U.S. Equity Markets suffered one of the deepest sell-offs of the year and Treasuries surged as mounting signs of a global economic slowdown stoked fears of an economic recession. The S&P 500 sank almost 3% and the Dow Jones Industrial Average plunged 800 points in its worst rout of the year, sparked when the 10-year Treasury rate slid below the two-year for the first time since 2007. The 30-year yield fell to the lowest on record. Financial shares plunged 3.5% led by a 4.2% rout in Goldman Sachs Group Inc. All of the 30 Dow components retreated. Volatility has gripped the S&P 500 since President Donald Trump rekindled the trade war at the start of August. The index has swung at least 1% intraday for 11 straight sessions and is now down 6.1% from its July record. Oil sank 3.5%, Gold rallied and the US Dollar rose. Meanwhile, Hong Kong’s airport resumed normal operations after a chaotic night of protest in which demonstrators beat and detained two suspected infiltrators and Trump warned of Chinese troops massing on the border.
To mark my 1875th 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 10 points yesterday and is now ahead by 911 points for August, having made 1153 points in July, 1346 points in June,1722 points in May, 955 points in April, 1027 points in March, 1013 points in February and 1671 points in January. 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
European shares lost more than 1.5% after Germany’s economy contracted in the second quarter, adding to angst fuelled by weak Chinese Retail and Industrial numbers. With U.S.-China trade uncertainty lingering, investors are increasingly selling first and asking questions later. The only thing seemingly capable of reversing the volatility is credible evidence global growth is bottoming out. That seems too much to hope for right now. The warning emanating from bond markets spooked investors already seeking shelter from the fraught geopolitical climate and the impact of the global trade war just a day after equities rallied on a tariff reprieve from President Donald Trump. While curve inversions normally precede economic downturns, they do not necessarily signal imminent doom.
The S&P 500 Index fell 2.9% to close at 2840, 100 Handles lower than where we traded on Tuesday afternoon. The Dow Jones Industrial Average lost 3.1% and the Nasdaq 100 fell 3.1%.
In Europe, the Stoxx Europe 600 Index fell 1.7% and Germany’s DAX Index sank 2%.
Currencies
Here is a summary of the main changes in F.X. Markets:
The Bloomberg Dollar Spot Index rose 0.3%.
The Euro decreased 0.3% to $1.1143.
The British Pound climbed 0.1% to $1.2073.
The Japanese Yen jumped 0.7% to 106.01 per dollar.
Bonds
Both the British and US Yield Curves inverted for the first time since the financial crisis and the Pound edged higher after inflation unexpectedly rose. Government bonds rallied across Europe, with the yield on benchmark German Bund sliding to another record.
The yield on 10-year Treasuries sank 12 basis points to 1.59%.
The yield on two-year Treasuries declined nine basis points to 1.58%.
The 30-year rate fell to 2.034%.
Germany’s 10-year yield declined four basis points to -0.65%.
Commodities
Gold futures rose 0.8% to $1,526.60 an ounce.
West Texas Intermediate crude decreased 3.5% to $55.11 a barrel.
This Morning on the Economic Front we have UK Retail Sales at 9.30 am. Most of Europe is closed today for Assumption Day so we have no Euro-Zone data. At 1.30 pm we have US Weekly Jobless Claims, Philly Fed Manufacturing Index and Retail Sales. This is followed at 2.15 pm by Industrial Production. Finally, at 3.00 pm we have Business Inventories and the NAHB Housing Market Index.
September S&P 500
The Dow, S&P, and NASDAQ all gapped lower at yesterday’s U.S Open and closed at the near bottom tick of the day. The decline was broad based with all of the 30 stocks comprising the Dow closing lower while 99% in the S&P 500 Index did to. The bearish internals were equally as strong with respect to volume, as 93.9% of the Big Board Volume was in declining issues and just 6.1% in advancing issues. As I go to press, Bloomberg shows that the Trin closed at 3.62, which is the most extreme close since September 1, 2015 (4.95). This level of extreme suggests that the market will rally in the next day or two, just like what happened on Tuesday when the S&P rallied 70 Handles in 20 minutes. The VIX rose 27% to close at 22.09 and tomorrow will be a key day for the market to see if we fall further or there is another Hail Mary Rally first. Interestingly the McClellan Oscillator did not reflect the extreme of the Trin closing with a negative print of 158. Initially my S&P plan was wrong with the market trading the whole of my buy range for a 2908 average long position before stopping me out of this position at a tight 2896. I did not do my first update until near tea-time when we saw some stabilisation and I got my Platinum Members to buy the market at a price of 2847 before the market rallied to my 2860 T/P level and I am still flat. Given how oversold the market is I would expect to see the 2800/2820 area hold the S&P initially and I will be a buyer in this area with a 2789 wider stop. If I am taken long I will have a T/P level at 2835.
EUR/USD
I am still flat the Euro. Today I will again lower my buy level slightly to 1.1070/1.1110 with a 1.1035 stop.
September Dollar Index
No Change as I am still a seller from 98.35/98.75 with the same 99.05 stop.
September DAX
As I was already long the S&P, Dow and FTSE I did not buy the DAX as I had enough risk on board and I am still flat. The DAX fell 2% after economic data showed that Germany is close or already in recession. I am going to stay flat the DAX at this time and concentrate on the other Indices.
September FTSE
I waited to buy the FTSE which I did at the bottom of my buy range at 7120 before getting stopped out of this position at 7085 and I am still flat. As I go to press the market is trading at 7080 and today my only interest in buying the FTSE is on a further dip lower to 6995/7035 with a 6955 stop. If I am taken long I will have a T/P level at 7065.
Dow Rolling Contract
As I had a large long position in the Dow I waited to buy the Dow which I did at the bottom of my buy range at 25980 before quickly getting stopped out of this trade at 25905. I waited to email my Platinum Members and in this email I got them to buy the market again at 25520 before being able to T/P at 25610 and I am still flat. I am not happy that the Dow closed below the key 25500 support level but given how oversold we are as explained by the Trin above I will give the market one more day to try and recover. Today my buy level will be from 25130/25300 with a wider 24995 stop, which is just below the 25070 low print from August 5.
September NASDAQ
Thankfully we had no buy level in this market yesterday as we closed over 3% lower on heavy volume. The NASDAQ has strong support from 7360/7420 and I will be a buyer on any dip to this area with a 7325 stop. I no longer want to be short the NASDAQ at this time.
September BUND
The aggressive sell-off in European Equity Markets saw the Bund trade the whole of my sell range for a now average short position of 178.15. I will leave my 178.70 stop unchanged while raising my T/P level to 177.95. If any of the above levels are hit I will be back with a new update for my Platinum Members.
Gold Rolling Contract
The 10-Day Daily Sentiment Index has pushed to 90.8% Gold bulls which is the highest since August 22, 2011 when it closed at 92.7%. I am still flat the market and today I will be a small seller on any further rally to 1548/1560 with a 1569 stop.
Silver Rolling Contract
I am still flat Silver and today I will raise my buy level slightly to 16.35/16.75 with a higher 15.95 stop.
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