After a tumultuous week U.S. Equity Markets ended Friday’s session in the red and that trend has continued overnight with Futures Markets down over 1.5% as I go to press. The Dow led Friday’s losses closing lower by 1.48%. COVID-19 fears took centre stage. Rising cases led to the National Football League postponing some of its games, sparking fears that this could be a precursor to further shutdowns across the country. Federal Reserve Bank of New York President John Williams spooked markets in the afternoon, as he said that the Fed raising rates will actually be a good thing for the economy. While that may be true, it was not what investors wanted to hear. Wall Street equates higher rates with higher borrowing costs and lower growth. News out of Washington, D.C. also made headlines, with President Joe Biden conceding that his Build Back Better plan will have to wait until 2022, as Democrats try to get Senator Joe Manchin (D-WV) on board. Within the S&P 500, all 11 sectors finished lower. European Markets closed lower. German business confidence declined for the sixth straight month in December. The Munich-based Institute for Economic Research said this was the result of the country continuing to deal with COVID-19 restrictions and supply-chain issues. Given Germany accounts for 30% of regional economic output, the mood there can weigh everywhere. Meanwhile, Thursday’s central bank activity remained in the headlines… The European Central Bank announced it will end pandemic asset purchases next year as planned, but interest rates are unlikely to rise before 2023. The Bank of England unexpectedly raised interest rates by 0.15%, saying that the threat of inflation prompted the central bank to act early. In Asia, Like the selloff in U.S. markets the day prior, investors were taking money off the table in risk assets like stocks. They worried the changing narrative from the Fed and Bank of England with regards to policy tightening could mean the easy gains are over. Striking a different tone, the Bank of Japan left interest rates unchanged and extended a lending facility for small businesses. But it did say it would pare back corporate bond purchases. That is a signal it feels the financial system is increasingly stable. Other regional central banks echoed the sentiment. People’s Bank of China Governor Yi Gang said it will ensure more stable credit growth by steadily improving the underlying market structure. Bank of Korea Governor Lee Ju-yeol said it will continue to work toward normalizing interest rates, but its primary focus is keeping economic stability intact. And Taiwan’s Financial Supervisory Commission said it will inspect banks’ property lending practices in an attempt to ensure financial market stability. Elsewhere, Oil fell 2.72% on concerns a rising dollar would weigh on prices and speculation potential Omicron-related restrictions could hurt demand, while Bitcoin fell 5% as investors trimmed risk exposure ahead of the weekend.
To mark my 2450th issue of TraderNoble Daily Commentary I am offering a special 2-Year Rate of Euro 2750 for my Platinum Service which includes 1 to 4 updated emails throughout the trading day to demonstrate this value, a monthly subscription over the same period would cost 4440 euro in total This offer represents a 38% discount and is open to both new and existing members. If anyone is interested in this offer can you please email me on bryan@tradernoble.com for details
For anyone following my Platinum Service it lost 189 points on Friday, and is now down by 565 points for December, 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, having ended March with an impressive gain of 3769 points, 3286 points in February, 2077 points in January, and 2273 points last December. 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 closed 1.03% lower at a price of 4620.
The Dow Jones Industrial Average closed 532 points lower for a 1.48% loss at a price of 35,365.
The NASDAQ 100 closed 0.39% lower at a price of 15,801.
The Stoxx Europe 600 Index closed 1.1% lower.
This morning, the MSCI Asia Pacific Index fell 1.3%.
This morning, the Nikkei closed 2.13% lower at a price of 27,937.
Currencies
The Bloomberg Dollar Spot Index closed 0.7% higher.
The Euro closed 0.8% higher at $1.1248.
The British Pound closed 0.9% lower at 1.3210.
The Japanese Yen rose 0.1%, closing at $113.48.
Bonds
Germany’s 10-year yield closed three basis points lower at -0.38%.
Britain’s 10-year yield closed two basis points higher at 0.77%.
US 10 Year Treasury closed three basis points lower at 1.39%.
Commodities
West Texas Intermediate crude closed 2.72% lower at $70.89 a barrel.
Gold closed 0.50% lower at $1,798.10 an ounce.
This morning on the Economic Front we have no data of note on either side of the Atlantic.
Cash S&P 500
My S&P plan worked very well on Friday as the market traded lower to both of my buy level of 4620 and 4637. I covered my 4620 long position at 4632 and the second one at my 4645 revised T/P level and I am now flat. Friday was the last Triple Witching of 2021 along with end-of-year Stock Index rebalancing (when stock indexes re-weight their numbers) This led to a jump in intra-day volatility with a whopping 17.8 billion shares traded, the highest volume day since March 4. This morning the S&P is trading at 4555, almost 200 Handles lower than Thursday’s 4752 morning high for the December Contract. We have now left a massive ‘’Gap From Friday’s Chicago 4620 close and I would expect some of this gap to be filled when the U.S. Markets open this afternoon. I have now decided to trade the Cash S&P rather than the Futures Contract as we have a narrower spread. Given the fact that the S&P is now oversold I do not want to be a seller today. The S&P has strong support from 4525/4545 where I will be an aggressive buyer with a 4499 wider stop.
EUR/USD
The Euro traded lower to my 1.1270 buy level. I am still long and I will add to this position at 1.1210 while leaving my 1.1169 stop unchanged. Meanwhile, I will continue to look to take profit at 1.1305. I will not chase the Euro lower, leaving my 1.1405/1.1455 sell level unchanged with the same 1.1501 stop.
March Dollar Index
The Dollar is trading higher this morning and I am now short at a price of 96.50. I will add to this position at 97.00 with a now higher 97.31 stop. I will also raise my T/P level to 96.20 and if any of the above levels are hit I will be back with a new update for my Platinum Members.
Cash DAX
After the DAX traded lower to my 15450 buy level I emailed my Platinum Members to exit any long position at 15491 and I am now flat. This morning the DAX is opening much weaker, below the key 15270 support level at 15190. Given the large move lower from Friday, I still do not want to be short the market at this time. The DAX has support from 15000/15080 where I will be a strong buyer with a 14935 stop.
Cash FTSE
The FTSE sold off this morning, trading the whole of my buy range for a now 7190 average long position. I will now lower my T/P level to 7210 while leaving my 7095 stop unchanged.
Dow Rolling Contract
I said last week that the Dow is a beast to trade as you need a very wide stop in this market given the volatility. After the Dow traded the whole of Friday’s buy range for a 35625 average long position, I was stopped out of this position at 35395. Subsequently, the Dow made a low of 35277, before rallying almost 500 points. Overnight, I bought the Dow again at 35225 before getting stopped at 34495 and I am now flat. The Dow has strong support from 34650/34850 where I will again be a buyer with a 34495 stop. I still do not want to be short the Dow at this time.
Cash NASDAQ 100
The NDX was the strongest of Friday’s U.S. Indexes closing lower by 0.40%. After the market hit my 15690 buy level, I covered this long position too early at 15720 and I am still flat This morning the NDX is trading lower at 15550. We have strong support from 15500/15350 where I will be an aggressive buyer with a 15225 stop. If I am taken long I will have a T/P level at 15620.
March BUND
This morning the Bund traded higher to my 174.80 sell level. I am still short with a now higher 174.50 T/P level.
Gold Rolling Contract
I am still flat. I will now lower my buy level to 1770/1782 with a tight 1759 stop. If I am taken long I will have a T/P level at 1788.
Silver Rolling Contract
No Change. I am still a buyer on any dip lower to 21.60/22.20 with a 20.95 stop.
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