U.S. stock markets rose for a second day last Friday as investors got a reprieve from trade posturing and speculation mounted that European officials will bolster stimulus if growth in the region continues to sputter. Treasuries nudged lower, lifting yields from multiyear lows. The S&P 500 jumped more than 1%, notching its 13th straight session with an intraday move of that magnitude as August volatility persisted. The index lost 1% in the five days for a third straight drop. Bulls got ammunition when on a report Germany would engage in deficit spending in the event of a recession. A day earlier, a European Central Bank official said monetary stimulus would be greater than investors anticipated. Germany’s Dax surged and the region’s bonds retreated. In the U.S., chipmakers paced Friday’s advance after Nvidia Corp.’s after quarterly sales and profit beat estimates. Banks also rose as the yield curve steepened, with two-year rates slipping and 10-years turning higher. Deere & Co. rebounded even after cutting guidance, blaming in part the trade war for undermining sales. In Asia, shares in Hong Kong rallied, Chinese stocks edged higher and Korean equities fell.
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For anyone following my Platinum Service it was flat on Friday and is still head by 1154 points for August, having made 1153 points in July, 1346 points in June,1722 points in May, 955 points in April, 1027 points in March, 1013 points in February and 1671 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 prospect for strong European stimulus bolstered confidence that the U.S. economy would be spared some of the ill-effects of the slowdown in that region. Investors remained on edge over trade after a week of back-and-forth headlines delivered wild swings in the equity and bond markets. With traders gunning for more rate cuts from the Federal Reserve, chair Jerome Powell may give a hint of his thinking when he speaks Aug. 23 at the annual central bankers retreat in Jackson Hole, Wyoming The S&P 500 Index gained 1.45% to close at 2890 while the Dow Jones Industrial Average rose 1.2%. The Stoxx Europe 600 Index rose 1.2%.
Currencies
Here is a summary of the main changes in F.X. Markets:
The Bloomberg Dollar Spot Index rose 0.1%, pushing its weekly advance to 0.5%.
The Euro fell 0.1% to $1.1092, having reached an intra – day low of 1.1066
The British Pound jumped 0.5% to $1.2146.
The Onshore Yuan dipped 0.1% to 7.04 per dollar.
The Japanese Yen declined 0.2% to 106.34 per dollar.
Bonds
Despite the large rally in Equity Markets the yield on 10-year Treasuries only rose two basis points to 1.5454%, while the yield on two-year Treasuries fell one basis point to 1.48%. In Europe, Germany’s 10-year yield rose three one basis points to -0.685% and Britain’s 10-year yield climbed six basis points to 0.466%.
Commodities
West Texas Intermediate crude rose 0.6% to $54.76 a barrel.
Iron ore climbed 0.3% to $86.75 per metric ton.
Gold Futures decreased 0.6% to $1,522.60 an ounce.
This morning on the Economic Front we have Euro-Zone Current Account and CPI at 10.00 am. We have no data today from either the U.K or the U.S as the market eagerly awaits the FOMC Minutes on Wednesday evening.
September S&P 500
The S&P never came close to my buy level on Friday instead rallying as expected to close day with a gain of 1.45%. The high Trin mentioned at length last week saw the S&P close 75 Handles higher than the early Thursday low of 2818. Given the Central Banks’ Policy of easy money coupled with the fact that Trump will do everything in his power to prevent a crash, in my opinion the market will continue to be a buy on dips as long as we do not close below the 200 Day Moving Average of 2798. I know the sell-offs are scary but once you trade in small size you can for the most part continue with this ‘’buy the dip’’ strategy. The market is still oversold and can rally further. We have two large ‘’Open Gaps’ above the market at 2898/2626 which is the Gap from Tuesday and above here at 2949/2954. Today I will be a small seller on any further rally to 2915/2925 with a 2933 stop. The 50 Day Moving Average comes in at 2945 and if I am stopped out of any short position I will be a more aggressive seller from 2940/2952 with a 2960 stop. The S&P has short-term support from 2853/2868 and I will be a buyer in this area with a 2845 tight stop.
EUR/USD
No Change as I am still long at 1.1098 with the same 1.1049 stop. The low on Friday was 1.1066 and today I will leave my T/P level unchanged at 1.1120. If any of the above levels are hit I will be back with a new update for my Platinum Members.
September Dollar Index
No Change as I am still a small seller on any further rally to 98.45/98.85 with the same 99.10 stop.
September DAX
I am still flat the DAX. So far the market is holding support at 11250 while for now resistance comes in at 11780. There is no doubt that the ECB will cut rates next month as the European Economies are in a mess. Despite this view it is very difficult to be short as Pension Funds have to put their monies somewhere. Today I will be a small buyer of the DAX on any dip lower to 11250/11350 with a 11180 stop.
September FTSE
I am not as bullish of the FTSE as the US Indices primarily because I expect the Pound to be close to a decent bottom. As a result I will only raise my FTSE buy level slightly to 7000/7040 with a 6965 higher stop.
Dow Rolling Contract
Friday’s well time 300 point rally in the Dow saw the market close comfortably above its 200 Day Moving Average which comes in at 25596 this morning. The rise in the US Indices was helped by the 12.80% fall in the VIX which closed well below 20 at 18.47. Similar to the S&P above the Dow has a large ‘’Open Gap’’ at 26,279 from last Tuesday and today I will be a small seller from 26220/26370 with a 26450 tight stop. I will also raise my buy level to 25460/25630 with a 25380 stop.
September NASDAQ
I am still flat the NASDAQ as the market never came close to my buy level on Friday. Today I will raise my buy level to 7450/7510 with a 7395 stop.
September BUND
I am still flat the Bund which just missed my 179.70 sell level with a 179.66 high print before falling over 70 points. Today I will lower my sell level to 179.40/179.80 with a 180.25 wider stop.
Gold Rolling Contract
I will now lower my Gold sell level slightly to 1540/1555 with a 1563 tighter stop. If I am taken short I will have a T/P level at 1533.
Silver Rolling Contract
I am still flat the Silver Market with the same 16.40/16.80 buy level. If I am taken long I will have a T/P level at 17.01, while my stop will remain unchanged at 16.05. If any of the above levels are hit I will be back with a new update for my Platinum Members.
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