U.S Equity Markets were mixed for most of the day, before selling off sharply into the close. The big driver today behind the selloff was a tweet from President Donald Trump, who said he has instructed his team not to negotiate a stimulus package until after the election. This spooked markets, as it indicates that there won’t be a Stimulus Bill anytime soon. In a speech, Federal Reserve chairman Jerome Powell warned that too little stimulus would create more economic risk. He added that monetary policy will remain accommodative for the foreseeable future. Political uncertainty also took a back seat yesterday, after President Donald Trump was released from the hospital following treatment for the Coronavirus. On the vaccine front, the U.S. Food and Drug Administration (“FDA”) said it will work as quickly as possible to approve a vaccine, but won’t “bend to political pressure” to rush an inoculation. The FDA added that it would require at least two months of safety data before approving a vaccine. This timeline could possibly take some wind out of the optimism that a vaccine could be approved by Election Day next month. Both the S&P and Dow closed lower by 1.4%, well off earlier highs. European Central Bank President Christine Lagarde said Quantitative Easing measures remain a better tool than lowering interest rates. She added that the ECB is ready to introduce more stimulus if necessary. German Factory Orders beat expectations in August, highlighting the ongoing economic recovery. The International Monetary Fund said more spending by governments on infrastructure projects will help boost growth in a post-coronavirus environment. The British government said it expects post-Brexit trade talks with the European Union to continue until an October 15 and 16 regional leaders’ summit. Elsewhere, Oil built on Monday’s 6.23% gain, closing a further 2.32% higher as a potential hurricane in the Gulf of Mexico caused companies to shutter production, taking supply out of the market. Meanwhile, Gold declined 1.43% on Dollar strength.
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For anyone following my Platinum Service it made 360 points yesterday and is now ahead by 981 points for October, having made 3042 points in September, 2383 points in August, 3128 points in July, 2580 points in June, 2456 points in May, 4773 points in April, an incredible 9264 points in March, 2223 points in February and 2142 points in January. 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 1.4% lower at a price of 3361.
The Dow Jones Industrial Average closed 375 points lower for a 1.34% loss at a price of 27,772.
The NASDAQ 100 closed 1.89% lower at a price of 11,291.
The Stoxx Europe 600 Index closed 0.9% higher.
The MSCI Asia Pacific Index rose 0.5%%.
This morning the Nikkei closed 0.0.2% lower at a price of 23,422
Currencies
The Bloomberg Dollar Spot Index closed 0.3% higher.
The Euro closed 0.4% lower at $1.1738.
The British Pound closed 0.7% lower at $1.2902.
The Japanese Yen closed 0.1% higher at 105.75 per dollar.
Bonds
The yield on 10-year Treasuries closed one basis point lower at 0.75%.
Germany’s 10-year yield closed three basis points lower at -0.53%.
Britain’s 10-year yield closed one basis point higher at 0.29%.
Commodities
The Bloomberg Commodity Index closed 0.1% higher.
West Texas Intermediate closed 2.32% higher at $40.14 a barrel.
Gold closed 1.43% lower at $1875 an ounce.
This morning on the Economic Front we already had the release of German Industrial Production which fell 0.2% versus +1.5% expected. At 12.00 pm we have U.S MBA Mortgage Applications and this is followed at 1.10 pm by a speech from ECB President Lagarde. At 7.00 pm we have the latest FOMC Minutes and a speech from Fed Member Williams. Finally. At 8.00 pm we have Consumer Credit.
December S&P 500
I mentioned yesterday that the S&P needs another Stimulus Bill to hold on to current gains as this whole rally as been dominated by the actions of the Fed since the March 23 low. This statement could not have been better timed, after President Trump tweeted that he told his representatives to stop Stimulus negotiations until after the election next month the S&P fell 90 Handles. These are nervous markets with very little liquidity as markets trade at unsustainable valuations. Yesterday the S&P hit my 3402 second sell level before spiking to a high at 3421. Having been stopped out numerous times over the past six weeks intra-day before the market reversed I left my stop at 3412 as a ‘’Closing Stop’’ only and this strategy worked with market selling off on Trump’s tweet to my 3386 revised T/P level and I am now flat. Yesterday’s sell-off led to a significant Downside Key Day Reversal as Friday’s Chicago ‘’Open Gap’’ was filled. However, as we have seen over the past few months these KDR’s quicky get reversed. This morning the S&P is trading higher at 3367 as I go to press, well off its overnight 3332 low print. The S&P has resistance from 3392/3407 where I will be a seller with a stop at 3423 which is just above yesterday’s high print. We have support from 3315/3330 where I will be a buyer with a 3299 stop.
EUR/USD
Late yesterday, the sell-off in US Indices saw the Euro trade lower to my 1.1730 buy level. I am still long and I will now lower my T/P level on this position to 1.1760 with the same 1.1655 stop. I will continue to add to this position on any drop lower to 1.1690 and if any of the above levels are hit I will be back with a new update for my Platinum Members.
December Dollar Index
My latest 93.45 long position worked well with the market trading higher to my 93.70 T/P level and I am now flat. Today, I will again be a buyer from 93.10/93.50 with the same 92.65 stop.
December DAX
The boring action continues in the DAX as the market so far refuses to break the key 12500 support level. I am still flat and I will raise my buy level to 12700/12780 with a 12615 higher stop.
December FTSE
The FTSE just missed my 5850 buy level before rallying this morning and I am still flat. I will now raise my buy level to 5810/5860 with a higher 5755 tight stop.
Dow Rolling Contract
My Dow plan worked well with the market trading higher to my 28350 sell level before incredibly falling to trade the whole of my buy range which out me long at an average rate of 27830. This move lower happened in a little over 30 minutes and allowed me to cover my short position at my 28230 T/P level. After I went long I emailed my Platinum Members to exit any long position at 27935 and I am now flat. The Dow made an overnight low at 27660, before rallying to sit 300 points higher at 27965 as I go to press. The Dow has resistance from 28250/27425 where I will again be a seller with a 28575 stop. My only interest in buying the Dow is from 27500/27650 with a 27375 stop.
December NASDAQ
After the NASDAQ traded the whole of my buy range for a 11300 average long position I emailed my Platinum Members to exit any long position at my revised 11350 T/P level and I am now flat. After falling 15% in September the NASDAQ has stabilised and all subsequent sell-offs have been met by aggressive buying. The NASDAQ has strong support from 10900/11050 where I will be an aggressive buyer with a 10795 stop. I will now lower my sell level to 11500/11600 with a lower 11705 stop.
December BUND
I am still flat and today I will raise my sell level slightly to 174.90/175.40 with a higher 175.75 stop.
Gold Rolling Contract
Gold just missed my 1872 buy level with a 1873 low print and I am still flat. As I am long Silver I will now lower my Gold buy level to 1850/1862 with a 1839 stop.
Silver Rolling Contract
Silver saw an aggressive move lower yesterday, trading the whole of my buy range for a now 23.60 average long Position. I am still long and I will now raise my stop on this position to 22.85 which is just below the overnight 22.92 low print. I will now lower my T/P level on this position to 23.95 and if any of the above levels are hit I will be back with a new update for my Platinum Members.
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