The NASDAQ 100 had its worst week of losses in over 10 years, closing lower by 2.75% on Friday as yet again U.S. Equity Markets sold off into the close. Tech stocks were again the ones most under pressure, pulling markets lower. Yields were not the issue on Friday, like they have been over the past few weeks. Instead, Netflix’s (NFLX) earnings were the reason for the Nasdaq falling further into correction. The streaming service giant provided weak subscriber guidance for the first quarter of 2022, and shares were punished to the tune of a 20% drop. On a broader scale, this sparked concerns that there is still air to come out of tech’s balloon, and that was not welcome news for investors, who pushed markets lower. That sent markets to their third consecutive down week to start 2022. With all the gloom and doom over rates and inflation, the S&P now sits about 8% below its all-time high. The declines heavily outpaced the advances today in the S&P 500. Communications names were the weakest – with Netflix dragging down any streaming stocks, including competitors Disney (DIS). On days like Friday, there were not many bright spots. Homebuilders outperformed with rates backing off, as it implies that mortgage rates could head lower and make homes more affordable. Now, eyes turn to this week’s Federal Reserve policy meeting, with investors on the lookout for any clues on policy tightening in the coming months. In recent weeks, the Fed has talked up chances of a March rate hike, and three to four hikes throughout 2022. We will look for more colour on hikes, as well as the timeline for the tapering of asset purchases. Within the S&P 500, 10 of the 11 sectors finished lower. European Markets closed lower. European Central Bank Minutes from the December policy meeting showed members were concerned about the recent moderation in economic activity but still expect inflation to ease. U.K Retail Sales fell more than expected in December, as the country’s COVID-19 restrictions hurt consumer spending. French Prime Minister Jean Castex said the government will lift COVID-19 restrictions in February, but vaccine passports will be required to enter public venues. In Asia, Japanese Consumer Price Index (“CPI”) numbers for December were weaker than expected, remaining well below the central bank’s 2% target. Chinese state-run media outlet the Securities Journal said the government in Beijing is likely to introduce more stimulus to support economic growth. The People’s Bank of China added another $14.2 billion worth of liquidity to the financial system via reverse repos, bringing the total this week to roughly $57 billion. South Korean Vice Finance Minister Ahn Do-geol said the government will use coordinated policy measures to stabilize bond prices if it sees excessive volatility. Elsewhere, Oil fell 1% while Bitcoin continued its recent collapse, falling over 14% on Friday.
To mark my 2475th 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 made 335 points on Friday and is now ahead by 1445 points for January, after ending December with a loss of 932 points, 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, and 2077 points last 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 S&P 500 closed 1.89% lower at a price of 4398.
The Dow Jones Industrial Average closed 450 points lower for a 1.30% loss at a price of 34,265.
The NASDAQ 100 closed 2.75% lower at a price of 14,438.
The Stoxx Europe 600 Index closed 1.8% lower.
Last Friday, the MSCI Asia Pacific Index fell 0.6%.
Last Friday, the Nikkei closed 0.90% lower at a price of 27,522.
Currencies
The Bloomberg Dollar Spot Index closed 0.3% lower.
The Euro closed 0.25% higher at $1.1342.
The British Pound closed 0.3% lower at 1.3550.
The Japanese Yen rose 0.4%, closing at $113.68.
Bonds
Germany’s 10-year yield closed one basis points lower at -0.09%.
Britain’s 10-year yield closed six basis points lower at 1.17%.
US 10 Year Treasury closed five basis points lower at 1.77%.
Commodities
West Texas Intermediate crude closed 1% lower at $82.05 a barrel.
Gold closed 0.67% lower at $1,830.10 an ounce.
This morning on the Economic Front we have German, Euro-Zone and U.K. Markit Services PMI at 8.30 am, 9.00 am and 9.30 am respectively. This is followed by the Chicago Fed National Activity Index at 1.30 pm. Finally, we have U.S. Markit Services PMI at 2.45 pm and the Dallas Fed Manufacturing Business Index at 3.30 pm.
Cash S&P 500
The S&P again traded in a wide range as volatility ramped resulting in the Volatility Index closing higher by a further a 12.75% at a price of 28.75. This, initial move saw the S&P hit my next buy level at 4423 for a 4464 average long position before rallying to my 4482 revised T/P level with a 4493 high print. Subsequently the S&P fell 100 Handles into the close. I bought the S&P again at a price of 4400. The S&P is now very close to my initial 4360 target level as outlined in early January. The market is now deeply oversold with the 14-Day RSI at 28 for the lowest reading since March 2020 while the McClellan Oscillator closed at -293. Once we get the FOMC Meeting out of the way on Wednesday, I am expecting a ferocious rally. The Fed are now trapped despite having expanded its Balance Sheet by a massive $80bn last week the S&P still got slammed. There is no doubt in my opinion that the Fed will try and engineer this market correction with hawkish talk versus hawkish action to produce a soft landing to lead to further rallies. However, beneath the surface we are witnessing a bloodbath with the Small Cap Russell 2000 now 20% lower since the November highs, while many stocks are now trading 50/80% below their 2021 highs. There is only one word for this ‘’Carnage’’. Shortly, after the S&P re-opened last night I emailed my Platinum Members to exit their latest long S&P position at a price of 4423 and this T/P level has now been filled as I go to press. Today, I will again be an aggressive buyer from 4360/4390 with a 4415 T/P level. Again, given how oversold the American Indexes are trading I will not have any stop if executed. If any of the above levels are hit I will be back with a new update for my Platinum Members.
EUR/USD
No Change. I am still a buyer from 1.1235/1.1285 with the same 1.1195 stop. If I am taken long I will have a T/P level at 1.1325.
March Dollar Index
I am still flat. Today, I will again be a buyer on any dip lower to 94.80/95.30 with the same 94.35 stop. If I am taken long I will have a T/P level at 95.60.
Cash DAX
My DAX plan worked well with the trading the whole of my buy range for a 15510 average long position. Subsequently, we rallied to my 15570 revised T/P level and I am now flat. This morning the DAX is trading lower at 15450 as I go to press. The DAX is severely oversold with support below at 15280/15360 where I will again be a buyer with a wider 15195 stop. I still do not want to be short the DAX at this time.
Cash FTSE
I am still flat as the FTSE continues to outperform the other European Indices. The FTSE has support from 7300/7360 where I will be an aggressive buyer with a 7225 stop. I no longer want to be short the FTSE at this time.
Dow Rolling Contract
Wednesday’s FOMC Meeting promises to produce real fireworks. There is no doubt that there are serious question marks about the Fed Members given the insider trading by at least two Fed Members who had to retire as a result in late 2021. The Fed mandate of Full Employment as a cause to keep Rates low was revealed to be a joke as the Fed showed their through colours cutting rates three times in 2019 when the Unemployment Rate was at a 50-Year low of 3.50%. Now we have the Inflation Fiasco where Powell has stubbornly insisted that Inflation was ‘’transitory’’ until he capitulated in December as growth exploded higher and fiscal stimulus was flooding the system. Through all of this the Fed kept relentlessly printing, exacerbating the asset bubble we now see that is imploding all around us. There is no doubt the Fed are trapped and given the recent sell-off I cannot see them hiking rates anytime soon. Late on Friday the Dow accelerated into the close. I bought the market at a price of 34300. Shortly after the markets re-opened last night I emailed my Platinum Members to exit any long position at my 34490 revised T/P level and this has now been executed as I go to press. The Dow has strong support from 33900/34100 where I will be an aggressive buyer with a 33695 wider stop. If I am taken long I will have a T/P level at 34285.
Cash NASDAQ 100
The NDX fell shy if my 15920 revised T/P level before stopping me out of my 15900 long position near the close at a price of 15575 and I am now flat. The NDX is severely oversold and due a strong bounce. Overnight, I bought the market again at a price of 14420 as emailed to my Platinum Members. I am still long with a T/P level at 14600. I will also add to this trade on any further move lower to 14250. I will have no stop for now and if any of the above levels are hit I will be back with a new update for my Platinum Members.
March BUND
No Change as the Bund rallied as expected and I am still flat. I will now raise my buy level to 169.30/169.90 with a higher 168.75 stop.
Gold Rolling Contract
Gold traded in a narrow range yesterday and I am still flat. Today, I will lower my buy level to 1800/1814 with a tight 1789 stop. If I am taken long I will have a T/P level at 1822.
Silver Rolling Contract
No Change. I will not chase Silver higher leaving my 23.00/23.60 unchanged with the same 22.55 tight stop.
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