Equity Markets slumped and bonds rallied as concern over the impact of a deadly virus that originated in China rattled global markets. The S&P 500 Index fell the most in almost four months, the Dow Jones Industrial Average erased its 2020 gain and the Nasdaq-100 Index had the biggest drop since August. Chipmakers, cruise lines and casino operators were among the hardest hit as investors fled companies with close links to China. A gauge of U.S. equity volatility surged above its one-year average. European and Emerging-Market shares slid to the lowest since mid-December. China’s financial markets will remain closed until next Monday after authorities extended the Lunar New Year break by three days as they grapple with the virus crisis. Assets that track the country’s largest stocks took a nosedive, with the iShares MSCI China ETF and Invesco China Technology ETF dropping more than 3.5%. China-based Alibaba Group Holding Ltd. and Yum China Holdings Inc. also slid. The offshore Yuan sank, breaching key technical levels. The flight to safety, which comes ahead of tomorrow’s Federal Reserve meeting, saw volumes in Treasury futures jump to double their regular levels in Asia. The yield on 10-year U.S. bonds dropped to the lowest since October, while the US Dollar rose. The Swiss Franc, the Japanese Yen and Gold paced gains in haven assets. Oil slipped to a more than three-month low, copper had its longest slump since 2014 and iron ore tumbled.
To mark my 1975th 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.com for details
For anyone following my Platinum Service it made 296 points yesterday and is now ahead by 1809 points for January, having made 818 points in December, 780 points in November, 1649 points in October, 1620 points in September, 2387 points in August, 1153 points in July, 1346 points in June,1722 points in May, 955 points in April and 1027 points in March. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1600 points
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Equities
Fears that China has failed to contain the pneumonia-like virus — which has killed at least 80 people and infected more than 2,700 — roiled markets at the start of a week jam-packed with corporate earnings. The outbreak has shattered a calm in markets that hasn’t seen a 1% up-or-down move in the S&P 500 since early October. As global stocks sell off, JPMorgan Chase & Co. strategists say this could end up a buying opportunity. They retained a constructive view on world equities, adding that in the past, the more stocks have fallen on similar fears, the more they have rebounded later. Both the S&P 500 and MSCI All-Country World Index surged to records this month as 2020 started on a jubilant note amid optimism over the U.S.-China trade deal.
The S&P 500 sank 1.6%, closing at a price of 3243.
The Dow Jones Industrial Average fell 450 points to close at 28,440.
The Stoxx Europe 600 Index slid 2.3%.
The MSCI Emerging Market Index fell 1.6%.
Currencies
Here is a summary of the main Changes in F.X. Markets:
The Bloomberg Dollar Spot Index rose 0.2%.
The Euro fell 0.1% to $1.1018.
The Japanese Yen appreciated 0.3% to 108.90 per dollar.
Bonds
The yield on 10-year Treasuries slid eight basis points to 1.60%.
Germany’s 10-year yield dipped five basis points to -0.39%.
Britain’s 10-year yield fell five basis points to 0.508%.
Commodities
The Bloomberg Commodity Index decreased 1.4%.
West Texas Intermediate crude dipped 2% to $53.14 a barrel.
Gold rose 0.3% to $1,583.70 an ounce.
This morning on the Economic Front we have UK CBI Distributive Trades Survey at 11.00 am. This is followed at 1.30 pm by U.S. Durable Goods Orders. Finally, at 3.00 pm we have Consumer Confidence and the Richmond Fed Manufacturing Index.
March S&P 500
In yesterday’s Daily Commentary I mentioned at length about the Volatility Index. Last night the VIX closed 25% higher at 18.23 having reached an intra-day high of 19.02. This is the highest close since October 9. This saw the S&P end it’s 70 day streak of not closing +/- 1% with a fall of 1.57%. The S&P has strong support from 3200/3220 This support most hold or else there every chance we will accelerate to 3160 and lower. Co-incidently the bottom of the Daily Bollinger Band is at 3201, while the 50-Day Moving Average comes in at 3198. Yesterday my S&P plan worked well with the market trading the whole of my buy range for a 3247 average long position before rallying to my revised 3256 T/P level and I am now flat. Yesterday’s price action has left a massive ‘’Open Gap’’ from Friday’s Chicago close at 3295 to yesterday’s 3257 rebound high. Today I will be an aggressive buyer from 3204/3222 with a wider 3192 stop. Given how close we are to short-term support I no longer want to be short the market at this time.
EUR/USD
I am still flat the Euro and today I will continue to be a buyer from 1.0955/1.0995 with the same 1.0915 stop.
March Dollar Index
No Change as I am still short from last week at 97.50 with the same 97.30 T/P level. I will continue to add to this trade at 97.90. I will leave my stop unchanged at 98.12 and if any of the above levels are hit I will be back with a new update for my Platinum Members.
March DAX
My DAX plan worked well with the market trading lower to my 13250 buy level before rallying to my 13295 T/P level and I am now flat. So far the DAX is holding the key 13020/13100 support area and today I will be a small buyer in this area with a 12965 stop.
March FTSE
In my opinion the FTSE is one of the great leaders for market direction in equities. The fact that the FTSE has traded heavy over the past two weeks despite the US Indices making new highs almost every day was a concern that I shared with you in nearly all my Daily Commentaries this month. Thankfully we had no buy level in the FTSE with the market closing in New York last night almost 250 points lower than last Friday’s high. This is a huge move for the FTSE. This move lower saw the FTSE close 100 points below the bottom of its Daily Bollinger Band. The FTSE has short-term support from 7240/7290 and I will be a buyer in this area with a 7185 stop.
Dow Rolling Contract
My Dow plan also worked well with the market trading lower to my 28550 buy level before rallying to my revised 28660 T/P level and I am now flat. They say markets never sleep and thankfully I managed to get a late update out to everyone last Friday after the markets re-opened at 9.30 pm (for 45 minutes) which gave anyone who was still long the Dow a chance to exit. This was critical given the fact that we closed 450 points lower yesterday. The 50 Day MA for the Dow comes in at 28378 and I would expect this level to hold and rebound on it’s first test especially with the FOMC Meeting tomorrow. Today I will be a buyer from 28270/28420 with a 28165 stop.
March NASDAQ
The NASDAQ also traded the whole of my buy range for a 8950 average long position before rallying to my revised 9001 T/P level and I am now flat. Today I will again look to buy the market from 8870/8930 with an 8805 stop. If I am taken long I will have a T/P level at 8985.
March BUND
I am still flat the Bund and today I will still be a seller on any further rally to 174.65/175.05 with a 175.40 stop.
Gold Rolling Contract
No Change as I am still a seller from 1595/1610 with a 1619 stop.
Silver Rolling Contract
Very late yesterday Silver traded lower to my 18.05 buy level I am still long and I will now lower my T/P level on this position to 18.20. I will also raise my stop on this trade to 17.55.
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