U.S. Equity Markets ended their best month in three decades on a slightly sour note, slumping amid dismal economic data and corporate results that reflected the Coronavirus’s toll. The S&P 500 Index fell from a seven-week high as the U.S. reported a larger-than-expected jump in Unemployment Claims, with about four stocks lower for everyone in the green. Strong results from Microsoft Corp., Facebook Inc. and Tesla Inc. limited losses on the tech-heavy Nasdaq gauges. Crude rose for a second day on signs fuel consumption is starting to recover in the world’s biggest economies. Still, the S&P 500 posted its biggest monthly gain since 1987, climbing 13% amid speculation that damage from the Coronavirus may be short lived. After the close of cash trading, investors watched mega-cap tech earnings, with Amazon.com sinking after it warned of a possible second-quarter loss. Apple gained after saying quarterly revenue grew 1% in the midst of the global Covid-19 pandemic. Investors continue to weigh a brutal economic picture against hopes for a Coronavirus treatment and an eventual end to lockdown measures across the world. Food and Drug Administration Commissioner Stephen Hahn said the agency is moving at “lightning speed” to review data on Gilead Sciences’ experimental Covid-19 treatment. But earnings reports from tech giants show some parts of the economy have remained resilient. The Stoxx Europe 600 Index fell amid a barrage of bad economic readings and after European Central Bank President Christine Lagarde said the Euro-Zrea economy could shrink 12% this year. The ECB intensified its response to the Coronavirus crisis and the Federal Reserve said it planned to expand its Main Street Lending Programme.
Twitter Inc. slumped after reporting a drop in sales. Kraft Heinz Inc. fell as it said 2020 guidance remains uncertain. Royal Dutch Shell shares slipped after the firm cut its dividend for the first time since World War II.
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For anyone following my Platinum Service it made 45 points yesterday to finish April with a gain of 4773 points, 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
Overnight, U.S. and U.K. Futures slid along with Japanese and Australian shares, and the US Dollar climbed, after sobering comments from Amazon and Apple about the impact of the Coronavirus. Amazon.com warned of a possible second-quarter loss, while Apple omitted an earnings forecast for the first time in more than a decade. While global stocks posted their best month since 2011 in April — spurred by a slowdown in Coronavirus infections and massive stimulus initiatives — earnings announcements and economic data are serving a reminder of lasting pain.
The S&P 500 Index dropped 0.9%, closing at a price of 2912.
The Dow Jones Industrial Average fell 288 points to close at 24,345.
The NASDAQ 100 rose 0.2%, closing at 9000.
The Stoxx Europe 600 Index decreased 2%.
The NIKKEI closed 2.84% lower this morning at 19,619.
Currencies
Here is a summary of the main Changes in F.X. Markets:
The Bloomberg Dollar Spot Index fell 0.1%.
The Euro rose 0.7% to $1.0955.
The British Pound rose 1% to $1.2591.
The Japanese Yen fell 0.6% to 107.34 per dollar.
Bonds
The yield on 10-year Treasuries rose one basis point to 0.64%.
Germany’s 10-year yield sank nine basis points to -0.59%.
Britain’s 10-year yield declined five basis points to 0.23%.
Commodities
West Texas Intermediate crude gained 26% to $18.99 a barrel.
Gold weakened 1.5% to $1,687.82 an ounce.
This morning on the Economic Front we already had the release of U.K April Nationwide House Prices which surprisingly rose 0.7% versus +0.3% expected. At 9.30 am we have UK Markit Manufacturing PMI, Consumer Credit, Net Lending to Individuals, Money Supply and Mortgage Approvals. Most of Europe is closed today for May Day. At 2.45 pm we have U.S. Markit Manufacturing PMI. Finally, at 3.00 pm, ISM Manufacturing PMI and Construction Spending will be released.
June S&P 500
It looks like that Phase 2 of this oversold bounce in the S&P ended early yesterday morning at a price of 2964. This morning the S&P is trading over 125 Handles lower at 2838 after weaker earnings from both Amazon and Apple. Thankfully, we had no buy level in the S&P yesterday. With 30 million Americans having lost their jobs in the last six weeks, reality may finally be setting in. Against this the Fed will do everything in their power to prevent a further crash in the market. In my opinion the American system is completely broken as it cannot sustain itself without the Fed’s ever more monumental interventions. These interventions are absolutely necessary or the system collapses under its own broken façade. And this conflict, a Fed poisoning the economy’s growth prospects on the one hand, and its needed presence and actions to keep the broken system afloat. The Fed has been managing the economy via asset prices even though Jay Powell again insisted on saying the Fed is not targeting asset prices which is a complete lie. As a result, we have seen massive widening of the wealth equation in the process. What happens when you have a slow growth recovery for 10 years and all the wealth benefits going disproportionally to the top 1% who own most of the assets that are targeted while real wage growth stagnates? For one you have a sizeable portion of society who have little or no savings, behind on its bills and struggling to pay rent, taking on multiple low jobs in the US with no benefits while real estate prices keep rising as the wealthy keep squeezing people out of neighbourhoods. This will not end well. Yesterday’s markets closed at 138% Market Cap versus GDP. The S&P has support from 2808/2825 where I will be a buyer with a 2793 stop. Despite my rant above it is difficult to be short the S&P ahead of the weekend as the Fed will try to hold the market up. With such a large ‘’Open Gap’’ to start the month my only interest in going short if from 2905/2925 with a 2937 stop.
EUR/USD
The Euro broke and closed over 1.0900, thus generating a buy signal as mentioned in yesterday’s commentary. Today I will raise my buy level to 1.0880/1.0920 with a 1.0835 stop.
June Dollar Index
I am still flat the Dollar and I will now lower my sell level to 99.45/99.95 with a 100.35 stop.
June DAX
The DAX got slammed yesterday with the market never coming close to my sell range and I am still flat. As Germany is closed today for May Day, EUREX is also closed. Despite this the spread betting firms are making their own prices in the DAX. However I prefer to stay flat until my next commentary on Tuesday.
June FTSE
I had the right idea of selling rallies in the FTSE. It was frustrating to get stopped out of my short position on Wednesday at 6010 with the market trading at 5740 this morning, 400 points lower from where I marked prices 24 hours ago. The FTSE has support from 5600/5680 where I will be a small buyer with a 5545 tight stop.
Dow Rolling Contract
Incredibly the Dow is trading 1000 points lower from yesterday morning’s 24900 high print. This morning the Dow is trading in my buy range and I have gone long in small size here at 23850. I will add to this position on any further move lower to 23660 with a lower 23520 stop. I will now lower my T/P level on this position to 24010 and if any of the above levels are hit I will be back with a new update for my Platinum Members.
June NASDAQ
The NASDAQ which closed less than 7% from all-time highs last night, got slammed on the re-open of the Futures Market following the Amazon and Apple results. I bought the market at the bottom of yesterday’s buy range at 8800. I am still long, and I will add to this position at 8680 with a now lower 8595 stop. I will now lower my T/P level on this position to 8870 and again if any of these levels are hit I will be back with a new update for my Platinum Members.
June BUND
My BUND plan did not work well as after the Lagarde Pres conference the Bund soared with the market trading the whole of my sell range for a 173.80 average short position before stopping me out near this high of the day at 174.45 and I am still flat. The BUND is closed today and I will stay flat until I return on Tuesday.
Gold Rolling Contract
My Gold plan worked well with the market hitting my 1694 buy level before rallying to my 1703 T/P level and I am now flat. Despite the weaker Dollar Gold sold off into the New York close. Gold has support from 1640/1652 where I will be a buyer with a 1631 stop.
Silver Rolling Contract
Silver traded the whole of my buy range for a 14.90 average long position before rallying to my revised 15.10 T/P level and I am now flat. This morning Silver is trading at 14.70. We have support from 13.90/14.30 where I will be a buyer with a 13.55 stop.
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