Equity Markets gained on speculation the U.S. and China could be moving closer to a trade deal and after Europe’s Central Bankers restarted stimulus. U.S. equity gauges advanced after Bloomberg reported that Trump administration officials have discussed offering a limited trade agreement to China that would delay and even roll back some tariffs in exchange for Chinese commitments on intellectual property and agricultural purchases. That came after the European Central Bank cut its main rate to minus 0.5% and said it would buy 20 billion euros ($22 billion) of bonds a month. The Euro gained and Bonds were mixed. The steps by China and the U.S. to ease tensions ahead of face-to-face talks in Washington in the coming weeks are supporting sentiment as investors await monetary decisions from more of the world’s major central banks. The ECB stimulus will run until shortly before the next rate increase, and President Mario Draghi painted a gloomy picture of the region’s economy at a press conference after the decision.
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For anyone following my Platinum Service it made 65 points yesterday and is now ahead by 575 points for September, having made 2387 points in August, 1153 points in July, 1346 points in June,1722 points in May, 955 points in April and 1027 points in March. 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 fact that the Central Banks are continuing to add stimulus is giving equity markets a little confidence here. On trade, I don’t think we want to get our hopes up just yet, but it is an early sign of some progress. Meanwhile the Federal Reserve is due to meet next week. Yesterday a measure of underlying U.S. inflation accelerating by more than forecast in August, complicating the central bank’s decision on whether to ease policy further.
The S&P 500 Index climbed 0.3% to close at 3010.
The Dow Jones closed flat at 27,182
The Stoxx Europe 600 Index rose 0.2%.
The Nikkei-225 Stock Average rose 1.05% overnight to close at 21,988 for its ninth straight gain, the best streak in a year
Currencies
Here is a summary of the main changes in F.X. Markets:
The Bloomberg Dollar Spot Index slipped 0.2%.
The Euro rose 0.3% to close at $1.1044, having earlier hit a low of $1.0933. This move higher was a significant Upside Key Day Reversal for the Euro.
The British Pound rose 0.2% to $1.2344.
The Japanese Yen fell 0.1% to 107.92 per dollar.
Bonds
The yield on 10-year Treasuries was little changed at 1.74%.
Germany’s 10-year yield rose one basis point to -0.55%.
Britain’s 10-year yield rose one basis point 0.64%.
Italy’s 10-year yield decreased 13 basis points to 0.84%.
Commodities
Gold jumped 0.8% to $1,508.97 an ounce.
Oil fluctuated before turning lower as the International Energy Agency warned OPEC it faces a “daunting” surplus of crude in 2020. This resulted in West Texas Intermediate crude falling 1.3% to $55.03 a barrel.
Silver was little changed at $18.12 per ounce.
This morning on the Economic Front we have Euro-Zone Trade Balance and Labour Costs at 10.00 am. This is followed at 1.30 pm by U.S. Retail Sales and Import Prices. Finally, at 3.00 pm we have the University of Michigan Consumer Sentiment Index and Business Inventories.
September S&P 500
Again the S&P just missed my buy level before rallying back to yesterday morning’s 3020 high print. Subsequently the S&P had a small sell-off into the close and I am still flat. The S&P is overbought and trading at the top of both its Daily Bollinger Band and Williams Index. I am watching the VIX closely to see if this market can bottom first, which would signal at lease a small correction in the US Indices. While the VIX did close 3% lower at 14.22 the McClellan Oscillator was weak closing slightly lower at +143 from Wednesday’s +175 print. This is another warning sign of an impending correction. Today I will lower my sell level slightly to 3028/3038 with a 3046 stop. I will also raise my buy level to 2986/2996 with a 2979 stop.
EUR/USD
My Euro plan worked well with the market trading lower to my 1.0940 buy level before rallying to my 1.0970 T/P level with a high so far of 1.1085. As I mentioned above yesterday was an Upside Key Day Reversal which may signal that we have seen a bottom in the Euro near the 1.0900 area for the foreseeable future. Today I will again look to buy the market on any dip lower to 1.1000/1.1040 with a 1.0965 stop.
December Dollar Index
Frustratingly the Dollar missed my 98.70 sell level with a 98.67 high print before selling off to trade at 97.80 this morning. As I have mentioned countless times the only thing that Trump has not achieved is a weaker Dollar and this is the main reason why I have not been long Dollars over the past couple of months. Today I will lower my sell level to 98.25/98.65 with a 98.95 stop.
September DAX
The DAX spiked to a high of 12472 on the ECB Rate Cut announcement which was just shy of my 12490 initial sell level and I am still flat. Today I will look to sell the DAX from 12480/12540 with a 12585 stop. Given the strength of the Euro I no longer want to be long the DAX at this time.
September FTSE
I am still flat the FTSE and today I will lower my sell level to 7395/7445 with a 7475 stop. Meanwhile I will leave my 7210/7250 buy level unchanged with the same 7165 stop.
Dow Rolling Contract
Just like the S&P above the Dow is severely overbought having rallied 2000 points in the last two weeks. Yesterday the Dow just fell short of my initial 27030 buy level before testing yesterday morning’s 27320 high and I am still flat. I am not going to chase the Dow lower and I will leave my 27395/27515 sell range unchanged with the same 27605 stop. However, I will lower my buy level to 26830/26980 with a 26750 stop.
September NASDAQ
While the other Indices rose yesterday the NASDAQ closed lower. I am still flat and today I will leave my 7800/7850 buy level unchanged with the same 7765 tight stop.
December BUND
The Bund registered and incredible Downside Key Day Reversal yesterday. Initially the Bund spiked higher to 175.59 which enabled me to go short at 175.40 before the market fell over 200 points to my 173.25 buy level this morning. Unfortunately I covered this initial short position at 175.05 before the market got slammed. I will now lower my T/P level on this long Bund position to 173.50 with a 172.95 stop. If any of the above levels are filled I will be back with a new update for my Platinum Members. A word of caution for anyone long the U.S. Bond Market. The 10-Year Treasury Yield shows the 9-month RSI Line as the most oversold condition below 30 in the last decade which suggests that the decline in Treasury Yields may have been overdone to the downside. This condition is on top of the Daily Sentiment Index which registered as serious of 90%+ readings over the past few weeks. Remember we have over $17 Trillion worth of Bonds with a negative Yield. This is the greatest bubble any living investor has ever witnessed, dwarfing in its capital misallocation both the Tech Bubble of the late 1990s and the Mortgage Bubble of the mid-2000s.
Gold Rolling Contract
I am still flat Gold. Even though Gold is opening higher this morning I am reluctant to chase this market higher and I will leave my 1475/1485 buy level unchanged with the same 1467 stop.
Silver Rolling Contract
Late yesterday Silver traded lower to my 18.10 buy level. I am still long with a now higher 17.65 stop on this position. I will lower my T/P level to 18.25 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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