Equities rallied on some signs the Coronavirus outbreak is either levelling off or easing, with traders assessing the first reports of the cloudy corporate earnings season. The S&P 500 jumped to a one-month high while giant technology companies pushed the Nasdaq 100 through its 50, 100 and 200-day moving averages. Johnson & Johnson surged after posting stronger sales and boosting its quarterly dividend. Meanwhile, JPMorgan Chase & Co. and Wells Fargo & Co. slumped as their profits were hit by major provisions. Treasuries rose, the U.S. Dollar retreated against its major peers and Oil tumbled. Equities extended gains after a report that President Donald Trump will make some “important announcements” in the next few days regarding state guidelines on reopening the economy. Separately, National Institute of Allergy and Infectious Diseases Director Anthony Fauci said that a May 1 target to reopen is “a bit overly optimistic” for many areas of the country. As the earnings season gets under way, investors will get a sense of how bad the pandemic could hit global companies. The International Monetary Fund said the “Great Lockdown” recession would be the steepest in almost a century and warned the world economy’s contraction and recovery would be worse than anticipated if the Coronavirus lingers or returns. Traders also focused on whether trillions of dollars in stimulus and rescue plans will sustain the rally in risk assets amid uncertain corporate profits. Investor pessimism over the pandemic’s economic damage is at “extreme” levels with cash positions at the highest since the 9/11 terrorist attacks, according to a Bank of America Corp. survey.
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For anyone following my Platinum Service it made 61 points yesterday and is now ahead by 2314 points for April, having made an incredible 9264 points in March, 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
The S&P 500 increased 3.1%, closing at a price of 2846.
The Dow Jones Industrial Average rose 2.39% to close at 23,950.
The NASDAQ 100 surged 4.31%, closing at 8692.
The Stoxx Europe 600 Index rose 0.6%.
The MSCI Asia Pacific Index climbed 2.1%.
Currencies
Here is a summary of the main Changes in F.X. Markets:
The Bloomberg Dollar Spot Index fell 0.5%.
The Euro increased 0.7% to $1.0986.
The Japanese Yen appreciated 0.6% to 107.15 per dollar.
Bonds
The yield on 10-year Treasuries fell two basis points to 0.75%.
Germany’s 10-year yield decreased three basis points to -0.38%.
Britain’s 10-year yield gained four basis points to 0.341%.
Commodities
The Bloomberg Commodity Index decreased 0.5%.
West Texas Intermediate crude dipped 7.7% to $20.68 a barrel.
Gold increased 1% to $1,730.40 an ounce.
This morning on the Economic Front we have no data of note from either the UK or the Euro-Zone. At 12.00 pm we have U.S. MBA Mortgage Applications and this is followed at 1.30 pm by Retail Sales and the New York Empire State Manufacturing Index. This is followed at 2.15 pm by Industrial Production and Capacity Utilisation. Finally, at 3.00 pm we have the NAHB Housing Market Index and Business Inventories.
June S&P 500
The S&P has now rallied 675 Handles since the March 23, low at 2170 to yesterday’s 2845 high print as yet again anyone betting against the Fed gets slammed. The S&P accelerated higher after the NASDAQ broke its 50, 100 and 200 Day Moving Averages as the stock market completely discounts any negativity form the shut-down of the U.S economy. The S&P is now just 16% below its February all-time high. After the S&P hit my initial 2840 sell level the market had a small sell-off to 2829 and I used this move lower to cover this position at 2836 and I am now flat. This morning the S&P has hit a low so far at 2804. Internally the market is strong with the McClellan Oscillator closing at very overbought + 295 last night while the Fear & Greed Index is now ‘’Neutral’’ by closing at 45. The S&P has strong support from 2752/2778 where I will be a strong buyer with a 2728 stop. The S&P has resistance from 2872/2892 where I will be a seller with a 2908 stop. The S&P has strong resistance at its March 6, ‘’Open Gap’’ (2963) and I will be an aggressive seller on any further rally to 2940/2975 with a 3005 stop. Any move higher to this area should see the end of Phase 2 of this incredible three- week rally.
EUR/USD
The Euro rallied to my 1.0980 sell level before selling off to my revised 1.0959 T/P level and I am now flat. Today, my only interest in selling the Euro is from 1.1020/1.1070 with a 1.1105 tight stop. The Euro has initial support from 1.0830/1.0880 where I will be a buyer with a 1.0785 stop.
June Dollar Index
The Dollar traded lower to my 98.90 buy level. I am not as comfortable with this position given the price action over the past few days and I will now lower my T/P level to 99.25. Meanwhile I will raise my stop to a tight 98.65 and if any of the above levels are hit I will be back with a new update for my Platinum Members.
June DAX
I am still flat the DAX which is selling off as I post this commentary. I will now lower my buy level to 10270/10420 with a lower 10195 stop.
June FTSE
The FTSE is trading heavy. If you go back to January when the US Indices were making new highs almost every day, the FTSE struggled. Yesterday the FTSE traded lower all-day despite the 3% rally in the S&P. I will now lower my sell level to 5825/5875 with a lower 5930 stop. I still do not want to be long the FTSE at this time.
Dow Rolling Contract
I am still flat the Dow as the market continues to lag behind both the S&P and especially the NASDAQ. Remember the Dow did close below its 55 Month Average in March while the S&P and NASDAQ did not. The 50 Day MA for the Dow is still along way from current prices at 24886 while the 200 Day MA comes in at 26729. In my opinion unless we break these key levels then this is Bear Market rally before the Phase 3 kicks in. When President Trump does re-open the US Economy it will be a different Economy to the who he closed a few weeks ago. Social distancing will remain until a vaccine is found and mass produced. This needs to happen before the end of the year or else we run the risk of having a major depression. With the Presidential Election in November both and he and the Fed are doing all they can to avoid this scenario. Today I will raise my Dow buy level to 23150/23420 with a higher 22985 stop. I will leave my 24350/24600 sell level unchanged with the same 24765 stop.
June NASDAQ
An incredible 4.3% rally in the NASDAQ yesterday saw the market close above its 200 Day MA (8209) and 50 Day (8420) to fall just shy of my 8720 stop with a 8705 high print. I sold the NASDAQ again at 8610 for a now 8540 average short position. I am not comfortable with this trade and I will now raise my exit level for a loss at 8595. I will be an aggressive buyer on any dip lower to 8425/8500 with a 8350 stop.
June BUND
The BUND trades on the EUREX Exchange. This platform had major issues yesterday, resulting in no trading for most of the morning. When trading finally came back the Bund rallied and I am still flat. The Bund has resistance from 172.45/172.95 where I will be a seller with a 173.40 tight stop.
Gold Rolling Contract
Gold just missed my 1742 sell level with a 1739 high print before selling off to trade at 1712 this morning. Even though Gold is oversold I am not going to chase this market lower and I will leave my 1742/1758 sell level unchanged with the same 1771 stop.
Silver Rolling Contract
I am still flat Silver and today I will lower my sell level to 15.90/16.30 with a lower 16.75 stop.
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