U.S. Equity Markets plunged more than 7.5% in the worst day on Wall Street since the financial crisis, as a full-blown oil price war rattled financial markets already on edge over the spreading Coronavirus. Treasury yields plummeted, crude sank 20% and credit markets buckled. The S&P 500 sank the most since December 2008 and is now at a nine-month low. The rout began at the open, with losses reaching 7% four minutes in, triggering NYSE circuit breakers that halted trading for 15 minutes. The markets will close if losses reach 20%. The measure is down almost 19% from its Feb. 19 all-time high, threatening to end the record-long bull market that began 11 years ago to the day.
In a dramatic day across Assets Globally:
- All but nine S&P 500 companies were lower Monday, with energy producers routed by 20%. Exxon Mobil and Chevron were down more than 12%. Banks lost 11%, with an ETF that tracks regional banks had for its worst day since 2009. Apple sank 7.9% and Dow Chemical plunged 22%.
- Crude tumbled the most since the Gulf War in 1991, after an OPEC+ alliance that had contained global production disintegrated. WTI and Brent pared some of their losses but remained down more than 20%.
- The 10-year Treasury yield fell below 0.5% and the 30-year yield dropped under 0.9%, taking the whole U.S. yield curve below 1% for the first time in history.
- The Stoxx Europe 600 Index fell the most since 2016 on trading volumes exceeding three times the 100-day average. Several of the region’s gauges look set to enter bear markets. Japanese stocks entered one earlier when they tumbled almost 6%.
- A U.S. derivatives index that measures the perceived risk of corporate credit surged by the most since Lehman Brothers collapsed.
- Exchange rates including the yen saw sharp moves as traders struggled to establish where new ranges might be. The Japanese Yen was up about 3% versus the US Dollar while the Euro and Swiss Franc both strengthened more than 1%.
The oil-price crash threatened to upend politics and budgets around the world, exacerbate strains in high-yield credit and add pressure on central bankers trying to avert a recession. It typically would have proved a boon to consumers, but the Coronavirus is increasingly keeping them at home. Investors are clamoring for some policy response from the Trump administration, which has so far signalled that it believes the spread is under control. President Donald Trump and his economic team will weigh measures later Monday to contain the fallout from Coronavirus and a sudden crash in oil prices, with funding for a temporary expansion of paid sick leave and aid for battered U.S. energy producers among possible steps. A Bloomberg gauge of financial stress for the U.S. has deteriorated at the fastest pace since the great financial crisis.
To mark my 2025th 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 140 points yesterday and is now ahead by 1402 points for March, having made 2223 points in February, 2142 points in January, 818 points in December, 780 points in November, 1649 points in October, 1620 points in September and 2387 points in August 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
S&P 500 futures Tuesday briefly traded down 20% from their high — signaling a bear market — then gained after President Donald Trump said that the administration will discuss a possible payroll tax cut with Congress, and that there will be “major” economic announcements Tuesday. Treasury Secretary Steven Mnuchin rejected comparisons with the financial crisis. Measures to contain the Coronavirus continue to undermine prospects for corporate earnings, and raise the danger of a funding crisis. Making things worse, the crash in oil prices threatens a swathe of defaults in that industry. On the Coronavirus front, Italy added nationwide travel restrictions to its effective lockdown of the northern region of the country.
The S&P 500 Index SANK 7.6% to close at a price of 2746, the lowest level since last June.
The Dow Jones Industrial Average slid 7.7%, closing at 23,851, for a 2000 point fall.
The Nasdaq 100 Fell 6.8%, closing at 7948.
The Stoxx Europe 600 Index fell 8.0%.
Germany’s DAX Index declined 7.5%.
Currencies
Here is a summary of the main Changes in F.X. Markets:
The Bloomberg Dollar Spot Index fell 0.3%
The British Pound increased 0.6% to $1.3125.
The Euro advanced 1.6% to $1.1464, the highest level in 13 months.
The Japanese Yen strengthened 3.2% to 102.15 per dollar.
Bonds
The yield on 10-year Treasuries sank 25 basis points to 0.55%.
The yield on thirty year Treasuries declined 31 basis points to 0.98%, the lowest on record on the biggest fall on record.
Germany’s 10-year yield decreased 15 basis points to -0.86%.
Commodities
West Texas Intermediate crude fell 25% to $30.96 a barrel, the most since 1991.
Gold rose 0.2% to $1,676.40 an ounce.
This morning on the Economic Front we have Euro-Zone GDP and the Employment Change. At the same time we have the NFIB Small Business Optimism. No other releases are expected.
March S&P 500
The E-mini S&P Futures Contract was limit down on Sunday night and limit down shortly after yesterday’s New York open. So-called Circuit Breakers, which regulators instituted to stop market trading when there are large intraday declines, do not stop people from panicking. Without limits to trading activity, markets will reach their desired level faster, thereby clearing weak hands and creating more order, not less. The S&P closed down more than 7% yesterday and the NYSE Advance/Decline ratio was negative by a whopping 46-to-1. Brazil’s stock market declined 12%, the largest drop in 21 years. Finally, the VIX closed 30% higher at 54.46, the highest close since the midst of the Great Credit Crisis of 2008. The large sell-off in the last 30 minutes of trading saw the CBOE Put/Call ratio surge to a record 1.86, while the DSI closed at 8%. On top of this, the McClellan Oscillator closed at –379 while the Fear & Greed Index closed at a new low of Extreme Fear with a 3 print. If you used a mental rather than a physical stop then you may have been able to make a small gain on my 2818 long position as the market rebounded to an intraday high above 2840. However, I was stopped out of this position at 2780 and I am now flat. The S&P has now reached all my near-term target levels and is sue a massive rally to correct this aggressive move lower. The S&P has support from 2720/2760 and I will be a buyer in this area with a 2685 mental stop. If I am taken long I will have a T/P level at 2810.
EUR/USD
My Euro plan worked well with the Euro trading higher to my 1.1460 sell level shortly after the European Markets opened before selling off to my 1.1410 T/P level and I am now flat. After rising 700 points in the last few weeks the Euro is severely overbought and today I will be a seller from 1.1490/1.1540 with a 1.1585 stop. I still do not want to be long the Euro at this time.
March Dollar Index
The Dollar traded lower to my 94.80 buy level. I am still long and I will now lower my T/P level on this position to 95.35. I will raise my stop on this position to 94.35 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 the whole of my buy range for a 10700 average long position before thankfully rallying to my 10880 T/P level and I am now flat. Subsequently the DAX got slammed into the close and is now trading over 22% lower since the end of January. The DAX has support from 10250/10400 and I will be a buyer in this area with a 10165 stop. If I am taken long I will have a T/P level at 10530.
March FTSE
My FTSE plan also worked well with the market trading lower to 5965 average buy level before rallying to an intraday high at 6150. This move higher enabled me to cover this position at my 6050 T/P level and I am now flat. The FTSE has now fallen over 25% since its November high. Looking at the monthly Chart we have strong support at the November 2015 low at 5560. Today I will be a buyer from 5650/5850 with a 5545 stop. If I am taken long I will have a T/P level at 5990.
Dow Rolling Contract
The Dow has fallen an incredible 6000 points in just 17 trading days. So far, the Dow has erased two years of gains in this time. Looking at the Monthly Chart we closed last night below its Monthly Bollinger Band which gives you an idea of how severely oversold this market is. With the Circuit Breakers in force I was not able to buy the market until the bottom of my buy range at 24170 before getting stopped out of this position at 23995. If you did use a mental instead of physical stop we did rally to an afternoon high at 24650 before we got slammed into the close. Today I will be a small buyer from 23500/23750 with a 23350 stop. If I am taken long I will have a T/P level at 24150.
March NASDAQ
For a time yesterday the NASDAQ was the strongest of the US Indices before also getting slammed into the close. Earlier the NASDAQ traded the whole of my buy range for a 7970 average long position before thankfully rallying to my 8230 T/P level and I am now flat. The NASDAQ has strong support from 7840/7920 and I will be a buyer in this area with a 7715 stop. If I am taken long I will have a T/P level at 8040.
June BUND
The moves in Bond prices and Yields are historic. The Yield on the 30-Year US T-Bond dropped to 0.70% intraday. At the close, the 30 Year Yields barely had a 1% Handle. The DSI closed last night at 98% Bond Bulls. This is insane. Yesterday the June Bund closed 171 points higher at 178.23 having hit a new all-time high at 179.31. Today I will be a seller from 178.60/179.20 with a 179.75 stop. If I am taken short I will have a T/P level at 178.05.
Gold Rolling Contract
My 1701 short Gold position worked well with the market hitting a low of 1659. This move lower enabled me to cover this position at my 1688 T/P level and I am now flat. Today, I will again look to sell Gold from 1702/1715 with a 1725 stop.
Silver Rolling Contract
Silver traded the whole of my buy range for a now 16.75 average long position. I will leave my T/P level unchanged at 17.10 with the same 16.25 stop.
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