Equity Markets slumped and bonds rallied on heightened concern that the spread of the coronavirus will slam global economic growth. The S&P 500 Index erased its 2020 gain and the Dow Jones Industrial Average dropped more than 600 points as traders remained on edge over the impact of the disease that’s now infected about 10,000 people around the world. A gauge of U.S. equity volatility spiked to an almost four-month high. Caterpillar Inc. plunged as its outlook trailed estimates, adding to worries about global business spending. Amazon.com Inc. soared after a blowout quarter. Treasury 30-year yields breached 2% for the first time since October. Chinese stocks plummeted overnight by the most since an equity bubble burst in 2015 as they resumed trading amid the worsening virus outbreak. The CSI 300 Index dropped as much as 9.1% as onshore financial markets opened for the first time since Jan. 23. More than 2,600 stocks fell by the daily 10% limit. China’s benchmark iron ore contract declined by its daily limit of 8%, while copper, crude and palm oil also sank by the maximum allowed. The yield on China’s most actively traded 10-year government bonds dropped the most since 2014. The Yuan tumbled more than 1% to weaken past 7 per dollar. The rout comes as regulators unleashed targeted measures to help blunt the pain for companies, banks and individuals, as well as pledging financial stability. China injected cash into the financial system Monday, with the central bank seeking to ensure ample liquidity as markets plunge. It cut the rates on the funds by 10 basis points. Officials also urged investors to evaluate objectively the impact of the coronavirus, which has killed more than 360 and spread to more than 17,000 people.
To mark my 2000th 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 7 points on Friday to finish January with a gain of 2142 points, having made 818 points in December, 780 points in November, 1649 points in October, 1620 points in September and 2387 points in August. 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 end of January was tumultuous across global markets as a barrage of corporate earnings, central-bank decisions and economic data landed in the growing shadow of the epidemic. The outbreak will cut U.S. economic growth by 0.4 percentage point in the first quarter as the number of tourists from China plunges and exports to the Asian nation slow, according to Goldman Sachs Group Inc. Still, a report showed that American consumer sentiment increased in January to an eight-month high, indicating sustained optimism in the face of the coronavirus.
American stocks had their worst month since August, with the S&P 500 dropping more than 3% from its all-time high on Jan. 17, led by energy and raw-material companies. While the benchmark gauge and the Dow Average both erased gains for the year, the Nasdaq Composite Index still held on to a 2% advance in 2020. It was the first time since Sept. 2018 that the major equity measures failed to move together on a monthly basis.
The S&P 500 sank 1.8% to close January at 3225.
The Dow Jones Industrial Average fell 603 points to close at 23,256.
The Stoxx Europe 600 Index decreased 1.1%.
The MSCI Emerging Market Index fell 1%.
Currencies
Here is a summary of the main Changes in F.X. Markets:
The Bloomberg Dollar Spot Index dipped 0.3%.
The Euro increased 0.6% to $1.1094.
The Japanese Yen appreciated 0.6% to 108.35 per dollar.
Bonds
The yield on 10-year Treasuries declined eight basis points to 1.51%.
Germany’s 10-year yield decreased three basis points to -0.43%.
Britain’s 10-year yield fell two basis points to 0.524%.
Commodities
The Bloomberg Commodity Index decreased 0.4%.
West Texas Intermediate crude dipped 1.1% to $51.56 a barrel.
Gold strengthened 1% to $1,589.26 an ounce.
This morning on the Economic Front we have German, Euro-Zone UK and U.S. Markit Manufacturing PMI at 8.55 am, 9.00 am 9.30 am and 2.45 pm respectively. Also, at 2.45 pm we have ISM New York. Finally, at 3.00 pm we have ISM Manufacturing PMI and Construction Spending.
March S&P 500
Initially my S&P plan worked well with the market trading lower to my 3268 buy level shortly after I posted before rebounding to an intra-day high of 3280. This move higher enabled me to cover this position at my revised 3275 T/P level. Subsequently I emailed my Platinum Members to re-buy the S&P at a price of 3250 before being stopped out of this trade at 3237 and I am now flat. The S&P sold off into the close to test it’s 50 Day Moving Average with a low of 3213 before rebounding overnight to sit at 3245 as I go to press. While the Dow did close below it’s 50 Day MA both the NASDAQ and S&P did not. Stocks are oversold with the McClellan Oscillator closing deep in negative territory with a reading of -182 while the Fear & Greed Index closed with a Fear reading of 44. Although the S&P closed below 3250 I would prefer to see the S&P break and close below 3210 before looking to set up a short position. Conversely if the S&P breaks and closes over 3250 I will look to buy the market. Today I will be an aggressive buyer from 3205/3218 with a 3196 stop. Given how oversold the S&P is trading I do not want to be short the market at this time.
EUR/USD
I am still flat the Euro as the market closed 0.6% higher on Friday. The Euro has strong resistance from 1.1100/1.1140 and I will be a small seller in this area with a 1.1175 stop. I will also move my buy level higher to 1.0980/1.1020 with a 1.0945 stop.
March Dollar Index
Finally, the Dollar traded lower to my 97.60 T/P level on my 97.70 short position and I am now flat. The Dollar has strong resistance from 97.65/98.05 and I will be a seller in this area with a 98.35 stop.
March DAX
Shortly after I posted on Friday, all five of my Indices hit my buy range. I know most of you will only take 2/3 of these calls given the level of risk and exposure. After the DAX traded lower to my 13100 buy level I emailed my Platinum Members to exit any long position at 13115 and I am still flat. This morning the DAX is trading at 13020 as I go to press and I will be a small seller on any further rally to 13100/13160 with a 13225 stop.
March FTSE
My FTSE plan did not work well with the market trading the whole of my buy range or a 7280 average long position before quickly getting stopped out of this trade at 7215 and I am now flat. The FTSE is severely oversold and today I will again look to buy the market on any further move lower to 7125/7175 with a 7080 stop.
Dow Rolling Contract
My Dow plan worked well with the market trading lower to my 28650 buy level before rallying to my revised 28715 T/P level and I am now flat. Subsequently the Dow was hammered, falling 600 points to close at 28,256 as thankfully we had no second buy level in this market. The 50 Day MA for the Dow comes in at 28,435 and as I go to press we are now testing this level. The Dow has resistance from 28600/28750 and I will be a small seller in this area with a 28850 stop. The Dow has strong support from 28000/27850 and I will be an aggressive buyer on any dip to this area with a 27735 stop.
March NASDAQ
My NASDAQ plan also worked well with the market trading lower to my 9145 buy level before rallying to my revised 9173 T/P level and I am now flat. Even though the NASDAQ got hit hard into last Friday’s close the market is still trading over 2% higher for the year. The 50 Day MA is well below current prices at 8710. It is going to take a lot more negativity for the NASDAQ to break its current uptrend. Today I will be a buyer on any further dip lower to 8940/8990 with an 8895 stop.
March BUND
Late Friday I emailed my Platinum Members to raise their sell level in the Bund and I am now short at 175.10. The Bund is overbought, having risen 500 points since Christmas. I will have a stop on this position at 175.45 while raising my T/P level on this position to 174.80. If any of the above levels are hit I will be back with a new update for my Platinum Members.
Gold Rolling Contract
I am still flat and today I will raise my buy level to 1545/1557 with a higher 1537 stop.
Silver Rolling Contract
No Change as my only interest in buy the market is still on a dip lower to 17.15/17.55 with the same 16.70 stop.
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