U.S. Equities staged a furious rally in the final hour of trading that cut in half a rout that reached 4% and left the S&P 500 higher after a tumultuous week dominated by fear the spreading Coronavirus will upend global growth. Treasuries surged. The S&P 500 slid 1.7% Friday and ended the week up 0.6%. Indexes were whipsawed over the past five days as the spreading virus shook investor confidence and spurred action from central banks and governments. Treasuries fell to all-time lows, with the 10-year yield dropping as far as 0.66%. The US Dollar slid for the sixth time in seven days. West Texas crude plunged 10%, the biggest drop in more than five years. A Derivatives Index that investors use to hedge against losses rose the most since at least 2011. Investors have grown increasingly anxious that the Trump administration’s preference for forgoing fiscal stimulus in favor of pressuring the Federal Reserve into more action will fall short of propping up the economy as airlines cancel routes and events get delayed around the nation. While concerted efforts from Central Banks and Governments to soften the blow from the virus spurred gains across Equity Markets earlier in the week, investors are back to taking risk off the table and piling into the world’s safest and most liquid assets. The number of Coronavirus cases globally surpassed 100,000 as more infections were reported in the Europe and Iran. Markets mostly shrugged off the latest U.S. jobs report, which showed the biggest gain in nearly two years, because it only reflected conditions before the virus outbreak began snarling global supply chains and intensified across America. Oil markets tumbled the most since the Gulf War in 1991 after the disintegration of the OPEC+ alliance triggered an all-out price-war among the world’s biggest producers. In one of the most dramatic bouts of selling ever, Brent futures sunk by 31% in a matter of seconds after the open of trading in Asia on Monday after already suffering their biggest loss since the Global Financial Crisis at the end of last week. As Brent collapsed as low as $31 a barrel, Goldman Sachs Group Inc. warned prices could drop into the $20s. Hammered by a collapse in demand due to the Coronavirus, the oil market sank deeper into chaos on the prospect of a supply free-for-all. Saudi Arabia over the weekend slashed its official prices by the most in at least 20 years and signalled to buyers it would ramp up output — an unambiguous declaration of intent to flood the market with crude. Russia said its companies were free to pump as much as they could.
To mark my 2025th 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 357 points on Friday and is now ahead by 1262 points for March, having made 2223 points in February, 2142 points in January, 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
Oil prices crashed and U.S. Equity Futures plunged at the open Monday in Asia after crude producers launched a price war, an additional disruption to a global economy already struggling thanks to the coronavirus.
Among the tumultuous moves to kick off the week:
- Crude plummeted more than 30% at one point, sliding the most since the Gulf War in 1991
- Futures on the S&P 500 Index — which face trading curbsif they move by 5% — cratered as much as 4.6%
- Norway’s krone slid to its weakest against the dollar since the 1980s. Mexico’s peso fell as much as 6%, to the weakest since the aftermath of border-wall advocate President Donald Trump taking office
- Australian and New Zealand 10-year government bond yields hit fresh record lows
- Australia’s benchmark stock index plunged the most since 2008
- The Yen soared to its strongest since 2016
The S&P 500 Index dropped 1.7% to close at a price of 2972.
The Dow Jones Industrial Average slid 1%, closing at 25,864.
The Nasdaq Composite Index dropped 1.9%.
The Stoxx Europe 600 Index fell 3.7%.
Germany’s DAX Index declined 3.4%.
Currencies
Here is a summary of the main Changes in F.X. Markets:
The Bloomberg Dollar Spot Index fell 0.3%
The British Pound increased 0.7% to $1.3044.
The Euro advanced 0.6% to $1.1308.
The Japanese Yen strengthened 0.7% to 105.43 per dollar.
Bonds
The yield on 10-year Treasuries fell 14 basis points to 0.77%.
The yield on two-year Treasuries declined eight basis points to 0.51%.
Germany’s 10-year yield decreased two basis points to -0.71%.
Commodities
West Texas Intermediate crude fell 9.6% to $41.31 a barrel, the most since 2015.
Brent crude settled down 9.4%, the most since December 2008
Gold rose 0.4% to $1,674.40 an ounce.
This morning on the Economic Front we have German Industrial Production and Trade Balance at 7.00 am. This is followed at 9.30 am by Euro-Zone Sentix Investor Confidence. As America changed clocks at the weekend all US Data will be released one hour earlier (for the next three weeks) while the Equity Markets will now close at 8.00 pm for the Cash Markets and 8.15 pm for Futures Contracts. We have no data of note due to be released from the U.S. today.
March S&P 500
Incredible volatility with the S&P rallying 75 Handles in the last 40 minutes of trading. Five out of the past 10 trading sessions have had a ‘’Opening Gap’’ of more than 1.5%, which is tied for the most all-time with October-November 2008 and April 2009. The Fear & Greed Index closed with a reading of 6 which is Extreme Fear. The last comparable reading was December 26, 2018 when we closed at 4. This was just before we had a 30% rally in the S&P. On top of the McClellan Oscillator closed deep in negative territory with a -278 print. Internally the rally on Wednesday was positive so I was surprised to see the extent of the sell-off from Wednesday’s close at 3128 to this afternoon’s 2898 low print. However, as we know from history in Bear Markets all surprises are to the downside. If you follow my strategy of trading in small size with Mental as opposed to Physical stops then you can make some nice points. It is nerve racking and the key is not to have too many positions. After the S&P traded the whole of my buy range for a 2967 long position I was stopped out of this trade at 2949. Frustratingly the S&P just missed my second buy level at 2880. This morning the S&P has opened below my second buy level and stop in what is one of the most remarkable ‘’Opening Gap’s in the S&P’s history. We have hit the 5% limit down for the S&P Futures Contract at 2836. As I go to press the spreadbetting firms have the S&P trading at 2818 in the ”Grey Market.” The Central Banks are going to have to intervene. I have bought the market here in small size at 2819 with a 2780 stop. My T/P level on this position is 2855 for 50% which is the low on February 28 and the balance at 2895.
EUR/USD
The Euro soared after I posted on Friday and I am still flat. The market is severely overbought as we approach the key 1.14 resistance level. A break and close over 1.1400 is bullish for 1.1650 and possibly 1.2150/1.2300 over the coming months. Today I will be a seller from 1.1460/1.1510 with a 1.1555 stop.
March Dollar Index
The Dollar has fallen nearly 5% in the last three weeks and is oversold. The Dollar has support from 94.50/94.90 and I will be a buyer in this area with a 94.05 stop.
March DAX
My DAX plan worked well with the market trading lower to my 11480 buy level before rallying to y 11580 T/P level and I am now flat. The DAX is severely oversold and I will continue to buy the dip. The DAX has support from 10650/10750 and I will be buyer in this area with a 10590 stop. If I am taken long I will have a T/P level at 10880.
March FTSE
My FTSE plan did not work well as after I bought the market at 6490 I was stopped out of this position at 6425 and I am now flat. This morning the FTSE is getting slammed as I post my Daily Commentary. The FTSE has support from 5940/5990 and I will be a buyer in this area with a 5895 stop.
Dow Rolling Contract
My Dow plan worked well with the market trading lower to my 25500 average buy level before rallying to my 25780 T/P level and I am now flat. After rallying 500 points in the last 40 minutes of trading this rally has now been erased following the re-open of the Futures Market. As long as the Dow does not close below its Feb 28 24681 low then I will continue to be a buyer on dips. The Central Banks cannot allow this rout to continue as there is too much at stake. The Dow has strong support from 24170/24450 and I will be a buyer in this area with a 23995 wider stop. If I am taken long I will have a T/P level at 24750.
March NASDAQ
Lets start with some good news. Heading into the close on Friday stock were under heavy selling pressure. The NASDAQ Composite was in danger of closing below its 200-Day Moving Average for the first time since last Spring. A late stock rebound, however, prevented that from happening. My NASDAQ plan worked well as after we traded lower to my 8410 buy level the market rallied to my revised 8542 T/P level and I am now flat. The 200 Day MA comes in at 8170 and today I will be a buyer from 7920/8020 with an 7860 stop. If I am taken long I will have a T/P level at 8230.
June BUND
Not since the depths of the Great Credit Crisis have Bond prices and Yields moved so much in such a short period of time. The US 30 Year Bond closed 6 full points higher, closing at a new record low yield of 1.1846%. Buyers of these Bonds are getting less than 2% in yield for the next 20/30 years. Bloomberg notes that investors in Austria’s 100-year bond are getting just 0.48% for the right to park money until 2117. The DSI is now over 93% bulls. The March Contract has expired and I have now rolled to the June Contract which has not opened yet as I post my Daily Commentary. Given the extent to the rally in the US Bond Markets late Friday I will wait until tomorrow to have a forecast in the June Bund.
Gold Rolling Contract
After falling $20 into the New York close Gold has rebounded to new highs for this move with the market hitting my 1701 sell level. I am still short and I will now raise my T/P level on this position to 1688. I will add to this short position at 1720 with a 1731 stop. If any of the above levels are hit I will be back with a new update for my Platinum Members.
Silver Rolling Contract
My Silver plan worked well with the market trading lower to my 17.10 buy level before rallying to my 17.35 T/P level and I am now flat. Silver continues to underperform Gold causing further tension between the two diverging metals. Today my buy level will be from 16.55/16.95 with a 16.15 stop. If I am taken long I will have a T/P level at 17.20.
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