U.S. Equity Markets finished the week lower after getting hit hard in the last two hours of trading following strong rumours that Russia will invade Ukraine this week. Thursday’s inflation data and hawkish comments from St. Louis Fed President James Bullard remained on investors’ minds. Meanwhile, Richmond Fed President Thomas Barkin said he did not see the need for a 50-basis-point hike, but, he added that he could be in favour of one. This, sparked concerns of the Fed acting aggressively, and there is even speculation that the Fed could call an emergency meeting to hike rates (as soon as Monday). The speculation is the central bank will stop all asset purchases immediately and increase the Federal-Funds target range by 25 basis points. That would be a lot faster than the planned March rate hike. The uncertainty spooked markets, and investors sent the S&P 500 back below the 200-day moving average. There was also concern over potential conflict with Russia, as President Joe Biden reportedly told NATO that Russia could invade Ukraine as soon as this week. There were not many bright spots out there on Friday. Under Armour (UA) was among the worst performers in the S&P 500, after warning that shipping costs would eat into its margins in the current quarter. Growth sectors – tech, communications, and consumer discretionary – also underperformed on the rate-hike speculation. On the positive side, energy stocks outperformed, as any conflict with Russia could disrupt the energy supply (and push prices higher). Within the S&P 500, nine of the 11 sectors finished lower. European Markets closed lower. Negotiators from Russia and Ukraine said talks in Berlin failed to yield any results yesterday, but the two sides agreed to keep talking. European Central Bank Governing Council member Gabriel Makhlouf said if current inflation trends persist, the central bank may need to take action sooner than anticipated. European Central Bank Vice President Luis de Guindos stated inflation will likely remain higher for longer than previously thought, highlighting the need for policy flexibility. In Asia, The Bank of Japan introduced a plan to buy an unlimited amount of 10-year bonds at 0.25%, in an attempt to ease speculation it will raise interest rates. The People’s Bank of China’s new Yuan loan data for January was stronger than expected, more than doubling from December, as the government increased economic stimulus. Taiwan’s export growth for January was weaker than anticipated, falling from December as shipments to Japan and China slowed. Japanese stock markets were closed for the National Foundation Day holiday. Elsewhere, Oil closed 4.4% higher as increased chances of a conflict with Russia could potentially disrupt European energy supply, while Gold rose 1.48%, as investors rotated into safe-haven assets.
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For anyone following my Platinum Service it made 255 points last Friday and is now ahead by 2735 points for February, after ending January with a gain of 3878 points, more than making up for December’s 932 points loss, 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, after ending March with an impressive gain of 3769 points. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1600 points I have a YouTube Channel which contains recent interviews I have given This can be viewed by clicking HERE Please subscribe to this for new interview notification
Equities
The S&P 500 closed 1.90% lower at a price of 4418.
The Dow Jones Industrial Average closed 503 points lower for a 1.43% loss at a price of 34,738.
The NASDAQ 100 closed 3.07% lower at a price of 14,253.
The Stoxx Europe 600 Index closed 0.5% lower.
Yesterday, the MSCI Asia Pacific Index fell 0.2%.
Yesterday, the Nikkei closed 0.42% higher at a price of 27,696.
Currencies
The Bloomberg Dollar Spot Index closed 0.6% higher.
The Euro closed 0.7% lower at $1.1347.
The British Pound closed 0.1% lower at 1.3550.
The Japanese Yen rose 0.4%, closing at $115.52.
Bonds
Germany’s 10-year yield closed two basis points lower at 0.29%.
Britain’s 10-year yield closed two basis points higher at 1.55%.
US 10 Year Treasury closed 12 basis points lower at 1.92%.
Commodities
West Texas Intermediate crude closed 4.4% higher at $94.10 a barrel.
Gold closed 1.48% higher at $1,861.10 an ounce.
This morning on the Economic Front we have no data of note due to be released on either side of the Atlantic which is highly unusual.
Cash S&P 500
We are witnessing an unprecedented level of uncertainty over the past few days caused by higher inflation, Fed Member Bullard looking for a 1% Rate hike, while late Friday the White House warned of a possible Russian invasion of Ukraine this week. Markets hate uncertainty, resulting in the S&P falling 1.90% for the second consecutive trading session and in the process saw the Dow, NDX and S&P all close below their respective 200 Day Moving Averages. Encouragingly, the McClellan Oscillator only closed with a negative print of -51. Given the carnage I would have expected a much weaker print. Markets are either going to flush lower here or have a massive rally depending on what Russia does. The charts continue to tell me that stock markets are oversold. However, wars perversely tend to be bullish so I would not chase lower prices from here. Initially, my S&P plan worked well with the market trading lower to my aggressive 4468 buy level before rallying to my 4488 T/P level with a rebound high at 4527, before falling to a late low of 4401. I emailed my Platinum Members to buy the S&P again which I did at a price of 4460 before getting stopped at 4435 and I am still flat. The S&P has strong support from 4340/4370 where I will again be a buyer with no stop. Given how oversold my charts are I do not want to be short the S&P at this time, preferring to buy any flush lower.
EUR/USD
My Euro plan worked well with the market trading lower to my 1.1370 buy level before rallying to my 1.1405 T/P level and I am now flat. The break and close below 1.1400 is bearish. The Euro has resistance from 1.1400/1.1450 where I will be a small seller with a 1.1505 stop. I do want to be long the Euro at this time.
March Dollar Index
Friday’s late rally in the Dollar saw the market hit my 96.05 sell level. I am still short and I will add to this trade at 96.45 with a tight 96.81 stop. I will now raise my T/P level to 95.75 and if any of the above levels are hit I will be back with a new update for my Platinum Members.
Cash DAX
I am still flat. Ahead of a possible Russian invasion of Ukraine, I will again lower my DAX buy level to 14710/14800 with a wider 14595 stop. I still do not want to be short the DAX at this time. If I am taken long I will have a T/P level at 14870.
Cash FTSE
I am still flat. I will continue to be a buyer on any dip lower to 7470/7530 with a wider 7395 stop. I still do not want to be short the FTSE at this time.
Dow Rolling Contract
My Dow plan worked perfectly with the market trading lower to my 34980 buy level before rallying to my 35120 T/P level and I am now flat. The Dow subsequently made a high of 35435 before falling 800 points into the close. Thankfully, we had no buy level in the Dow as for a change, buyers and not sellers got slammed. The Dow has strong support from 34250/34500 where I will be an aggressive buyer with a 33995 wider stop. Ahead of this week’s ‘’Event Risk’’ I do not want to be short the Dow at this time.
Cash NASDAQ 100
My NDX plan worked well with the market trading lower to my 14550 buy level before rallying to my 15680 T/P level with a rebound high of 14775. Subsequently, the NDX led the U.S. Markets lower, closing with a loss of over 3%. The NDX has strong support from 14120/13920 where I will again be an aggressive buyer with no stop. If I am taken long I will have a T/P level at 14350.
March BUND
No Change. I am still long at 166.26 with the same 166.50 T/P level. The Bund rallied almost 200 points on the equity sell-off so the idea of holding this position with no stop should be rewarded when the Bund opens for trading this morning. If any of the above levels are hit I will be back with a new update for my Platinum Members.
Gold Rolling Contract
Gold rallied 1.50% on Friday on Inflation concerns and ‘’War’’ risk. I am still flat and reluctant to chase this market price at these levels. Therefore, my only interest in buying Gold is still on a drop lower to 1795/1809 with a tight 1783 stop. If I am taken long I will have a T/P level at 1822.
Silver Rolling Contract
Silver following Gold higher on Friday and I am still flat. I will now raise my buy level to 22.70/23.40 with no stop.
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