After opening higher, U.S. Equity Markets finished the day lower having got hit hard in a session which saw plenty of two-way price action. The NASDAQ 100 led the declines, reversing all of Wednesday’s gains, closing lower by 2.61%. Wednesday’s Federal Reserve meeting was still the focus… the central bank said it plans to end its bond-purchase taper by the end of the first quarter and forecast three interest rate hikes next year. Markets spiked after that news and ramped into the close, finishing just below a new record high. Yesterday’s selling was likely due to investors locking in profits. In terms of economic data, Weekly Jobless Claims rose off their 52-year low from the week prior and came in above estimates. And December IHS Markit Flash US Manufacturing PMI fell to a 12-month low. This could raise concerns about the economic outlook, encouraging investors looking to lock in Wednesday’s gains. Other economic data was positive… Housing Starts and Building Permits both rose above estimates in November. Within the S&P 500, eight of the 11 sectors finished higher. European Markets closed higher. Markit Euro-Zone preliminary manufacturing Purchasing Managers’ Index (“PMI”) figures for December beat expectations, expanding for the 18th straight month. British health minister Gillian Keegan said the country is not introducing any more COVID-19 restrictions before the Christmas holiday. That helped ease recent concerns over COVID lockdowns. The European Central Bank (“ECB”) was the big story of the day in Europe. The ECB left interest rates unchanged, but said regional growth is strong enough to warrant a gradual reduction in stimulus. This is the most hawkish (inclined to raise rates) stance it has struck since the coronavirus pandemic began. In Asia, China’s government increased the quota of foreign securities that domestic investors can purchase as it attempts to further weaken the Yuan. The Japanese Ministry of Finance’s export figures for November were weaker than expected but rose versus October ‒ the total Dollar volume hit the highest level since March. Markit Japan’s preliminary composite PMI numbers for December remained in expansion territory for the third straight month, driven by steady manufacturing activity. Similarly, Markit Australia’s preliminary composite PMI numbers for December signalled economic expansion for the third consecutive month on steady new order growth. Elsewhere Oil rose 1.61% as a larger than expected drawdown in U.S. crude inventories signalled strong demand, while Gold surged 1.95% on Dollar weakness.
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For anyone following my Platinum Service it made 285 points yesterday, and is now down by 376 points for December, having made 2466 points in November, 1028 points in October, 2866 points in September, 1543 points in August, and 996 points in July. The Platinum Service made 1366 points in June, 1439 points in May, 1244 points in April, having ended March with an impressive gain of 3769 points, 3286 points in February, 2077 points in January, and 2273 points last 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 closed 0.87% lower at a price of 4668.
The Dow Jones Industrial Average closed 29 points lower for a 0.06% loss at a price of 35,897.
The NASDAQ 100 closed 2.61% lower at a price of 15,863.
The Stoxx Europe 600 Index closed 0.5% higher.
This morning, the MSCI Asia Pacific Index fell 0.6%.
This morning, the Nikkei closed 1.79% lower at a price of 28,545.
Currencies
The Bloomberg Dollar Spot Index closed 0.3% lower.
The Euro closed 0.3% higher at $1.1331.
The British Pound closed 0.5% higher at 1.3325.
The Japanese Yen rose 0.4%, closing at $113.55.
Bonds
Germany’s 10-year yield closed one basis points higher at -0.35%.
Britain’s 10-year yield closed two basis points higher at 0.75%.
US 10 Year Treasury closed three basis points lower at 1.42%.
Commodities
West Texas Intermediate crude closed 1.61% higher at $72.88 a barrel.
Gold closed 1.95% higher at $1,807.10 an ounce.
This morning on the Economic Front we already had the release of German PPI which rose 0.8% and U.K. Retail Sales which rose 1.4% versus +0.8% last month. At 9.00 am we have German IFO Survey, followed at 10.00 am by Euro-Zone CPI and Construction Output. We have no data due from the U.S today but at 6.00 pm we have a speech from Fed Member Waller.
December S&P 500
My S&P plan worked very well yesterday as the market made a new contract high at 4752, thus putting me short at 4751 before we sold off to trade the whole of my buy range with a 4642 low print, which had me long at an average rate of 4659. As I want to try and claw back all the points lost so far this month I covered my short position at 4743 and my long position at 4663 as I was also long the Dow at the same time. Yesterday’s new high in the S&P signals a Double Top. It is very difficult to be short as Powell said in his press conference that if the Stock Markets starts to wobble they will stop the tapering process and do more QE. Powell should not have been re-elected in my opinion. He made a mistake with the word ‘’Transitory’’ he made a mistake by printing too much for way too long in an inflationary environment and he now making a serious mistake by beholding to markets vis vis what the needed policy response is. With most stocks trading well of their all-time highs, we see just six stocks with a combined $11 trillion in market cap holding the whole market up. As I said earlier in the week Berkshire Hathaway which is the 9th largest Company has a $170bn position in Apple Shares which is insane and has the potential to generate mega cross risk. Today, I will be a small seller from 4710/4725 with a 4741 stop. The S&P has support from 4620/4637 where I will be a buyer with a 4599 stop.
EUR/USD
I am still flat the Euro. The Euro rallied on the ECB Statement with a high of 1.1360 before falling 40 points into the New York close. I will now raise my buy level to 1.1210/1.1270 with a tight 1.1169 stop. The Euro has resistance from 1.1405/1.1455 where I will be a small seller with a higher 1.1501 stop.
March Dollar Index
I am still flat the Dollar as the market never came close to yesterday’s sell range. This morning the Dollar is trading at 96.05. We have resistance from 96.35/96.85 and I will lower my sell level to this area with a 97.15 tight stop.
December DAX
The DAX reversed its morning gains by trading into yesterday’s buy range late in the session. I did not buy the market myself as I did not want to have a position in this market overnight. If you did buy the DAX the market is trading 50 points higher this morning and I would take your gain. The DAX has support from 15410/15480 where I will be a small buyer with a 15345 stop. I still do not want to be short the DAX at this time. If I am taken long I will have a T/P level at 15530.
December FTSE
Despite the surprise rate hike of 0.15% yesterday, bringing the Base Rate to 0.25%, the FTSE held in, never coming close to my buy range and I am still flat. I will now raise my buy level to 7160/7210 with a 7112 stop. If I am taken long I will have a T/P level at 7250.
Dow Rolling Contract
It took a while but a late sell-off saw the Dow sell off to my 35870 buy level with a low of 35770, before thankfully rallying to my 36010 T/P level and I am now flat. It was nice to make some points in the Dow after a difficult couple of weeks trying to trade this beast. The Dow has strong support from 35550/35730 where I will again be a buyer with a tight 35395 stop. I still do not want to be short the Dow at this time.
December NASDAQ
Incredible volatility in the NDX as the market reversed all of Wednesday’s impressive gains, falling by a hefty 2.61%. After the NDX hit my initial 16147 buy level we saw a small rally enabling me to cover this position at my revised 16172 T/P level and I am still flat. The NDX has strong support from 15540/15690 where I will be an aggressive buyer with a 15395 wider stop.
March BUND
No Change. I am still a seller from 174.80/175.30 with a 175.71 stop. I still do not want to be long the Bund at this time.
Gold Rolling Contract
Gold reversed earlier losses ending the day with an impressive 1.95% gain. Gold is now back above $1800 which is positive. I will now raise my buy level to 1777/1792 with a 1769 tight stop. If I am taken long I will have a T/P level at 1802.
Silver Rolling Contract
I am still flat. I will now raise my buy level to 21.60/22.20 with a 20.95 higher stop.
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