U.S. Equity Markets tumbled the most in 12 weeks as the torrid surge in Equities came to a screeching halt amid economic jitters. Treasuries surged with the US Dollar. The S&P 500 sank almost 6%, approaching the 7% threshold that would trigger an exchange-mandated trading pause. Only one company in the index — supermarket operator Kroger Co. — finished higher. Losses in the Dow Jones Industrial Average were even deeper, with the blue-chip gauge plunging as much as 7.1%. Airlines, cruise and travel shares that soared in recent weeks bore the brunt of the selling. The KBW Bank Index of financial heavyweights slid 9%, and energy producers joined a rout in oil. While much of the equity selling owed to the frantic pace of the recent rally, sentiment did sour as signs mounted that a possible second wave of the pandemic could be taking hold in some states. U.S. jobless claims remained high, underscoring the longer-term challenges caused by the pandemic. The report came out a day after the Federal Reserve provided a dour economic outlook. Treasury Secretary Steven Mnuchin said the U.S. should not shut down the economy again even if there is another surge in Coronavirus cases. As restrictions are lifted across the country, signs of a second wave of cases have been raising alarms. More than 2 million people in the U.S. have been infected so far. The localised surges have raised concerns among experts even as the Nation’s overall case count early this week rose just under 1%, the smallest increase since March.
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 585 points yesterday and is now ahead by 264 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 sank 5.9%, closing at price of 3002.
The Dow Jones Industrial Average fell 1861 points for a 6.9% decline, closing at 25,128.
The NASDAQ 100 closed 5% lower at 9588.
The Stoxx Europe 600 Index slumped 4.1%.
The MSCI Asia Pacific Index fell 2.1%.
This morning the Nikkei closed 0.75% lower at 22,305.
Currencies
Here is a summary of the main Changes in F.X Markets:
The Bloomberg Dollar Spot Index surged 1.2%.
The Euro decreased 0.7% to $1.1293.
The Japanese Yen appreciated 0.2% to 106.88 per dollar.
Bonds
The yield on 10-year Treasuries decreased six basis points to 0.67%.
Germany’s 10-year yield dipped eight basis points to -0.41%.
Britain’s 10-year yield sank seven basis points to 0.198%.
Commodities
The Bloomberg Commodity Index fell 1.4%.
West Texas Intermediate crude decreased 8.7% to $36.17 a barrel.
This morning on the Economic Front we already had the release of UK April Monthly GDP which came in worse than expected at -20.4%. At 10.00 am we have Euro-Zone Industrial Production and this is followed at 1.30 pm by US Import/Export Price Index. At 3.00 pm we have the University of Michigan Consumer Sentiment. At the same time we have a speech from Fed Member Barkin.
June S&P 500
The S&P has its biggest one-day fall since March 16 with the market falling an incredible 225 Handles from the high made post the FOMC Statement at 7.15 pm last Wednesday. The sell-off saw the 9, 20 and 200 Day Moving Averages broken, in what turned out to be one of the most brutal trading sessions for bulls in many years (in points terms). I make a lot of my money trading ‘’Gaps’’ in the S&P. Yesterday I was totally wrong in my view that at least some of Wednesday’s closing 3190 price would be filled. To my cost it was not as the afternoon high at 3119 has left a huge ‘’Gap’’ which as we know will be filled at some time over the coming weeks. After the S&P traded the whole of my buy range for a 3105 average long position I was stopped out of this trade at 3079 and I am still flat. The 200 Day MA is at 3013 but even this support could not prevent the market from breaking and closing near the low of the day at 3002. This morning the S&P has rallied to a rebound high at 3050. Given the expected margin calls this afternoon when the US Markets open there will be more forced selling. If you owned one Large S&P Contract for June you would have lost a massive $50,000 on this position if you closed at the low. Yesterday’s move lower has left a rare ‘’Island Reversal’’ in both the Dow and S&P. Technically this is bearish. However on the other hand it is so difficult to be short given the level of Fed support. The S&P has resistance from 3060/3090 where I will be a small seller with a wider 3115 stop. The S&P has strong support from three weeks ago at 2910/2930 where I will be an aggressive buyer with a 2895 stop. If I am taken short I will have a T/P level at 3025. If I am taken long I will have a T/P level at 2948.
EUR/USD
The Euro was my only executed call that worked yesterday. After the market traded higher to my 1.1395 I covered this position at my revised 1.1365 T/P level and I am now flat. Today I will be a small seller from 1.1360/1.1420 with a 1.1455 stop. I will now lower my buy level to 1.1160/1.1220 with a lower 1.1105 stop.
September Dollar Index
I have now rolled to the September Contract as the June Contract just missed my 95.90 buy level yesterday and I have no position. The US Dollar is correcting its oversold condition. The Sept Contract is trading at 96.80 this morning. The Dollar has strong resistance from 97.50/98.10 where I will be a seller with a 98.55 stop. The 200 Day MA is at 98.34 which will offer good resistance. The Dollar has support from 95.80/96.20 where I will be a buyer with a 95.35 stop.
June DAX
As I was long and wrong on four of my Index calls yesterday and had enough exposure I did not buy the DAX and I am still flat. The DAX has now fallen a 1000 points since Monday’s rebound high at 12920. The DAX has support here at 11870 which is been tested as I go to press. I will be a small buyer from 11650/11820 with a 11580 tight stop. I still do not want to be short the DAX at this time.
June FTSE
My 6180 long position from yesterday morning did not work as I was stopped out after the US Markets opened at 6125 and I am still flat. The FTSE is oversold after falling over 10% this month. I will be a small buyer from 5895/5955 with a 5835 stop. The market has resistance from 6110/6190 where I will be a seller with a 6235 stop.
Dow Rolling Contract
An historic day with the Dow having one of its biggest points losses in history closing over 1850 points lower. Last Monday’s high at 27580 was an 82% retracement of the Feb/March sell-off. A similar pattern occurred in 1937 when the Dow also retraced 82% before testing its lows a few months later. In the rally of 1937 there were five upside gaps that were left unfilled on the day of the Gap. Until yesterday we have had an incredible 21 unfilled gaps on this 9000 point rally since March 23. Volatility surged as shown by the VIX which closed a huge 48% higher at 40.79. The McClellan Oscillator which closed at +333 on Monday, reversed on a dime to close at -94 last night. Yesterday I was quickly stopped out of my 26450 long position at 26300 before the market went into free fall, to hit a low at 25085. This morning we are trading higher at 25600. The Dow has resistance from 25750/26000 where I will be a small seller with a 26250 stop. The Dow has strong support from 24800/25000 where I will be an aggressive buyer with a 24650 stop.
June NASDAQ
My bad day was summed up by the NASDAQ, having bought the market at an average rate of 9780, before being stopped on this position near the low of the day at 9625. This is even more frustrating with the market trading higher at 9750 this morning. However, I have to respect yesterday’s price action. The NASDAQ has resistance from 9760/9860 where I will be a small seller with a 9950 stop.
September BUND
The BUND never came close to my buy level before rallying over 100 points to sit at 175.20 this morning. I will now raise my buy level to 173.90/174.50 with a 173.45 stop.
Gold Rolling Contract
No Change as I am still a buyer from 1698/1708 with the same 1689 stop.
Silver Rolling Contract
This morning Silver traded into my buy range and I am now long at 17.40. I will lower my T/P level on this position to 17.70 with a now higher 16.95 stop.
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