U.S. stocks extended a weekly loss to the worst since Christmas, while Treasuries rallied a fourth day as the Trump administration’s trade spats intensified. Oil tumbled. The S&P 500 also capped its worst month of the year, bringing its May decline past 6.5% after President Donald Trump threatened to place escalating tariffs on Mexico. The Dow Jones Industrial average careened to a sixth weekly loss, the longest slump since 2011. The Mexican peso tumbled more than 2%, while the yen jumped. The 10-year Treasury yield had its biggest weekly slide since 2014 as traders fully priced in two Interest Rate cuts for the year amid angst over the threat of a recession. The credit market’s fear gauges moved by the most in almost three weeks to show the riskiest high-grade and junk bond markets since January. The latest move by the self-described ‘’Tariff Man’’ would put 5% American duties on all Mexican imports on June 10, rising to 25% in October unless Mexico halts “illegal migrants” heading to the U.S. Evidence emerged Friday that economic growth is holding up when a crucial measure of U.S. inflation watched by the Federal Reserve picked up in April for the first time this year and Americans’ spending and incomes topped forecasts.
To mark my 1850th 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 95 points on Friday to close May with a gain of 1722 points, having made 955 points in April, 1027 points in March, 1013 points in February, 1671 points in January, 2803 points in December, 1541 points in November and 2094 points in October. 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
Trump’s Mexico declaration and a Bloomberg report that China is planning to restrict rare-earths exports leave markets set for a turbulent end to what’s been a rough month for global stocks, This morning, Stocks in Asia were mostly lower as Futures signalled share declines in the U.S. and Europe in the wake of trade-war jitters from the U.S. tariffs looming against Mexico and China’s retaliation against American measures. The S&P 500 Index closed 1.3% on Friday for a totally loss in May of over 6.5%. The Dow average lost 1.4% and the Nasdaq 100 slid 1.5%. Meanwhile in Europe, the Stoxx Europe 600 Index dropped 0.8% to the lowest in 15 weeks.
Currencies
Friday was another quiet session for the main currencies with the Bloomberg Dollar Spot Index closing unchanged as the market again finds its difficult to break the key 98.20/98.60 resistance level. The Euro advanced 0.4% to close $1.1169, the first advance in a week. Meanwhile in Asia, on the back of the risk-off markets the Japanese yen jumped 1.1% to 108.48 per dollar.
Bonds
Treasuries have benefited from haven demand, with yields on 10-year notes down to 2.14 % Friday compared with 2.50% at the start of the month. This was the biggest weekly decline since December 2014. The yield on two-year Treasuries declined 13 basis points to 1.93%, while Germany’s 10-year yield fell two basis points to -0.21%, the lowest on record. Japan’s 10-year yield declined two basis points to -0.094%, the lowest in almost three years.
Commodities
It was a different story in the Commodity Markets where oil was slammed amid concerns about global demand with West Texas Intermediate crude falling 5.9% to $53.26 a barrel, the lowest since February. Safe haven buying saw Gold gain 1.3% to $1,304.81 an ounce, the highest in seven weeks.
This morning on the Economic Front we have German, Euro-Zone, UK and US Markit Manufacturing PMI at 8.55 am, 9.00 am, 9.30 am and 2.45 pm respectively. Finally we have US ISM Manufacturing PMI and Construction Spending at 3.00 pm.
June S&P 500
My S&P plan on Friday did not work well with the market stopping me out of my 2768 long position near the low of the day at 2755 shortly after I posted. The S&P made a low of 2751 in Chicago before rallying to a rebound high of 2768 before selling off into the close. That sell-off continued overnight with the market trading at 2735 this morning. The S&P is now trading 220 Handles lower since its 2955 high print one month ago. Usually the Advance/Decline line tops before the market shows weakness. This time there was no warning sign. My own view is that we will have one more test of the May Highs before the more meaningful sell-off occurs later in the Summer or in Q4. The McClellan Oscillator closed at -176 on Friday while all US Indices are now trading outside the bottom of their Daily Bollinger Bands thus showing how oversold the market is at this time. The S&P has strong support from 2715/2728 and I will be a buyer on any dip to this area with a wider 2703 stop. Given how oversold the market is trading my only interest in selling the S&P is on a rally higher to 2778/2790 with a 2801 stop.
EUR/USD
Despite the risk-off nature of Friday’s session the Euro rose which is in contrast to the rest of May. I am still flat and today I will now raise my buy level in the Euro to 1.1080/1.1125 with a 1.1045 stop.
June Dollar Index
The Dollar just missed my 98.30 sell level on Friday and I am still flat. Today I will lower my sell level to 98.00/98.40 with a lower 98.75 stop.
June DAX
Thankfully we had no buy level in the DAX on Friday with the market now trading near 11600 which is now well below the key 11800/11850 resistance area. The next support for the DAX comes in from 11460/11530 and today I will be a buyer in this area with a 11425 tight stop.
June FTSE
I am still flat the FTSE. The FTSE is severely oversold as we trade at a price of 7085 which is just 50 points above March low of 7035. The 7010/7055 area must hold or we this sell-off could turn nasty. Today I will be a buyer in this area with a 6970 stop. Given how oversold the FTSE is trading I still do not want to be short the market at this time.
Dow Rolling Contract
The Dow did not hit my buy range on Friday. However overnight the Dow got hit hard after the Futures Markets re-opened on Globex. I have bought the Dow myself in small size here at 24625 with a now lower 24450 stop. The Dow is now trading 2300 points lower than its late April high as Fear grips the market. It is extremely difficult to be short as there is every chance we will get a surprise rate cut from the Fed especially with the market now building in two cuts over the next six months. I will have a T/P level of 24750 on this position and if any of the above levels are hit I will be back with a new update for my Platinum Members.
June NASDAQ
My NASDAQ plan worked well with the market trading lower to my 7135 buy level on Friday before rallying to my 7170 T/P level and I am now flat. May was an awful month for the NASDAQ as we lost over 9%. The NASDAQ has strong support from 7010/7060 and today I will be a buyer on any dip to this area with a 6965 stop.
June BUND
With the BUND trading at a new all-time high this morning at a yield of -23 basis points. This is insane and in my opinion Fund Managers and Pension Funds buying these bonds with such a huge negative interest rate are mad. When this market turns these funds will loose a lot of their capital. Today I will leave my 164.80/165.20 sell level unchanged with the same 165.55 stop.
Gold Rolling Contract
Flight to safe-haven assets saw Gold outperform on Friday with the market now trading at $1314 this morning. Today I will raise my buy level to 1293/1301 with a 1285 stop.
Silver Rolling Contract
Unfortunately Silver just missed my 14.40 buy level on Friday and I am still flat. Today I will now raise my buy level to 14.15/14.55 with a 13.85 stop.
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