U.S. Equity Markets finished Thursday lower after a brutal sell-off led by the 3.37% fall in the NASDAQ 100. The VIX surged, closing higher by 10% at a price of 23.23. Markets ended much lower as investors reeled from the Federal Reserve’s 50-basis-point interest-rate increase on Wednesday (also accompanied by a hawkish statement that confirmed further rate hikes through 2023). Fed Chair Jerome Powell continued to reiterate that the labour market needs to see higher unemployment. This sentiment is driving Wall Street’s growing concern about an over-aggressive rate policy because the unemployment rate is viewed as a lagging economic indicator of Fed action, and employment remains strong today. Elsewhere, November Retail Sales came in much weaker than expected. Heading into next year, investors are paying close attention to margins as 2023 earnings come into focus. Within the S&P 500 Index , all 11 sectors finished lower as shown by the McClellan Oscillator which closed with a -112 print. European Markets got slammed. Euro-Zone markets ended the day lower following unsurprising rate-hike decisions from the European Central Bank (“ECB”) and Bank of England (“BOE”). The BOE hiked rates by 50 basis points to 3.50%, the highest since 2008. BOE Governor Andrew Bailey said that while inflation may have peaked, the upside risk to sticky high prices remains far greater than the alternative – and that additional rate hikes are likely based on current economic forecasts. The ECB also raised rates by the expected 50 basis points and guided for further significant increases. ECB President Christine Lagarde left little doubt in her statement, saying the central bank sees no other current course than to continue with 50-basis-point rate hikes. Elsewhere, the Swiss National Bank hiked rates by 50 basis points, and Norway’s central bank raised rates by 25 basis points. In Asia, Asian markets finished weaker, picking up on U.S. weakness following the Fed’s December rate hike and hawkish stance. New Zealand’s third-quarter Gross-Domestic-Product growth came in much hotter than anticipated, raising the pressure on the central bank to quell growth in its fight against inflation. Meanwhile, Australian jobs data also showed good economic activity as the unemployment rate remained at a 50-year low. The Central Committee of the Chinese Communist Party and the State Council announced plans to boost domestic demand as the primary growth driver for a country facing declining global demand and consumption. This news comes as the latest Industrial Production figures showed continued weakness due to COVID-19 lockdowns. Elsewhere, Oil fell 1.42% while after a volatile trading session, Gold ended the day with a loss of 1.76%.
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For anyone following my Platinum Service it lost 533 points yesterday and is now ahead by 1365 points for December after closing November with a gain of 4789 points, while finishing October with a record gain of 9619 points, making 6660 points in September, after closing August with a gain of 2228 points, having made 2660 points in July, following a gain of 3371 points in June. The Service made 3651 points in May, after making 762 points in April, following a gain of 5883 points in March. The Platinum Service made an impressive 5324 points in February, after ending January with a gain of 3878 points, more than making up for December’s 932 points loss. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1600 points. I have a YouTube Channel which contains recent interviews I have given This can be viewed by clicking HERE Please subscribe to this for new interview notification
Equities
The S&P 500 closed 2.49% lower at a price of 3895
The Dow Jones Industrial Average closed 764 points lower for a 2.25% loss at a price of 33,202.
The NASDAQ 100 closed 3.37% lower at a price of 11,345.
The Stoxx Europe 600 Index closed 2.85% lower.
This morning, the MSCI Asia Pacific fell 1.1%.
This morning, the Nikkei closed 1.87% lower at a price of 27,527.
Currencies
The Bloomberg Dollar Spot Index closed 0.7% higher.
The Euro closed 0.5% lower at $1.0627.
The British Pound closed 2.1% lower at 1.2174.
The Japanese Yen rose 1.4% closing at $137.34.
Bonds
Germany’s 10-year yield closed 11 basis points higher at 2.09%.
Britain’s 10-year yield closed 6 basis points lower at 3.25%.
U.S.10 Year Treasury closed 3 basis points lower at 3.46%.
Commodities
West Texas Intermediate crude closed 1.42% lower at $76.07 a barrel.
Gold closed 1.76% lower at $1778.10 an ounce.
This morning on the Economic Front we already had the release of U.K Retail Sales which fell 0.4% versus +0.3% expected. Next, we have German, Euro-Zone and U.K. Global Manufacturing PMI at 8.30 am, 9.00 am and 9.30 am respectively. This is followed by Euro-Zone CPI and Trade Balance at 10.00 am. Finally, we have U.S. Global Manufacturing PMI at 2.45 pm.
Cash S&P 500
I should have paid more respect to the S&P finding major resistance at its 200 Day Moving Average following the benign CPI Report. I have certainly paid for that mistake yesterday, believing that the Santa rally would win the battle into month-end. The S&P got slammed after a series of bad news across-the -board. Everything was bad. Philly Fed, Manufacturing, Retail Sales, Industrial Production and of course more rate hikes by the ECB and BOE as these regions are already in recession, U.K. in particular. The lag effects will put the U.S. in a recession which is now enhanced by yesterday’s data. These Central Bankers have no idea. They printed until inflation is blue in the face and are now raising rates into recessions as inflation is already coming down hard as we have seen already this week. Yesterday’s aggressive move lower saw the whole of my buy range triggered for a 3957 average long position before stopping me out of this position on the close at 3898. This morning the S&P is trading in my aggressive 3860/3880 target level. I have now bought the S&P here at 3865. I will add to this position at 3847. I will have no stop. My T/P level for now will be 3925. If any of the above levels are hit I will be back with a new update for my Platinum Members.
EUR/USD
My Euro plan worked well as the market rallied to my 1.0730 sell level before falling 100 points, enabling me to cover this position at my revised 1.0690 T/P level and I am still flat. Today, I will again be a seller on any further rally to 1.0700/1.0770 with a lower 1.0835 ‘’Closing Stop’’. I will continue to be an aggressive buyer from 1.0370/1.0440 with the same 1.0295 ‘’Closing Stop’’.
March Dollar Index
A volatile session for the Dollar. Initially the Dollar rallied before the key Day Reversals in USD/JPY and USD/GBP saw the Dollar rally over 100 points to my 104.25 T/P level on my latest 103.70 long position and I am now flat. The Dollar is due a rally given how oversold the market is trading. We have short-term support from 103.10/103.80 where I will again be a buyer with a 102.45 ‘’Closing Stop’’.
Cash DAX
My DAX plan did not work well yesterday as the market closed nearly 3% lower. This sell-off saw the whole of my buy range filled for a 14170 average long position. At 8.00 pm I emailed my Platinum Members to exit any long position at 14000 and I am still flat. Today, I will be a small buyer on any further dip lower to 13780/13880 with a 13695 ‘’Closing Stop’’. If I am taken long I will have a T/P level at 13970.
Cash FTSE
After the FTSE traded lower to my initial 7410 buy level we had a small rally to my revised 7442 T/P level and I am now flat. There is no doubt that the U.K. is now in recession which will be enhanced by the decision of the Bank of England to raise rates to their highest level since 2008. The level of debt is so great that the system will not be able to take anymore hikes without causing a possible depression. Incredibly, the FTSE is ignoring all the bad news and a market that ignores bad news has to be respected. Today, I will be a buyer from 7300/7360 with a 7235 wider ‘’Closing Stop’’.
Dow Rolling Contract
My Dow plan did not work well yesterday as the market dropped over 900 points from where I marked prices 24 hours ago. The selling started right after I posted and was relentless all day before a late rally into the close. The Dow traded the whole of my buy range for a now 33615 average long position. I emailed my Platinum Members to hold on to this position, ignoring my ‘’Closing Stop’’ from yesterday. I am conscious that the NYSE lost its 200 MA in yesterday’s sell-off but I do note three massive 3 MA confluence support below. This is why I have held on to my Dow position. I will have a 33295 ‘’Closing Stop’’ this evening and I will use any rally to the 33500-resistance area to reduce my position. I will update my Platinum Members if anything changes during today’s session.
Cash NASDAQ 100
The NDX traded the whole of my buy range for a now 11565 average long position. The NDX is severely oversold. The NDX has six open gaps above. I do not know of any structural sell case with so many open gaps above. We certainly did not have this scenario in either 2000 or 2008. In my opinion these gaps need to be filled before the big sell case ensues. There is no doubt that Tech is trading as if no one wants to own any stocks in this sector. Just look at $AAPL which fell 5% yesterday and is now testing the June and October lows. My view is they will hold and is why I am still long the NDX. I will leave my 11255 ‘’Closing Stop’’ unchanged while lowering my T/P level to 11700.
March BUND
The Bund got thumped yesterday, with the market trading over 200 points lower from where I marked prices 24-hours ago. This move lower saw the whole of my buy level triggered, for a now 139.00 average long position. I will leave my 137.95 ‘’Closing Stop’’ unchanged while lowering my exit level on this position to 138.70. We have had a good run in the Bund by buying dips over the past few months but the price action following the ECB rate hike feels differently.
Gold Rolling Contract
In contrast to my American Indexes, my Gold plan worked well as after the market hit my 1776 buy level we rallied to my 1786 T/P level and I am now flat. Gold has further support from 1752/1767 where I will again be a buyer with a lower 1739 ‘’Closing Stop’’.
Silver Rolling Contract
No Change. I am still long from early yesterday morning at 23.20. I will add to this position at 22.40 with no stop. I will now lower my T/P level to 23.60 on this position. If any of the above levels are hit I will be back with a new update for my Platinum Members.
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