Equity Markets extended their weekly rally as investors speculated the American economy would soon begin to emerge from a lockdown amid a glimmer of hope in the race to find a coronavirus treatment. The S&P 500 posted a second week of gains — the longest run since mid-February — after the U.S. Government issued guidelines toward restarting the economy. Gilead Sciences Inc. soared after a report that a group of patients were “seeing rapid recoveries in fever and respiratory symptoms.” Meanwhile, Apple Inc. sank after Goldman Sachs recommended selling the shares. Oil traded near $18 a barrel. Treasuries fell. The week ended on an upbeat note for stocks after the White House issued guidelines for states to consider as they decide whether to relax stay-at-home orders and other social-distancing measures. The Government is under pressure, with 22 million Americans applying for Unemployment benefits in a month, erasing a decade worth of job creation. Meanwhile, China pledged stronger policies, including rate cuts, after the pandemic pushed the economy into its first contraction in decades. The rally on Friday showed there’s an enormous amount of cash on sidelines, there’s an enormous amount of desire for people to get invested and participate in the recovery. In fact, weekly flow data from Bank of America Corp. and EPFR Global highlighted a clear investor preference for money-market funds. Assets under management in this category have swelled to $4.5 trillion following seven weeks of inflows that added $877 billion to the cash pile.
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Equities
The S&P 500 climbed 2.7%, closing at a price of 2875.
The Dow Jones rose 705 points for a gain of 3%, closing at 24,242.
The NASDAQ 100 closed 0.85% higher at 8832.
The Stoxx Europe 600 Index increased 2.6%.
The MSCI Asia Pacific Index gained 2%.
Currencies
Here is a summary of the main Changes in F.X. Markets:
The Bloomberg Dollar Spot Index dipped 0.5%.
The Euro advanced 0.3% to $1.0868.
The Japanese Yen strengthened 0.3% to 107.60 per dollar.
Bonds
The yield on 10-year Treasuries increased two basis points to 0.65%.
Germany’s 10-year yield advanced less than one basis point to -0.47%.
Britain’s 10-year yield climbed less than one basis point to 0.304%.
Commodities
The Bloomberg Commodity Index added 0.1%.
Gold fell 2% to close at 1677.80 an ounce.
This morning on the Economic Front we already had the release of German PPI for March which fell 0.8% versus -0.7% expected. At 9.00 am we have Euro-Zone Current Account and Trade Balance. Finally, at 1.30 pm we have the Chicago Fed National Activity Index.
June S&P 500
The S&P fell shy of my 2805 buy level with a low of 2819 before surging into the close as yet another ‘’Open Gap’’ was left unfilled. My experience with Phase 2 of this incredible S&P rally is that you have to be patient. It is a challenge emotionally in a Bear Market, because the goal of a second wave is to recreate the bullish spirits of the prior peak. By the end investors are convinced that the Bull Market is either back or still intact. The S&P has two ‘’Open Gaps’’ above here at 2934 from March 4, and 2965 from March 6. I will continue to be a small seller from 2895/2915 with a 2927 tight stop. I will still be an aggressive seller from 2950/2980 with the same 3010 stop. I will now raise my buy level slightly to 2795/2815 with a higher 2779 stop.
EUR/USD
The Euro traded higher to my 1.0890 sell level before having a small sell-off to trade at 1.0841 this morning. As I wanted to be flat over the weekend I covered this position at 1.0881. Today I will be a small seller from 1.0905/1.0955 with a 1.0991 stop.
June Dollar Index
I am still flat the Dollar and I will now raise my buy level slightly to 99.10/99.60 with a 98.75 stop.
June DAX
Frustratingly the DAX missed my initial 10750 sell level with a high of 10749 before falling 180 points. Subsequently we rallied into the New York close, before opening higher at 10700 this morning. I will now raise my sell level to 10825/10950 with a 11035 stop. I still do not want to be long the DAX at this time.
June FTSE
The FTSE also missed my sell level by a few points before following the same pattern as the DAX. This morning the FTSE is trading at 5785. I will now lower my sell level slightly to 5825/5900 with a lower 5975 stop.
Dow Rolling Contract
The Dow fell shy of my initial 23700 buy level with a low of 23825 before rallying over 400 points into the close. I am not going to chase the market higher and I will leave my 23450/23700 buy level unchanged with the same 23295 stop. The Dow has strong resistance from 24550/24800 where I will be an aggressive seller with a wider 25005 stop.
June NASDAQ
The NASDAQ ended last week with a gain of 6% as continued buying of high growth technology stocks pushed the NASDAQ above its 50 and 200 Day Moving Averages. In comparison the Bank Index fell 7.8% last week. Frustratingly the NASDAQ missed my 8960 sell level by a few points before selling off after Apple was downgraded by Goldman Sachs. Today I will lower my sell level to 8930/9080 with a lower 9170 stop. The NASDAQ has strong support from 8350/8500 where I will be a buyer with a 8275 stop.
June BUND
No Change as I am still a seller from 173.10/173.60 with the same 174.05 stop.
Gold Rolling Contract
Gold has got hit hard down $80 from last week’s 1747 high. This is no surprise given the level of extreme optimism towards Gold having rallied $250 since its March 6 low. Gold has short-term support from 1642/1658 where I will be a buyer with a 1629 stop.
Silver Rolling Contract
I am still flat Silver. I am not going to chase this market lower and I will leave my 15.70/16.20 sell level unchanged with the same 16.65 stop. Silver has support from 14.10/14.60 where I will be a buyer with a 13.65 stop.
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