Global Equity Markets extended their rally into an eighth straight day as investors clung to optimism for a quick economic recovery from the pandemic. The Nasdaq 100 briefly surpassed its February closing record. Banks led the S&P 500 Index toward a three-month high, with four stocks gaining for every one that fell. The US Dollar dropped to its weakest since early March. Gold and Treasuries also slumped as investors turned away from havens after U.S. Private Payrolls showed fewer job losses than forecast in May. European stocks jumped the most in two weeks, led by automakers and insurers. The Euro strengthened for a seventh session as data showed the region’s economic activity increased in May to the highest in three months after an easing of lockdowns. Amid the exuberance, a popular technical momentum indicator is close to flashing a warning sign for the S&P 500 and valuations for global stocks have climbed to their highest level versus estimated earnings since the early 2000s. The rally has surprised some analysts who predict a long road back to normalcy following the pandemic. They also point to risks including tense U.S.-China relations, the possibility for a second wave of infections and the uprisings in U.S. cities against police brutality. But the reopening of global economies has turned into a tailwind for stocks, and a flattening virus curve and Federal Reserve stimulus are also helping gains. Wednesday’s advance was driven by financial companies, auto manufacturers and makers of durable goods, while big tech shares lagged behind, indicating the rally is broadening out. Elsewhere, shares in South Korea led Asian Equities higher after the country detailed a third round of fiscal stimulus, while Singapore’s benchmark entered a bull market. MSCI’s gauge of Emerging-Market stocks climbed close a three-month high.
To mark my 2075th 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 lost 17 points yesterday and is now ahead by 660 points for June, having made 2456 points in May, 4773 points in April, an incredible 9264 points in March, 2223 points in February, 2142 points in January and 818 points in December. 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 Index rose 1.4% to close at a price of 3123.
The Dow Jones rose 527 points for a gain of 2.2% to close at 26,297.
The Nasdaq 100 Index added 0.5% closing at a new record high of 9704.
The Stoxx Europe 600 Index gained 2.5%.
The MSCI All-Country World Index climbed 1.7%.
This morning the Nikkei closed 0.4% higher at 22,695.
Currencies
Here is a summary of the main Changes in F.X. Markets:
The Bloomberg Dollar Spot Index slid 0.4%.
The Euro gained 0.7% to $1.1243.
The British Pound increased 0.3% to $1.2587.
The Japanese Yen slipped 0.2% to 108.93 per dollar.
Bonds
The yield on 10-year Treasuries rose seven basis points to 0.76%.
Germany’s 10-year yield climbed six basis points to -0.36%.
Britain’s 10-year yield increased five basis points to 0.27%.
Australia’s 10-year yield rose six basis points to 0.96%.
Commodities
WTI crude rose 0.1% to $36.84 a barrel.
Gold weakened 1.7% to $1,698.53 an ounce.
The Bloomberg Commodity Index rose 0.2%.
This morning on the Economic Front we have Euro-Zone Retail Sales at 9.00 am. This is followed at 12.45 pm by the ECB Meeting. The European Central Bank is expected to top up its rescue program with an additional 500 billion Euros of asset purchases at today’s meeting. Anything less than an expansion would be a big shock. At 1.30 pm we have the Lagarde Press Conference and the U.S Weekly Jobless Claims where another 1.8 million are expected to have lost their jobs. At the same time we have the Trade Balance and Nonfarm Productivity.
June S&P 500
An incredible last three weeks of trading with the S&P now rallying 370 handles off its May 14 low at 2760 to yesterday’s 3130 rebound high. Given the Fed’s $3 trillion of their balance sheet we have to acknowledge that the Central Banks continue to hold complete control over these markets. More will follow this afternoon when the ECB announce their own stimulus package and in the process are literally manufacturing the largest market bubble ever. In my opinion, market valuations are screaming danger. On Tuesday we closed at 145.6% market cap to GDP, while last night this indicator rose to close above 146%. These are not only historically extreme valuations they are also entirely incompatible with any valuation history in context of the economic backdrop where we have 20% unemployment and massively regressive earnings. As of last Friday, 95% of S&P stocks were trading above their 50-day Moving Average. On its own, this may not be something to worry about, but the speed at which stock shot to this extreme might be. A parabolic move in stock above the 50 day MA is indicative of an overbought market condition. On top of this the McClellan Oscillator closed at +273 last night. Yesterday’s move higher saw the S&P hit my second sell level at 3125 for a now average short position at 3109. I will now raise my T/P level on this position to 3097. I will leave my closing stop unchanged at 3141 and if any of the above levels are hit I will be back with a new update for my Platinum Members. My only interest in buying the S&P is on a dip lower to 3045/3058 with the same 3035 stop.
EUR/USD
My Euro plan worked well with the market trading higher to my 1.1250 sell level before selling off to my 1.1205 T/P level this morning and I am still flat. Given how overbought the Euro is trading, I will continue to be a seller of rallies and today my sell range will be from 1.1260/1.1320 with a higher 1.1365 stop. Meanwhile I will leave my 1.1060/1.1120 buy level unchanged with the same 1.1015 stop.
June Dollar Index
The Dollar just missed my 97.10 buy level by a few points and I am still flat. I will now raise my buy level to 96.85/97.25 with a higher 96.49 stop.
June DAX
My DAX plan did not work well as the market ended the day with a gain of 500 points. The DAX has now rallied over 55% off its March Lows. Yesterday’s move saw the DAX trade the whole of my sell range for a 12305 average short position before my 12440 stop was hit a short time later. It will be interesting to see if the DAX sells off after the ECB stimulus is announced at 12.45 pm. The DAX has resistance from 12550/12700 where I will again look to sell with a 12805 stop. I do not want to be long the DAX at this time.
June FTSE
Shortly after I posted yesterday morning I was stopped out of my 6275 short position at 6340 and I am still flat. Despite the aggressive move higher in the European Indices, the FTSE continues to struggle which is no surprise given the strength of Sterling and an overbought condition. Today I will again look to sell the market from 6390/6450 with a 6505 stop.
Dow Rolling Contract
The Dow surged 500 points yesterday but so far has run into resistance at its 200 Day Moving Average which comes in at a price of 25300 this morning. This move higher saw the Dow hit my second sell level at 26150 for a now 26015 average short position. I am still short as we did not close above my 26325 stop. I will now raise my exit level on this position to 26080. I will now lower my stop on this position to a one-time touch at 26250. If I am stopped out of this trade I will be a more aggressive seller from 26350/26600 with a 26750 closing stop. If I am taken short a second time I will have a T/P level at 26170.
June NASDAQ
I am still flat the NASDAQ. I will leave my 9740/9890 sell level unchanged with the same 10005 stop. I will now lower my buy level to 9380/9480 with a 9295 stop.
June BUND
I was lucky with my 171.70 T/P level on the Bund which was filled shortly after I posted yesterday morning. Subsequently the Bund got hit hard into the close to sit at 170.90 as I go to press. The Bund has support from 169.80/170.40 where I will be a small buyer with a 169.35 stop.
Gold Rolling Contract
My GOLD plan worked well with the market trading the whole of my buy range for a 1693 average long position before rallying to my revised 1700 T/P level and I am still flat. Given the massive optimism towards Gold I do not like the price action and I believe that we will see lower Gold prices going forward despite almost every analyst that I read being bullish. Ahead of today’s ECB Meeting I am reluctant to be short and I will be a small buyer from 1665/1675 with a 1654 stop.
Silver Rolling Contract
Shortly after I posted Silver rallied to my 17.95 T/P level on my latest 17.65 long position and I am still flat. On Monday the DSI closed at 93% bulls. Overall, I am bullish on Silver given how cheap the market is but with such a high DSI I am expecting lower prices ahead. I am too scared to sell but I will be happy to buy the market at the 16.70/17.20 support area with a 16.35 stop.
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