For the second consecutive session, U.S. Equity Markets reversed afternoon gains, before getting slammed in the last hour of trading. The NDX led the decline, closing lower by 1.34%. Early in the day, bond yields were the story that pushed markets higher. Bond yields continued to decline, providing more relief from the concerns that higher yields would choke off economic growth. And with yields backing off, investors bought into the dip. The Nasdaq Index officially entered a correction yesterday (10% below highs). This added to the “buy the dip” mentality, as investors returned to tech stocks. These dip-buyers helped propel broader markets higher yesterday afternoon. But by the end of the day, the Nasdaq was back in a correction. Economic data today was lackluster. Jobless Claims rose to the highest level since October, while the four-week moving average of claims is moving higher again. This could spark some concerns about the labour market. Existing Home Sales fell in December, though the decline was more down to a lack of supply than a drop off in demand. For 2021, Existing Home Sales came in at the highest level since 2005. Later in the day, markets began to sell off, before ending the day lower. In the afternoon, President Joe Biden took a hard stance on the conflict between the Ukraine and Russia. The impact here was two-fold. First, it heightened political tensions and raised uncertainty about the issue worsening. The second impact is that any sanctions on Russia could lead the country to choke off oil and gas supply to the rest of Europe. That could push energy prices higher, worsening the inflation outlook. As a result, investors sold on the uncertainty, bringing markets lower for the day. Within the S&P 500, 10 of the 11 sectors finished lower. European Markets closed higher. European Central Bank President Christine Lagarde said it does not need to tighten policy as quickly as the Federal Reserve, as inflation in the Euro-Zone is lower than in the U.S. German PPI figures for December rose to the highest on record, going back to 1949, driven by increasing energy prices. British Prime Minister Boris Johnson said most COVID-19 restrictions would be lifted going forward, as the country transitions toward living with the virus. In Asia, Chinese lending institutions lowered borrowing costs, reducing the benchmark one-year loan prime rate from 3.8% to 3.7% and the five-year rate from 4.65% to 4.6%. Japanese exports for December were stronger than anticipated as shipments to the U.S., China, and the EU hit some of the strongest levels this year. The Bank of Korea’s producer price index (“PPI”) numbers for December eased compared with November as utility cost growth eased and manufacturing input prices contracted. Chinese Foreign Ministry spokesperson Zhao Lijian said the government was “strongly opposed” to Slovenia’s plans to upgrade relations with Taiwan, calling it a dangerous statement. Elsewhere, Oil fell 1.36% on an unexpected build in U.S. crude inventories, while Gold closed 0.27% lower on Dollar strength.
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For anyone following my Platinum Service it made 370 points yesterday and is now ahead by 1110 points for January, after ending December with a loss of 932 points, 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, and 2077 points last January. 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 1.10% lower at a price of 4482.
The Dow Jones Industrial Average closed 383 points lower for a 0.89% loss at a price of 34,715.
The NASDAQ 100 closed 1.34% lower at a price of 14,846.
The Stoxx Europe 600 Index closed 0.4% higher.
Yesterday, the MSCI Asia Pacific Index rose 0.7%.
Yesterday, the Nikkei closed 1.11% higher at a price of 27,772.
Currencies
The Bloomberg Dollar Spot Index closed 0.7% higher.
The Euro closed 1% lower at $1.1310.
The British Pound closed 0.2% lower at 1.3598.
The Japanese Yen rose 0.2%, closing at $114.12.
Bonds
Germany’s 10-year yield closed one basis points lower at -0.08%.
Britain’s 10-year yield closed three basis points lower at 1.23%.
US 10 Year Treasury closed three basis points lower at 1.82%.
Commodities
West Texas Intermediate crude closed 1.3% lower at $82.88 a barrel.
Gold closed 0.27% lower at $1,836.10 an ounce.
This morning on the Economic Front we have U.K. Retail Sales at 7.00 am, followed by German Consumer Confidence Index at 10.00 am. This is followed by a speech from ECB President Lagarde at 12.30 pm. Finally, we have Euro-Zone Consumer Confidence at 3.00 pm.
Cash S&P 500
The S&P again traded in a wide range as volatility ramped resulting in the Volatility Index closing higher by 7% at a price of 25. This, initial move higher saw my 4545 T/P level filled on Wednesday’s late 4530 long position. The S&P made an afternoon high at 4602 before selling off 150 Handles to sit at a price of 4453 as I go to press. Below the surface we are seeing a crash in most stocks with the NDX lower by 11% while yesterday’s 2% fall in the Small Cap Russell 2000 sees this Index down by a whopping 18% since its November high. The S&P will probably test its 200 Day MA which comes in at a price of 4427. The increased chop has led to a scenario where most Funds are getting hammered. The S&P is on course to provide three Weekly Red Candles which in itself is extremely rare, meaning a sizeable bounce is due. Meanwhile, ECB President was on the wires saying she will not raise Interest Rates or even end QE. The last week in January tends to be bullish, meaning in my opinion we will see a decent bounce. I bought the S&P again in small size at a price of 4505. I will add to this trade at 4423 with no stop for now. Last night the McClellan Oscillator closed with a reading of -223 which is severely oversold and another reason not to be short the markets at this time. I will have a T/P level on this position at 4525 and if any of the above levels are hit I will be back with a new update for my Platinum Members.
EUR/USD
No Change. I am still a buyer from 1.1235/1.1285 with the same 1.1195 stop. If I am taken long I will have a T/P level at 1.1325.
March Dollar Index
I am still flat. Today, I will again be a buyer on any dip lower to 94.80/95.30 with the same 94.35 stop. If I am taken long I will have a T/P level at 95.60.
Cash DAX
My DAX plan worked well with the market trading lower to my 15640 buy level after the New York close before quickly rallying to my 15690 T/P level and I am now flat This morning, the DAX is trading lower at 15670. We have strong support from 15480/15540 where I will again be a buyer with a 15395 wider stop. I still do not want to be short the DAX at this time.
Cash FTSE
The FTSE rallied to my 7625 sell level before selling off to my 7595 T/P level and I am now flat. The FTSE traded heavy for most of yesterday’s session before accelerating lower into the close as thankfully we had no buy level. This morning the FTSE is trading at a price of 7510. The FTSE has resistance from 7550/7610 where I will be a seller with a 7665 lower stop.
Dow Rolling Contract
I was very lucky yesterday as the Dow rallied to my 35180 T/P level (with a rebound high of 35491) thus enabling me to exit Wednesday’s late 35040 long position. I emailed my Platinum Members to stay flat the Dow for the rest of the day. This for a change was an inspired decision as the Dow subsequently fell over 900 points to hit a low so far at 34521. The main reason I am staying long the S&P with no stop is because I have no Dow exposure. Although the Dow closed below its 200 Day MA, I see strong support from 34190/34400 where I will be an aggressive buyer with a wider 33995 stop. If I am taken long I will have a T/P level at 34640.
Cash NASDAQ 100
The NDX had a nice rebound off its 200 Day MA (15000) hitting a high of 15350 before selling off into the close and again overnight, falling a total of 700 points. I bought the market again at a price of 14900. We have strong support at 14700 which must hold this evening or the Technology Bull Market could be over. I am still long with a 14675 closing stop. I will now lower my T/P level to 14960 and if any of the above levels are hit I will be back with a new update for my Platinum Members.
March BUND
No Change as the Bund rallied as expected and I am still flat. I will now raise my buy level to 168.70/169.30 with a tight 168.25 stop.
Gold Rolling Contract
Gold traded in a narrow range yesterday and I am still flat. Today, I will leave my 1808/1823 buy level unchanged with the same 1797 stop.
Silver Rolling Contract
No Change. I will not chase Silver higher leaving my 23.00/23.60 unchanged with the same 22.55 tight stop.
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