U.S Indices finally reversed course after a relentless five-month rally as speculated at length in yesterday’s Daily Commentary. The NASDAQ 100 led the decline closing 5% lower while the VIX which has signalled trouble all-week, closed 20% higher Concerns over a stronger U.S Dollar weighed on markets. Policymakers at the European Central Bank and Bank of Japan have taken notice of recent dollar weakness and have said they need to do more to weaken their own currencies. Dollar strength would make U.S. exports less attractive, as it would cost more in relation to other currencies. This prompted some profit taking in markets, especially after the S&P 500 and Nasdaq hit all-time highs on Wednesday. Economic data was stronger than expected, with both Initial Jobless Claims and Continuing Claims bearing estimates. This indicates that the job market continues to recover. Vaccine data was also positive, with Pfizer (PFE) saying that it could have late-stage trial data by the end of October. This took some of the wind out of tech’s sails, as it means economies could fully reopen. And with money coming out of tech, it rotated into value and cyclical names. European Markets initially rose before following the U.S Markets lower with a late sell-off. German Chancellor Angela Merkel’s political allies have endorsed plans for deficit spending in next year’s budget to further support the economy. German Bundesbank President Jens Weidmann said the European Central Bank should withdraw emergency stimulus once the Coronavirus pandemic is over. Euro-Zone Retail Sales unexpectedly fell in July, highlighting the regional economic recovery may take longer than expected. France unveiled its $118 billion stimulus plan, with a focus on tax cuts, subsidies, and public spending to supporting job growth. Elsewhere, Oil fell 1% on concerns that the rebound in fuel demand was stalling while Bitcoin was the big mover, falling 15% over the past 36 hours.
To mark my 2125th 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 lost 175 points yesterday and is now down 356 points for September, having made 2383 points in August, 3128 points in July, 2580 points in June, 2456 points in May, 4773 points in April, an incredible 9264 points in March, 2223 points in February and 2142 points in 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 3.55% lower at a price of 3455.
The Dow Jones Industrial Average fell 892 points for a 2.78% decline to close at 28,292.
The NASDAQ 100 fell 5.25%, closing at a price of 11,771.
The Stoxx Europe 600 Index fell 1.5%.
The MSCI Asia Pacific Index fell 1.1%.
This morning the Nikkei closed 1.1% lower at 23,205.
Currencies
The Bloomberg Dollar Spot Index again closed 0.1% higher.
The Euro closed flat $1.1830.
The British Pound closed 0.2% lower at $1.3271.
The Japanese Yen closed unchanged at 106.22 per dollar.
Bonds
The yield on 10-year Treasuries closed two basis points lower at 0.64%.
Germany’s 10-year yield closed unchanged at -0.48%.
Britain’s 10-year yield closed one basis point lower at 0.23%.
Commodities
The Bloomberg Commodity Index fell 0.2%.
West Texas Intermediate closed 1% lower at $41.35 a barrel.
Gold closed 0.3% lower at $1,930.10 an ounce.
This morning on the Economic Front we already had the release of German Factory Orders which rose 2.8% versus +5% expected. At 9.30 am we have UK Markit Construction PMI and this is followed by the U.S Non-Farm Payrolls, Average Earnings and the Unemployment Rate which is expected to rise to 17.3% from last month’s 16.5% print. Finally, we have a speech from the ECB’s Lane at 4.00 pm.
September S&P 500
Trading can be the most frustrating jobs in the world at times as you can have the right view but be squeezed out of a position due to market forces driving the price in the opposite direction. I have been bearish the S&P for the last two weeks before getting stopped out on a few occasions. Late Wednesday I was stopped out of my latest short-position at 3581, while yesterday the S&P missed my 3587 sell level with a 3585.50 high print before falling 160 Handles and is currently trading at 3440 as I go to press. The S&P has strong support at the old February high of 3393. This is key for the market as a break and close below here will be the first signal of a top in the market. Today, I will be a small buyer from 3395/3415 with a 3382 stop. The break and close below 3500 is short-term bearish and I will now be a seller from 3482/3500 with a tight 3515 stop.
EUR/USD
I am still flat and ahead of the NFP data I will now raise my sell level to 1.1905/1.1955 with a 1.1995 stop. Meanwhile, I will leave my 1.1720/1.1760 buy level unchanged with the same 1.1675 stop.
September Dollar Index
No Change as I am still a small buyer from 92.00/92.50 with the same 91.45 stop.
September DAX
I much prefer to have a closing stop rather than an intra-day stop. Just like the S&P above I had the correct view by selling the DAX but unfortunately just as I posted yesterday morning, I was stopped out of my 13280 position at 12385. Subsequently the DAX made a new rebound high off the March low at 13458, 12 points below my second sell level at 13470. To add to my frustration the DAX promptly sold off over 500 points and I am still flat. The DAX has support from 12780/12880 where I will be a small buyer with a 12705 stop.
September FTSE
My FTSE plan did not work well with the market trading the whole of my buy range for a 5875 long position before stopping me out near the New York close at 5795 and I am still flat. Yet again the FTSE has been the leader in signalling lower prices, just like we saw at the previous top last November. Given how oversold the FTSE is trading I am reluctant to go short here. We have short-term support from 5680/5740 where I will be a buyer with a 5615 stop.
Dow Rolling Contract
Shortly after the US Cash Market opened the Dow made a new recovery high at 29175 before reversing and in the process posted a huge Downside Key Day Reversal with a fall of 1100 points. Thankfully we had no buy level as the Dow posted its biggest daily loss since early June. The Dow has strong support from 27850/28050 where I will be a buyer with a 27725 stop. Ahead of the Labour Weekend in the US when markets will closed on Monday, I do not want to be short the Dow at this time.
September NASDAQ
Wow, the NASDAQ is now trading 800 points below where I marked prices 24 hours ago. Finally, we have seen profit-taking in what I consider to be the most overvalued and over-stretched market in many years. Yesterday’s move lower saw the NASDAQ hit my 12310 too tight T/P level on my latest 12400 short-position and I am now flat. The NASDAQ has strong support from 11400/11540 where I will be a buyer with a 11295 stop. If I am taken long, I will have a T/P level at 11660.
September BUND
No Change as my only interest in buying the Bund is still on a dip lower to 175.90/176.30 with the same 175.45 stop.
Gold Rolling Contract
I am still flat as Gold was relatively stable during yesterday’s carnage. I will now lower my buy level slightly to 1892/1905 with a lower 1878 stop. If I am taken long I will have a T/P level at 1917.
Silver Rolling Contract
My Silver plan did not work well as I was stopped out of my 27.45 long position at 26.65 and I am still flat. I will be a small seller from 27.50/28.10 with a 28.55 stop. I do not want to be long Silver at this time.
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