The spread of a deadly respiratory virus rattled global markets, sending U.S. stocks lower and fuelling demand for havens in Government Bonds and Gold. Oil fell for a fourth day on concern the outbreak will dent economic growth. The S&P 500 Index posted its biggest drop since October amid reports that U.S. officials had confirmed two more cases of the illness, which originated in China and has also spread to several countries in Asia and to Europe. Benchmark Treasury yields fell to a three-month low, while the US Dollar advanced for a second day. Investors are exercising caution with stocks close to all-time highs, cognizant of the chance the respiratory virus migrates across the world and develops into a more devastating pandemic like the SARS illness that emerged 17 years ago. Officials in China boosted travel restrictions to cover 40 million people to contain the virus’s spread. In company news, United Airlines Holdings Inc. and American Airlines Group Inc. each slid more than 3% on concern the virus will limit demand for air travel and tourism. Financial shares also sank, with Citigroup Inc. down almost 2% as UBS warned the sector could be hurt by less credit-card spending and a decline in cross-border payments. Health shares were among the worst performers Friday on growing speculation that upcoming elections in the U.S. may prompt lawmakers to take action on the increasing cost of medicines in the U.S. Intel Corp. was a rare bright spot after giving a bullish revenue forecast. Elsewhere, the Pound slipped for a second day versus the dollar, giving back some of its rally from earlier in the week.
To mark my 1975th 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 8 points on Friday and is now ahead by 1513 points for January, having made 818 points in December, 780 points in November, 1649 points in October, 1620 points in September, 2387 points in August, 1153 points in July, 1346 points in June,1722 points in May, 955 points in April and 1027 points in March. 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 Index fell 0.9% to close at 3295.
The Dow Jones Industrial Average fell 170 points to close at 28.989.
The Stoxx Europe 600 Index added 0.9%.
The MSCI AC Asia Pacific Index fell 0.1%.
Currencies
Here is a summary of the main Changes in F.X. Markets:
The Bloomberg Dollar Spot Index gained 0.1%.
The British Pound declined 0.4% to $1.3076.
The Euro fell 0.3% to $1.1027.
The Japanese Yen rose 0.2% to 109.29 per dollar.
Bonds
The yield on 10-year Treasuries fell five basis points 1.69%.
Britain’s 10-year yield dipped three basis points to 0.56%.
Germany’s 10-year yield fell three basis points to -0.34%.
Commodities
West Texas Intermediate crude declined 2.2% to $54.39 a barrel.
Gold rose 0.5% to $1,571.30 an ounce.
This morning on the Economic Front we have the German IFO Survey for Current Assessment/Expectations at 9.00 am. This is followed at 9.30 am by UK BBA Mortgage Approvals. Finally, we have U.S. New Home Sales at 3.00 pm and the Dallas Fed Manufacturing Business Index at 3.30 pm.
March S&P 500
On Friday morning the S&P tested Wednesday’s 3337 all-time high before getting hit hard, trading to a low of 3281 before a late rally saw the S&P close 0.9% lower at 3295. Technically Friday was a very weak session for the S&P as the market registered a Downside Key Day Reversal. This is the fourth Downside KDR since October and all the other reversals have seen buyers return before the market got into more trouble. So far the S&P is holding below my 3350 Target level and if we can break and close below 3250 then we may finally be able to say that we have at least a temporary top in the market. My S&P plan did not work well on Friday with the market trading the whole of my buy range for a 3305 average long position before stopping me out of this trade at 3291 and I am now flat. Today I will lower my sell level to 3308/3320 with a 3329 stop. The S&P has short-term support from 3242/3252 and I will be a small buyer on any dip to this area with a 3233 tight stop. Friday’s 0.9% decline was the 70th consecutive trading session without a great than 1% higher or lower close than the previous day. The VIX which reflects expected volatility for at the money options, while at the same time trending and reversing with the market. Interesting, the VIX’s closing low during the most recent market advance occurred at a price of 11.54 on November 26. The VIX has not made a new extreme low since then, even though stocks have continued higher. On Friday the VIX exploded to the upside, hitting an intra-day at 15.98 before closing 12% higher at 14.56. If the VIX breaks and closes above Friday’s high then we will see an acceleration in the US Indices to the downside.
EUR/USD
I am still flat the Euro and today I will lower my buy level slightly to 1.0955/1.0995 with a lower 1.0915 stop.
March Dollar Index
I am still short the Dollar at 97.50 from last Thursday. I will leave my T/P level unchanged at 97.30. I will also look to add to this short position at 97.90 while raise my stop on this position to 98.12. If any of the above levels are hit I will be back with a new update for my Platinum Members.
March DAX
The weakness in the Euro prevented the DAX from following FTSE and US Indices lower. I am still flat and today I will now lower my buy level to 13180/13250 with a 13125 stop. If I am taken long I will have a stop level at 13290.
March FTSE
My FTSE plan worked well with the market trading higher to my 7565 sell level before selling off to my revised 7538 T/P level and I am now flat. Today I will again look to sell the FTSE from 7490/7550 with a 7605 stop. I still do not want to be long the FTSE at this time.
Dow Rolling Contract
The Dow registered a Downside Key Day Reversal on Friday. This morning the Dow is trading a further 300 points lower as the virus in China spreads. After the Dow traded lower to my 29000 buy level I emailed my Platinum Members to exit any long position at my revised 29050 T/P level as emailed to my Platinum Members. Subsequently after the Dow re-opened at 9.30 pm on Friday I emailed them again to say that if anyone did buy the Dow at the bottom of my buy range (28890) then to take the 100 point gain before the markets closed on Friday evening. This morning we are trading at 28675 as I go to press which is 700 points lower than last Wednesday’s all-time high as the sentiment extremes that I have been mentioning all month finally come home to roost. It is unlikely the U.S traders will leave such a large ‘’Open Gap’ go unfilled and today I will be a buyer from 28450/28600 with a 28360 stop. Given the extent of the sell-off since Friday afternoon I will not be a seller of the Dow at this time.
March NASDAQ
My 9250 short NASDAQ position worked well with the market trading lower to 9210 T/P level and I am now flat. The NASDAQ has strong support from 8930/8980 and I will be a buyer on any dip to this area with an 8885 stop. If I am taken long I will have a T/P level at 9035.
March BUND
The Bund never came close to my 172.10 buy level as the market rallied 100 points following the Equity Market sell-off. The Bund has strong resistance from 174.50/175.10 and I will be a seller in this area with a 175.45 stop.
Gold Rolling Contract
Gold has rallied strongly since I posted on Friday morning and I am still flat. Gold has resistance from 1598/1615 and I will be a small seller in this area with a 1626 stop.
Silver Rolling Contract
My latest 17.80 long Silver position worked well with the market rallying to my 17.95 T/P level and I am now flat. Today I will be a buyer from 17.70/18.10 with a 17.35 tight stop.
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