U.S Equity Markets built on Wednesday’s gains by closing higher across the board in what turned out to be a quiet trading session. Jobless Claims rose from the prior week, coming in above estimates. While this indicates that the job market’s recovery may be stalling, the four-week average for Jobless Claims fell again. Continuing Claims, which represent those that have filed for Unemployment for at least two weeks, fell again and beat estimates. This is a positive sign for the job market. Stimulus news was mixed, after House Speaker Nancy Pelosi said she would not support a bill for airlines without a full deal. She added that the economy needs a large package, and not the “skinny” $1.6 trillion bill proposed by Republicans. But Treasury Secretary Steven Mnuchin is reportedly considering restarting talks on a broader package. Market expectations for a Joe Biden win in November continued to grow. This is sparking optimism over a large Stimulus Bill being passed at the beginning of next year. The Russel 2000 led yesterday’s gains, closing 1.09% higher while the S&P finished with a gain of 0.8%. Meanwhile European Equities rallied despite the increase in Coronavirus cases across the EU. European Central Bank President Christine Lagarde pledged not to remove stimulus from the European economy prematurely. Bank of England Governor Andrew Bailey said that the central bank is not yet out of tools to support the economy. But it was not all good news. Daily coronavirus infections continued to rise as France reported a record number of new cases and Italy saw its highest total since April. And the Belgian city of Brussels issued a “code red” lockdown of all bars and cafes for at least a month. Elsewhere, Oil closed 3.28% higher as Saudi Aramco disputed reports that we’re close to “peak” oil demand, while Gold rose 0.37% on Dollar weakness.
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Equities
The S&P 500 closed 0.8% higher at a price of 3446.
The Dow Jones Industrial Average closed 122 points higher for a 0.43% gain at a price of 28,425.
The NASDAQ 100 closed 0.42% higher at a price of 11,550.
The Stoxx Europe 600 Index closed 0.8% higher.
The MSCI Asia Pacific Index rose 0.5%%.
This morning the Nikkei closed 0.12% lower at a price of 23,619.
Currencies
The Bloomberg Dollar Spot Index closed 0.1% lower.
The Euro closed 0.2% lower at $1.1742.
The British Pound closed 0.1% higher at $1.2946.
The Japanese Yen closed unchanged at 105.91 per dollar.
Bonds
The yield on 10-year Treasuries closed one basis point lower at 0.77%.
Germany’s 10-year yield closed three basis points lower at -0.53%.
Britain’s 10-year yield closed one basis point lower at 0.29%.
Commodities
The Bloomberg Commodity Index closed 0.1% higher.
West Texas Intermediate closed 3.26% higher at $40.74 a barrel.
Gold closed 0.37% higher at $1886 an ounce.
This morning on the Economic Front we already had the release of UK GDP which rose 2.1% versus 4.6% expected. UK Industrial Production was also released falling 0.7% versus +3% expected as it looks like the UK economic recovery has peaked. The only other data of note due today is U.S Wholesale Inventories at 3.00 pm.
December S&P 500
For the second consecutive trading session the S&P has left an ‘’Open Gap’’ from yesterday’s 3418 intra-day low to Wednesday’s 3408 Chicago close for the December Contract. This is on top of the 3375/3347 ‘’Gap’’ left from Tuesday. It is unusual that we have two ‘’Open Gap’s’’ and I would expect some correction before we move higher. Today, I will move my buy level higher to 3402/3417 with a 3389 wider stop. I will continue to be an aggressive buyer on any dip lower to 3350/3365 with the same 3339 stop. As it is a ”Friday” I still do not want to be short the S&P at this time.
EUR/USD
My Euro plan worked well with the market trading lower to my 1.1740 buy level before rallying to sit at 1.1775 as I go to press. As I wanted to bank some points for yesterday’s session I covered this long position for a small gain at 1.1750 and I am still flat. Today, I will again be a buyer on any dip lower to 1.1695/1.1735 with a 1.1655 stop. The Euro has resistance from 1.1830/1.1870 where I will be a small seller with the same 1.1905 tight stop.
December Dollar Index
No Change as I am still a buyer on any dip lower to 92.80/93.25 with the same 92.45 stop.
December DAX
The DAX closed over 13000 which is positive and if we can finish above this key pivot point this evening it will be a strong buy signal. Yesterday the DAX just missed my 12930 buy level and I am still flat. I am not going to chase the DAX higher and I will leave my 12850/12930 buy level unchanged with the same 12765 stop.
December FTSE
This morning’s UK GDP and Industrial Production releases show that the UK economy may have peaked. Given the extreme number of Daily Coronavirus cases it looks more and more likely that the UK is set for another lockdown which will weaken the economy further. The FTSE is higher on this news as it looks for the Government to produce another stimulus. As I mentioned earlier in the week it is only the Stimulus from the Governments worldwide that is keeping Equity Markets from crashing again. I am still flat the FTSE and I will now raise my buy level to 5860/5910 with a 5815 tight stop.
Dow Rolling Contract
After Wednesday’s 530 point rally, the Dow traded in a narrow range yesterday and I am still flat. Just like the S&P above we have two ‘’Open Gap’s’’ this week and for this reason I do not want to chase the Dow higher. Therefore, I will leave my 27950/28150 buy level unchanged with the same 27795 stop. If I am taken long I will have a T/P level at 28295.
December NASDAQ
No Change as I am still an aggressive buyer on any dip lower to 11380/11480 with the same 11295 stop. I will now lower my sell level to 11695/11795 with a lower 11905 stop.
December BUND
Just like the equity markets the Central Banks will do everything in their power to prevent Bond Yields from rising which is no surprise given the level of debt. Yields have hardly moved since April. The Bund yield has fluctuated by just 10 basis points in this time with volatility close to all-time lows. I am still flat the Bund and today I will raise my sell level to 174.95/175.45 with a higher 175.81 stop.
Gold Rolling Contract
I am still flat Gold and today I will raise my buy level to 1865/1877 with a higher 1853 stop.
Silver Rolling Contract
I am still and flat and I will now raise my buy level to 23.25/23.85 with a higher 22.75 tight stop.
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