Despite the Bank Index closing lower yesterday, the Dow led Monday’s gains closing higher by 1% as this relentless liquidity rally continues without any meaningful pull back. Oil jumped 8% as OPEC announced an unexpected crude output cut that is expected to begin next month. Rate hikes and bank panic have driven more funds into the safety of money-market assets. Investors are fleeing the banking sector for technology stocks. Multiple indicators say a recession is here, and that a market rally is on the horizon. But first Equity Markets need a pull-back to work off some overbought readings. The banking crisis that gripped markets in March was a wake-up call for those who ignored the economic carnage in front of them and those who thought a soft landing was still possible. Investors are now finally accepting that a recession is here – and likely has been for some time now. Last month, investors started piling into cash at the fastest pace since the early stages of the pandemic in 2020. This was largely driven by the panic in the banking sector after the collapse of Silicon Valley Bank. Money-market funds saw inflows of roughly $508 billion in the first quarter of 2023. While not as massive as the $1.1 trillion surge in assets we saw at the onset of the COVID-19 pandemic, that is still a huge gain. Bond Yields have collapsed as a result with 10-year treasuries falling an incredible 80 basis points over the past few weeks. Money-market assets have swelled from $4.6 trillion at the end of March 2022 to a new record of $5.2 trillion. Tech stocks were among the most battered in 2022 after the central bank hiked interest rates at one of the fastest paces in history. Now, with the Fed supposedly approaching the end of its rate-hike cycle, investors are flocking back to tech stocks. much of the tech sector’s gain occurred in the first 45 days of 2023. But a new rally in March was fuelled by further weakening of economic data and emerging banking-sector uncertainty. In fact, since the start of the banking turmoil that resulted from Silicon Valley Bank’s collapse, the banking sector – as measured by the KBW Nasdaq Bank Index – is down 15%. And the tech sector – as measured by the Nasdaq 100 Index – is up 8%. The collapse of faith in the financial sector is a bellwether sign of a recession. The Fed tends to only stop raising rates when the economy is already down the rabbit hole of a recession and has shown signs of serious economic contraction. Investors pouring into money-market funds tells us they see what is going on. They are hoarding cash waiting to put it back to use. The first move is usually back into growth stocks such as tech. Remember, investors typically make decisions for what the economy will resemble six to eight months down the line, a new bull run in the tech sector is a sign that a broader market rally is on the horizon. Within the S&P 500 Index, seven of 11 sectors finished higher. European Markets closed mixed. ECB Vice President De Guindos said that underlying inflation factors may continue to remain strong despite the expectation that headline inflation will fall significantly later this year. German Finance Minister Lindner said that despite tax income projected to reach record amounts this year, the government will still have to find alternative solutions to finance its legal obligations. U.K. Commercial Real Estate rose in the first quarter – after hitting a record-low in the previous quarter – but remains well below its 10-year average. In Asia, China’s Manufacturing PMI for March slowed with export orders underwhelming as the world’s second largest economy continues to hit roadblocks on its way back from restrictive pandemic-era policies. India’s Unemployment Rate climbed to 7.8% setting a three-month high, as the region’s third-largest economy continues to struggle from falling economic demand. Elsewhere, Oil closed 6.41% higher while Gold rose 0.40% after the Dollar weakened in Europe.
To mark my 2750th issue of TraderNoble Daily Commentary I am offering a special 2-Year Rate of Euro 2750 for my Platinum Service which includes 1 to 4 updated emails throughout the trading day to demonstrate this value, a monthly subscription over the same period would cost 4440 euro in total This offer represents a 38% discount and is open to both new and existing members. If anyone is interested in this offer can you please email me on bryan@tradernoble.combryan@tradernoble.com for details
For anyone following my Platinum Service it made 230 points yesterday, the first trading session of April after closing March with a gain of 6168 points, while finishing February with a gain of 3164 points, after closing January with a gain of 4687 points, while finishing December with a gain of 2054 points. November ended with a gain of 4789 points, while finishing October with a record gain of 9619 points, making 6660 points in September, after closing August with a gain of 2228 points, having made 2660 points in July, following a gain of 3371 points in June. The Service made 3651 points in May, after making 762 points in April, following a gain of 5883 points in March. The Platinum Service made an impressive 5324 points in February, after ending January with a gain of 3878 points, more than making up for December’s 932 points loss. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1600 points. I have a YouTube Channel which contains recent interviews I have given This can be viewed by clicking HEREHERE Please subscribe to this for new interview notification
Equities
The S&P 500 closed 0.37% higher at a price of 4124
The Dow Jones Industrial Average closed 327 points higher for a 0.98% gain at a price of 33,601.
The NASDAQ 100 closed 0.25% lower at a price of 13,148.
The Stoxx Europe 600 Index closed 0.03% lower.
Yesterday, the MSCI Asia Pacific rose 0.40%.
Yesterday, the Nikkei closed 0.52% higher at a price of 28,188.
Currencies
The Bloomberg Dollar Spot Index closed 0.5% lower.
The Euro closed 0.5% higher at $1.0903.
The British Pound closed 0.6% lower at 1.2421.
The Japanese Yen rose 0.20% closing at $132.44.
Bonds
Germany’s 10-year yield closed 2 basis points lower at 2.26%.
Britain’s 10-year yield closed 6 basis points lower at 3.43%.
U.S.10 Year Treasury closed 5 basis points lower at 3.42%.
Commodities
West Texas Intermediate crude closed 6.41% higher at $80.52 a barrel.
Gold closed 0.30% higher at $1975.10 an ounce.
This morning on the Economic Front we have German Trade Balance at 7.00 am, followed by Euro-Zone Producer Price Index at 10.00 am. Next, we have U.S. JOLTS Job Opening and Factory Orders at 3.00 pm. Finally, we have a speech from Fed Member Cook at 6.30 pm.
Cash S&P 500
Despite the S&P closing higher and the VIX 3.80% lower (for a new low of 2023 at a price of 18.55), the McClellan Oscillator also fell, closing last night at a still severely overbought level of +229. Yesterday’s move higher saw the market miss my 4130 initial sell level with a 4127 high print. Subsequently the S&P fell 20 Handles before rallying hard into the close. I am still flat. As I am still short the Dow I will now raise my S&P sell level to 4135/4152 with a higher 4165 ‘’Closing Stop’’. My only interest in buying the S&P is still on a dip lower to 4020/4040 with the same 3999 ‘’Closing Stop’’.
EUR/USD
The Euro had a volatile past 24 hours, trading below 1.0790 overnight before accelerating after the Dow rallied in European trading. This move higher saw my 1.0890 T/P level triggered on Friday’s late 1.0845 long position and I am now flat. I still believe that it is only a matter of time before the Euro tests the key 1.1000 resistance line. Today, I will be a buyer from 1.0770/1.0840 with a wider 1.0695 ‘’Closing Stop’’. The Euro has resistance from 1.1020/1.1080 where I will be a small seller with a 1.1125 ‘’Closing Stop’’.
June Dollar Index
My Dollar plan worked well as the market traded higher to my 102.90 sell level with a 103.08 high print before selling off to my 102.40 T/P level and I am now flat. Today, I will again be a seller from 102.80/103.50 with the same 104.05 ‘’Closing Stop’’.
Cash DAX
The DAX closed lower yesterday which was a surprise given the strength of the American Indexes. I will not chase the market lower, leaving my 15780/15900 sell level unchanged with the same 16005 ‘’Closing Stop’’.
Cash FTSE
No Change. I am still a buyer on any dip lower to 7490/7570 with the same 7415 ‘’Closing Stop’’.
Dow Rolling Contract
The Dow rallied to my 33450 second sell level for a now 33325 average short position. I will leave my 33605 ‘’Closing Stop’’ unchanged. I will now raise my T/P level to 33170. If any of the above levels are hit, I will be back with a new update for my Platinum Service.
Cash NASDAQ 100
My 13130 average short NDX position worked well as the market sold off in the afternoon to my 13060 revised T/P level and I am now flat. The NDX is severely overbought as outlined in yesterday’s Daily Commentary. I will now be a seller from 13280/13430 with a tight 13505 ‘’Closing Stop’’. I still do not want to be long the NDX at this time.
June BUND
My Bund plan worked well as the market traded lower to my 135.50 buy level before rallying to my 136.15 T/P level and I am now flat. The Bund continued to rally, closing at 136.51 last night. Today, I will again be a buyer on any dip lower to 135.10/135.80 with a tight 134.65 ‘’Closing Stop’’.
Gold Rolling Contract
I am still flat Gold. I will now raise my buy level to 1937/1952 with a higher 1925 ‘’Closing Stop’’.
Silver Rolling Contract
No Change. I am still long from Friday at a price of 23.75 with the same 25.20 T/P level. I will add to this position at 23.10 while leaving my 21.95 ‘’Closing Stop’’ unchanged. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
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