US Equity Markets started the week on a positive note, reversing earlier losses after the Fed announced it was buying more Corporate Bonds under an Emergency Loan Programme. The Fed said that this move would continue to provide liquidity in the markets and keep credit in the markets for large employers. Earlier the US Indices were off by 2.5% on concerns that a second wave of the Corona Virus is emerging while Geopolitical risks increase across America. US Treasuries rallied as the US Dollar and Gold slumped. Having traded to a morning low at 2935, the ‘’buy the dip’’ returned with the S&P closing higher at 3066 in a volatile trading session. The VIX having hit a new rebound high at 44.44, closed 4.68% lower at 34.40. With sentiment at such extreme levels it is no surprise that markets sold off last week. However, with the June Futures and Options expiring on Friday I would not be short as 16 of the last 20 Quarterly Expirations have been bullish. Although stocks have rallied hard since the March 23 low, investors are still nervous, especially after the S&P fell almost 300 Handles since the FOMC Statement was released last Wednesday. One worry for the Bears is the stampede out of Equity Markets as shown by the Total Equity Mutual Flows. We have seen money flow out of Mutual Funds for years but today’s outflows are the largest in more than 25 years. Similar outflows have occurred in 2002, 2008, 2012 and 2016 all of which turned out to be a terrible time to pull money out of the stock market. After we saw the record outflows in the above years, 12 months later we saw the S&P trading higher, between 15% (2002) to 23% from the 2016 low. In my opinion, this negativity is good and should create a major tailwind for US Equities especially as stock markets have the Fed on their backs. Elsewhere Oil Futures rebounded after trading below $35 a barrel after BP warned the virus will hurt long-term energy demand.
To mark my 2100th 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 72 points yesterday and is now ahead by 830 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 closed 0.83% higher at a price of 3066.
The Dow Jones Industrial Average rose 157 points for a 0.62% gain to close at 25,763. This was 1200 points above its early morning low of 24,560.
The NASDAQ 100 rose 1.17% to close at 9777.
Stoxx Europe 600 Index advanced 0.5%.
The MSCI Asia Pacific Index increased 0.1%.
This morning the Nikkei closed 4.88% higher at 22,582.
Currencies
Here is a summary of the main Changes in F.X. Markets:
The Euro increased 0.5% to $1.1313.
The Japanese Yen closed unchanged at 107.36 per Dollar.
The British Pound gained 0.4% to 1.2586 per Dollar.
Bonds
The yield on 10-year Treasuries closed unchanged at 0.71%.
Germany’s 10-year yield fell one basis point to -0.45%.
Britain’s 10-year yield closed unchanged at 0.208%.
Commodities
West Texas Intermediate crude advanced 2.2% to $37.05 a barrel.
Gold closed 0.4% lower at $1720.
This morning on the Economic Front we already had the release of German CPI for May which came in as expected at +0.6%. Also released was UK Jobless Claims where we saw a change of 529K versus the prior month’s 856K. The Unemployment for April was 3.9% versus 4.7% expected, while Average Earnings were lower than expected at +1%. At 10.00 am we have the Euro-Zone and German ZEW Survey and this is followed at 1.30 pm by U.S Retail Sales. At 3.00 pm we have the NAHB Housing Market Index and Business Inventories. Finally, at the same time Fed Chair Powell delivers his semi-annual report to Congress.
June S&P 500
An incredible turnaround in the S&P which was trading at 2945 as I went to press yesterday morning. The Central Banks and in particular the Fed will not allow you to be short the stock markets as they announced that they would start buying corporate Bonds from today. This led to a massive rally in the S&P which hit an overnight high at 3123.50 – 180 Handles above yesterday morning’s low and now just 100 Handles from last week’s rebound high. I said in yesterday’s commentary that unless we closed below the 200 Day Moving Average at 3013, then I would caution against being short. On top of this we have the Quadruple Expiration on Friday which has seen 16 of the last Quarterly Expirations end the week with a strong rally. Thankfully we had no sell levels in any of my Indices apart from the S&P which traded higher to my 3017 sell level. Immediately I emailed my Platinum Members to exit any short position at 3011 and I am still flat. As you know all ‘’Open Gaps’’ in the S&P are always filled whether it takes a day like yesterday or six months. From last Wednesday’s Chicago close at 3190 to Thursday afternoon’s 3119 high we have a massive 71 Handle Gap that will attract attention. In my opinion, despite the huge technical damage done to the S&P last week that this Gap will eventually be filled. This morning the S&P is in the process of leaving a huge Gap to last night’s 3066 close. Today I will be an aggressive buyer from 3055/3072 with a 3042 stop. The S&P has initial resistance from 3145/3165 where I will be a small seller with a 3177 stop.
EUR/USD
Late yesterday following the equity market rally, the Euro traded higher to my 1.1330 initial sell level. As I wanted to be flat overnight I covered this position at my revised 1.1318 T/P level and I am still flat. I will now raise my buy level to 1.1210/1.1270 with a higher 1.1165 stop. The Euro has strong resistance from 1.1400/1.1440 where I will be a seller with a 1.1475 stop. Remember a break and close over 1.1400 for a few days is bullish.
September Dollar Index
The Dollar just missed my 97.65 sell level with a 97.45 high print and I am still flat. As long as the Dollar continue to trade below its 200 Day Moving Average (98.33) then the Dollar is in a down trend and rallies are a sell. Today I will lower my sell level to 97.35/97.95 with a 98.40 wider stop. I still do not want to be long the Dollar at this time.
June DAX
I am still flat the DAX as the market never came close to yesterday’s buy level. This morning the DAX is trading 550 points higher from where I marked prices 24 hours ago. Normally these moves would take 2/3 weeks to happen buy these are not normal times. Germany’s 130 Euro Billion stimulus is unprecedented and will under pin any weakness in the DAX. Today I will raise my buy level to 11980/12105 with a 11915 stop.
June FTSE
The FTSE has now gone from the top of its Bollinger Band last week to the bottom yesterday morning and back to the middle of the Band in just over a week’s trading. This is incredible volatility. The FTSE has support from 6070/6140 where I will be a buyer with a 6015 stop. Ahead of Friday’s expiration for the June Contract I still do not want to be short the market at this time.
Dow Rolling Contract
Last Thursday’s 1900 point fall in the Dow was the fourth largest point drop in history. This sell-off left a rare Island Reversal which is technically very bearish. However the level of stimulus from the Fed is insane and makes it extremely difficult to hold a short position for any length of time. The Dow has now bounced over 1800 points from yesterday’s 24580 low print to an overnight high at 26379 so far. I expect that markets will hold in until we get the expiration out of the way on Friday. Despite the huge rally yesterday, volume was light while internally the market was weak with the McClellan Oscillator only closing barley in positive territory at +21. The Dow has initial support from 25700/25850 where I will be a small buyer with a 25575 stop. The Dow has resistance from 26450/26700 where I will be a seller with a 26850 stop.
June NASDAQ
The NASDAQ continues to lead the way. This morning the NASDAQ is trading at 9900 which is just below last week’s 10155 all-time high. Today I will be a small seller from 9970/10100 with a tight 10195 stop.
September BUND
This morning the Bund has traded lower to my 175.15 buy level. I am still long and I will now lower my T/P level on this position to 175.45. I will now raise my stop on this position to 174.75 and if any of the above levels are hit I will be back with a new update for my Platinum Members.
Gold Rolling Contract
Frustratingly Gold just missed my 1696 buy level with a 1696.50 low print before rallying to trade at 1722 this morning. With Gold having traded sideways for most of the past two months I am not going to chase this market higher and I will leave my 1686/1696 buy level unchanged with the same 1678 stop.
Silver Rolling Contract
I am still flat and I will now raise my buy level to 16.50/16.90 with a higher 16.15 stop.
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