U.S. Equity Markets jumped and Treasuries fell after a jobs report that far surpassed analysts’ forecasts bolstered expectations for the economy to rebound quickly from Coronavirus lockdowns. The S&P 500 Index rose 2.6% and posted a third weekly advance, leaving the gauge up more than 40% from its March low. Benchmark Treasury yields rose to an 11-week high. Oil jumped, Gold fell and the US Dollar slumped following data that showed a drop in Unemployment and surge in Payrolls last month, signalling the economy is picking up faster than anticipated from the virus-inflicted recession. The tech-heavy Nasdaq Composite underperformed but still set an intraday record. Airlines, automakers and banks soared, signalling that investors are rotating away from the beneficiaries of the stay-at-home economy and into shares that will do well when more normal activity resumes. While the Unemployment rate at 13.3% is still shockingly high by historic standards, markets are riding a wave of enthusiasm as investors bet on a global economy awash with stimulus. Fiscal and monetary aid measures from Frankfurt and Berlin exceeded expectations this week, and reports showed that Trump administration officials expect to spend as much as $1 trillion in the next round of aid. With this week’s 4.9% gain, the S&P 500 is close to wiping out its losses for the year, even after the Coronavirus pandemic killed more than 100,000 Americans and left many more collecting unemployment. The Nasdaq Composite has climbed almost 10% since the end of December. Oil posted its sixth weekly gain after OPEC+ reached a tentative agreement to extend record production cuts. In Europe, airlines, automakers and hotels led gains in equities as investors scooped up beaten-up shares. The Stoxx 600 Index posted its best week in two months. Asian stocks were up more than 5% on the week, led by financial shares.
To mark my 2075th 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 285 points on Friday and is now ahead by 725 points for June, having made 2456 points in May, 4773 points in April, an incredible 9264 points in March, 2223 points in February, 2142 points in January and 818 points in 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
As if life could not confuse even more, the BLS said 2.5 million jobs were added back in May after the huge self-inflicted job losses seen in the prior months. The Unemployment Rate fell to 13.3% from 14.7%. The caveat is that the all-encompassing U6 rate is still very elevated at 21.2% versus 22.8% last month. More jobs will of course be added in June as more things re-open. Remember the U6 Unemployment Rate of 21.2% compares with 6.7% at the end of 2019.
The S&P 500 Index climbed 2.6%, closing at a price of 3193.
The Dow Jones Industrial rose 829 points for a 3.15% gain to close at 27,110.
The NASDAQ 100 rose 2% to close at a new all-time high at 9824.
The Stoxx Europe 600 Index rose 2.5%.
The MSCI Asia Pacific Index increased 0.7%.
The MSCI Emerging Market Index gained 1.5%.
Currencies
Here is a summary of the main Changes in F.X Markets:
The Bloomberg Dollar Spot Index fell 0.2%.
The Euro fell 0.4% to $1.1293.
The British Pound rose 0.6% to $1.2666.
The Japanese Yen weakened 0.4% to 109.63 per dollar.
Bonds
The yield on 10-year Treasuries jumped seven basis points to 0.89%.
Germany’s 10-year yield increased five basis points to -0.28%.
Britain’s 10-year yield rose five basis points to 0.35%.
Commodities
West Texas Intermediate crude increased 5.2% to $39.36 a barrel.
Gold weakened 1.8% to $1,682.94 an ounce.
This morning on the Economic Front we already had the release of German Industrial Production for April which fell 17.9% versus -16.5% expected. At 9.30 am we have Euro-Zone Sentix Investor Confidence and this is followed at 11.00 am by the OPEC press conference. Finally, as we have no U.S data of note this afternoon, we have Canadian Housing Starts at 1.15 pm.
June S&P 500
Markets closed last week at a ‘’Red Flag’’ screaming 151% market cap to GDP. There is no history, none, that shows valuations above 150% market cap to GDP are sustainable. But this is what you get when you have a market that treats a Phase one Trade Deal as something better than the trade volumes were in place before the trade war ever started, This is what you get when a market treats Phase one Covid Vaccine trials as an actual vaccine already in place. This is what you get when a market prices in a perceived uptick in Employment from a total collapse as an economy already having returned to full employment. Finally, this is what you get when a market perceives the injection of trillions of Dollars as a substitute for actual growth in the economy. We now have a Financial Asset Bubble the likes we have never seen before. Asset bubbles happen at the end of a business cycle. Now we have one with nothing, absolutely nothing, on an extended proven growth path and the global economy still in a recession. The five-day S&P Daily Sentiment Index closed at 79.2% on Friday night. This shows a greater level of bullishness than at the February peak of 77.2%. With the Trump administration talking about another $1 trillion of aid, this bubble will inflate further. My S&P plan of Friday did not work well as after my second sell level at 3157 was hit for a 3148 average short-position I was quickly stopped out of this trade at 3171. Subsequently I went short again at 3181 in small size. I will add to this position today at 3202 with a 3215 closing stop. I will have a T/P level at 3169. The S&P has strong support from 3100/3120 where I will be a buyer with a 3088 stop.
EUR/USD
The Euro just missed my 1.1395 sell level with a 1.1384 high print before selling off 100 points and I am still flat. I will continue to be a buyer on any dip lower to 1.1160/1.1220 with a higher 1.1105 stop. I will now lower my sell level to 1.1360/1.1420 with a lower 1.1465 stop.
June Dollar Index
No Change as I am still long at 97.00 with the same 97.10 T/P level. I will now raise my stop on this position to 96.55.
June DAX
My DAX plan worked well as after the market traded higher to my initial 12820 sell level I emailed my Platinum Members to exit any short position at 12780 and I am still flat. It is no surprise that after a 2300 point gain in the DAX in the last three weeks that we are struggling to move higher. This morning the DAX is trading lower at 12720. We have support from 12500/12600 where I will be a small buyer with a tight 12425 stop. The DAX has resistance from 12900/13050 where I will be a seller with a 13115 stop.
June FTSE
After the FTSE traded higher to my 6470 sell level we had a small sell-off. As I am short both the S&P and NASDAQ, I had enough exposure over the weekend and I exited this FTSE gain at 6445 and I am still flat. This morning the FTSE is opening lower at 6420. I will continue to be a seller from 6480/6540 with a 6595 stop. Given the strength of Sterling I still do not want to be long FTSE at this time.
Dow Rolling Contract
The Dow has now rallied over 9000 points from the March 23 low at 18215 to Friday’s 27338 high print. This incredible move higher saw the March 4 ‘’Open Gap’’ at 27305 been filled, while the VIX fell 5% to close at an oversold level of 24.52. Shortly after the NFP was released the Dow traded the whole of my sell range for a 26850 average short position before stopping me out of this trade at 27105 and I am still flat. The 50 – Day Moving Average comes in at 26304 and this level will initially act as good support on any sell-off. I will be a buyer from 26100/26350 with a 25965 stop. Given how severely overbought the Dow is, I will be a small seller from 27350/27550 with a tight 27705 stop.
June NASDAQ
Late on Friday the NASDAQ traded higher to my 9820 sell level with a new all-time high at 9873 overnight. I am still short and I will know raise my T/P level to 9775. I will now lower my stop to 9905 and if any of the above levels are hit I will be back with a new update for my Platinum Members.
June BUND
My BUND plan worked well with the market trading lower to my 169.75 buy level before rallying to my 170.15 T/P level and I am still flat. The BUND is oversold and today I will again be a buyer from 169.30/169.80 with the same 168.95 stop.
Gold Rolling Contract
My Gold plan also worked well with the market trading lower to my 1675 buy level before rallying to my 1682 T/P level. This morning Gold is opening higher at 1695. I will continue to buy Gold on any dip lower to 1665/1675 with the same 1654 stop.
Silver Rolling Contract
After Silver traded lower to my 17.25 buy level I emailed my Platinum Members to exit any long position at 17.50. This level was filled overnight and I am still flat. Today my buy level will be from 16.80/17.20 with a 16.45 stop.
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