Equity Markets started the year on the front foot, building on strong gains for many asset classes in 2019 as investors cheered the latest policy move by China’s central bank to support its economy. Treasuries and the US Dollar strengthened. The S&P 500 jumped 0.8% to a record on the year’s first trading day, with mega-caps Apple, Alphabet and Nike notching all-time highs. It was among the best starts for U.S. stocks in the past decade, though first-day performance has virtually no bearing on how the year plays out. Tech shares led gains, with AMD surging 7% after an upgrade. Small caps underperformed, with the Russell 2000 sliding 0.1%. The Stoxx Europe 600 Index advanced as every sector finished in the green. Gauges in Hong Kong and Shanghai jumped more than 1% after the People’s Bank of China said it will increase the supply of cheap funding to banks, in line with market expectations. The Euro fell as data showed the region’s manufacturing downturn deepened in December. The US Dollar stayed higher as U.S. Jobless Claims dropped to a four-week low, while the Pound weakened following its best quarter in a decade. However, the risk-on sentiment that ushered in the new year took a hit overnight as tensions flared in the Middle East, buoying the yen and sending U.S. and European Equity Futures lower. Oil surged. Stocks in Asia reversed gains and Treasuries advanced as news broke that a U.S. airstrike in Baghdad killed a top Iranian commander. The risk-off move was given extra momentum when Iran’s Ayatollah Khamenei said “severe retaliation” awaits the commander’s killers. The developments ended the bullish mood that had pushed the S&P 500 to a record high last night.
To mark my 1975th 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 made 272 points yesterday on the first trading session of 2020, having made 818 points in December, 780 points in November, 1649 points in October, 1620 points in September, 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
Stocks had begun 2020 strongly as traders returned from holidays to news of policy support from China’s central bank to boost its economy. U.S. President Donald Trump earlier this week said he expects to sign the first phase of a trade deal with China on Jan. 15, though Beijing has yet to confirm the date. Investors on Friday will get the latest read on the health of the world’s biggest economy, with U.S. ISM Manufacturing data due.
Futures on the S&P 500 fell 0.8% as of 7:01 a.m. in London. The underlying gauge rose 0.8% to close at a new all-time high of 3258 yesterday.
The Dow Jones Industrial Average closed 330 points higher at yet another all-time high of 28,869.
The NASDAQ Composite Index surged 1.3% to close at a new all-time high of 9092 with its biggest jump in more than 12 weeks.
Australia’s S&P/ASX 200 Index rose 0.6%.
Germany’s DAX surged over 1% to close at 13385, the highest level in more than two weeks on its biggest rise in over four weeks.
Currencies
Here is a summary of the main Changes in F.X. Markets:
The Japanese Yen gained 0.4% to 108.11 per dollar.
The offshore Yuan fell 0.2% at 6.9707 per dollar.
The Euro bought $1.1169.
The Pound dropped 0.6% to $1.3125.
Bonds
The yield on 10-year Treasuries fell four basis points to 1.84%.
Australia’s 10-year yield declined nine basis points to 1.25%.
Commodities
The U.S. airstrike lifted London’s Brent crude to as much as $69.16 a barrel, the highest since the attacks on Saudi Arabian oil infrastructure in September that knocked out as much as 5% of global supply. New York’s West Texas Intermediate crude touched $63.84 a barrel, the highest intra-day level since May. Gold prices also rose as investors sought haven in bullion.
West Texas Intermediate crude oil rose 2.7% to $62.85 a barrel.
Gold rose 0.8% to $1,541 an ounce.
This morning on the Economic Front we have German Unemployment at 8.55 am and this is followed at 9.00 am by Euro-Zone Money Supply. At 9.30 am we have UK Mortgage Approvals, Consumer Credit, Net Lending to Individuals and Markit Construction PMI. Next, we have German CPI at 1.00 pm and this is followed by U.S ISM New York Business Conditions and ISM Manufacturing PMI at 2.45 pm and 3.00 pm respectively. Finally, at 7.00 pm we have the FOMC Minutes.
March S&P 500
At 6.00 pm on Tuesday the S&P was trading sub 3215 before rallying to close at a new all-time high last night at 3258. However, the military strike on Iran sees the S&P get hit hard in the last few hours to sit at 3226 as I go to press. This strike could be a game changer that finally sees the US Indices have more than just a decent correction like the one we had in January 2018 when sentiment reached dangerous levels. This time sentiment is at even more dangerous levels as shown by the ‘Fear & Greed’’ Index which reached a new all-time closing high of ‘’Extreme Greed’’ with a closing print of 97. My S&P plan worked well last night with the market hitting my 3255 T/P level before selling off to my too tight 3245 T/P level and I am now flat. This morning the S&P is trading at 3226 which is 32 Handles below yesterday’s Chicago close of 3258 and the big question is how much of this Gap will closed when the U.S Markets open at 2.30 pm. As mentioned in yesterday’s commentary the S&P has strong support from 3200/3215 and I will be a small buyer in this area with a 3190 stop. If the S&P decides to close last night’s ‘’Open Gap’’ I will be a seller from 3252/3267 with a 3275 tight stop. If I am taken short and subsequently stopped out of this position I will be an aggressive seller from 3300/3340 with a 3360. The 3300/3350 has been my final objective in this market which I first mentioned in November 2018.
EUR/USD
The Euro traded lower to my 1.1170 buy level. I am still long and I will add to this position on any further move lower to 1.1110 with a lower 1.1080 stop. I will now lower my T/P level on this position to 1.1185 and if any of the above levels are hit I will be back with a new update for my Platinum Members.
March Dollar Index
No Change as I am still a seller from 96.80/97.25 with the same 97.55 stop.
March DAX
My DAX plan worked well with the market trading higher to my 13400 sell level. As I was already short both the S&P and Dow I covered this position too early at 13383 and I am now flat. This morning the DAX is trading at 13250 and today I will leave my 13120/13180 buy level unchanged with the same 13075 tight stop.
March FTSE
Unfortunately the FTSE just missed my 7600 sell level and I am still flat. Today I will lower my sell level to 7560/7620 with a lower 7655 stop.
Dow Rolling Contract
My Dow plan worked well with the market trading the whole of my sell range for a 28840 average short position before selling off to my revised 28725 T/P level and I am now flat. Despite all three US Indices closing at new all-time highs the market is weak internally as shown by the McClellan Oscillator which closed barely in positive territory with a reading of +64. Today I will raise my buy level slightly to 28300/28450 with a higher 28210 stop. Given the extreme sentiment levels I will continue to be a seller of rallies and today my sell range will be from 28810/28960 with a 29050 stop.
March NASDAQ
My NASDAQ plan worked well with the market trading higher to my 8845 sell level before selling off to my 8805 T/P level shortly after the U.S Markets opened and I am still flat. The NASDAQ has strong resistance from 8870/8950 and I will be a seller in this area with a 9005 stop.
March BUND
Frustratingly the Bund just started to rally as I sent my Daily Commentary yesterday morning with the Bund regaining all of last week’s 150 point loss to sit at 171.80 as I go to press. Today I will now raise my buy level to 170.90/171.40 with a 170.55 tight stop.
Gold Rolling Contract
Safe haven buying of Gold continues as frustrating both Gold and Silver just missed my buy range yesterday as the markets surged. With Gold trading at 1544 this morning I am going to stay flat Gold until Monday as the market is now trading $100 higher than its December Low and I want to see the price action when the US Markets open this afternoon before making my next recommendation.
Silver Rolling Contract
I am still flat Silver and today I will raise my buy level to 17.70/18.10 with a higher 17.35 stop. If I am taken long I will have a T/P level at 18.35.
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