U.S. Equity Markets tumbled as volatility sparked by the spread of the Coronavirus woes continued to grip financial markets. Treasury yields sank to record lows and Safe Haven Assets surged. The S&P 500 fell more than 3%, erasing the majority of Wednesday’s steep gains, as wild swings piled up. The benchmark has had the most volatile week since S&P Global Ratings cut the U.S. debt rating in 2011. Banks and tech shares led losses. Investor confidence has been shaken as cases of the virus continue to multiply across the world’s largest economy despite efforts by authorities to contain the outbreak. The 10-year yield sank to as low as 0.90%, while the US Dollar plunged against the Japanese Yen. Gold climbed and Oil slid. Risk assets have whipsawed this week, with traders still on edge amid a rise in virus cases around the world and governments extending quarantines and travel restrictions. An industry association warned the outbreak could cost airlines as much as $113 billion in lost revenue. The S&P 500 has rebounded since the Federal Reserve pledged action on Friday, but it remains more than 10% below last month’s all-time high. Stocks in Asia followed the U.S. lower and European stock futures indicate it will be another big selloff when trading starts. Pay close attention to sovereign bonds, where yields keep hitting record lows in an indication that the world has re-entered crisis mode. Another Safe Haven, Gold, continues to rally too. It is much quieter in terms of earnings but the closely scrutinized U.S. payrolls report for February is on the slate later in the day.
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For anyone following my Platinum Service it lost 390 points yesterday and is now ahead by 905 points for March, having made 2223 points in February, 2142 points in January, 818 points in December, 780 points in November, 1649 points in October, 1620 points in September and 2387 points in August 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 Index dropped 3.4%, closing at a price of 3023.
The Dow Jones Industrial Average fell 3.6%, for a 969 point drop at 26,121.
The Stoxx Europe 600 Index fell 1.4%.
The MSCI Asia Pacific Index gained 1.4%.
Currencies
Here is a summary of the main Changes in F.X. Markets:
The Bloomberg Dollar Spot Index declined 0.3%.
The Euro climbed 0.8% to $1.1226.
The British Pound gained 0.7% to $1.2966.
The Japanese Yen strengthened 1.3% to 106.16 per dollar.
Bonds
The yield on 10-year Treasuries sank 14 basis points to 0.91%.
The yield on two-year Treasuries decreased 11 basis points to 0.58%.
Germany’s 10-year yield fell five basis points at -0.69%.
Commodities
West Texas Intermediate crude fell 1.9% at $45.89 a barrel.
Gold strengthened 1.9% to $1,674.10 an ounce.
This morning on the Economic Front we already had the release of German Factory Orders which surprised with a rise of 5.5% versus +1.3% expected. At 1.30 pm we have U.S. Non-Farm Payrolls which are expected to rise 175K versus last month’s 225K rise. Average Earnings, the Unemployment Rate and Trade Balance will also be released at the same time. Finally, Wholesale Inventories will be releases at 3.00 pm. Speaking wise, the Fed’s Evans, Williams and Rosengren are speaking at 2.20 pm, 7.00 pm and 7.10 pm respectively.
March S&P 500
I was travelling yesterday and a s a result I could not do any updated emails as I had no access to the internet. Initially the S&P traded the whole of my buy range for a 3062 average long position before rallying to a rebound high at 3074. Hopefully you were able to take advantage of this rebound before I got stopped out of this position at 3044. Subsequently the S&P traded the whole of my second buy level for an average rate of 3011. Overnight we rallied back to a high at 3037 and I used this move to exit this position at 3030 and I am now flat. I am sure that most of you were able to take advantage of this rally and make up for the earlier losses. Overnight the S&P has traded to a low so far at 2971.50 before rallying 20 Handles of this low as I go to press. I have said countless times that all ‘’Open Gaps’’ get filled for the S&P. However, given Wednesday’s massive move higher to 3130 I did not expect that the 3003/3132 Gap would be filled so quickly yesterday. On top of this Thursday’s trading session has left another huge Gap from 3074 to Wednesday’s close at 3130 and this Gap will also be filled at some point. Ahead of the NFP release I would expect the S&P to trade sideways to higher. The S&P needs to close back above 3020 this evening or else a close below 2980 could well see prices accelerate to the downside on Monday. The S&P has initial support from 2960/2975 and I will be a buyer here with a 2949 stop. The S&P has strong support at last Friday’s 2855 low print and I will be an aggressive buyer from 2850/2880 with a 2835 stop. Given how oversold the S&P is trading I do not want to be short the market at this time. If I am taken long I will have a T/P level at 2991. If I am taken long a second time I will have a T/P level at 2925.
EUR/USD
The Euro continues to rally as expected. The authorities have no choice but to let the Dollar fall. With the Fed expected to cut Interest Rates by another 50/75 basis points over the coming weeks, this will weaken the Dollar further. The Euro has now rallied nearly 500 points off its 1.0750 January low and is now trading at the top of its Daily Bollinger Band. The Euro has short-term support from 1.1090/1.1140 and I will be a buyer in this area with a 1.1045 stop.
March Dollar Index
I am still flat the Dollar as we closed 0.3% lower last night. I will now lower my sell level to 96.80/97.25 with a 97.55 stop.
March DAX
The DAX is trading 450 points lower from where I marked prices yesterday morning. This is a huge move which did not work well for me as I bought the market at 11980 before getting stopped out of this position at 11885 and I am now flat. The DAX has now fallen 2000 points in three weeks as we are currently trading at 11650 as I go to press. The market is oversold and has support from 11360/11510 where I will be a buyer with a 11295 stop. If I am taken long I will have a T/P level at 11580.
March FTSE
My FTSE plan did not work well as after the market traded the whole of my buy range for a 6700 average long position I was quickly stopped out of this trade at 6635 and I am now flat. The FTSE will have strong support at last week’s low of 6468 and today I will be an aggressive buyer from 6460/6520 with a 6425 stop. If I am taken long I will have a T/P level at 6580.
Dow Rolling Contract
After the Dow traded the whole of my buy range for a 26430 average long position the market rebounded to a high of 26621. Hopefully you were able to take advantage of this rally before the market got slammed to an overnight low so far at 25730. This move lower stopped me out of this position at 26245 as my 26650 T/P level just missed and I am now flat. The Dow has strong support from 25400/25600 and I will be a buyer on any dip to this area with a 25280 stop. Given the incredible volatility as shown by the VIX which closed 24% higher last night at 39.62 I have to use wider buy levels and larger ‘’mental’’ stops. The Fear & Greed Index closed with a reading of 8 which is Extreme Fear. This is within touching distance of the December 2018 low at 4 before the markets started their 30% rally for 2019. It will interesting to see where the DSI closes this evening. If I am taken long at this buy range I will have a T/P level at 25780.
March NASDAQ
I am still flat the NASDAQ as thankfully I had no buy level in this market yesterday. The NASDAQ has strong support from 8380/8460 where I will be a buyer with a 8295 stop. If I am taken long I will have a T/P level at 8550.
March BUND
To see 10 Year Treasuries trading below 0.90% is incredible. The DSI is now over 92% bulls which is one of the highest readings on record. This huge move in the US Bond Markets saw the Bund hit my average 178.30 sell level before stopping me out of this position at 178.85 and I am now flat. With the NFP to be released at 1.30 pm I am going to stay flat and wait to see the price action before making my next move.
Gold Rolling Contract
Gold has been frustrating for me. I had the correct view in buying last Friday before getting stopped out near the low of the day at 1587. This is annoying when you see Gold trading at 1673 this morning. Gold is overbought and trading at seven-year highs. Gold is also getting a boost from the weaker Dollar. We have small resistance from 1695/1710 and I will be a seller in this area with a 1719 tight stop.
Silver Rolling Contract
I am still flat and I will now raise my buy level to 16.70/17.10 with a higher 16.35 stop.
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