U.S. Equity Markets reversed earlier loses by spiking on the Federal Reserve’s Policy Announcement, finishing the day higher after recovering all of this week’s sell-off. The NASDAQ 100 led the rally, closing higher by 2.35% which saw the VIX fall 12%, closing at a price of 19.29. In the FOMC Statement, the central bank said it would double the speed of its asset purchase tapering, which was to be expected. That means that the taper will be complete at the end of March (instead of the previous target of the end of June). In the Fed’s “dot plot” (which shows how many rate hikes the central bank is estimating), the majority of Fed members said they expect three rate hikes to come in 2022. Meanwhile, the Fed said that it could reinstitute any accommodative policies if the economy worsens. In his post-policy meeting press conference, Fed Chair Jerome Powell said the central bank sees inflation as a problem, but added that it will not raise rates until the taper is complete. So none of those three rate hikes will happen in the first quarter, by the Fed’s measure. Essentially, policy will remain accommodative for the near future, and the changes the Fed made were not worse than feared. And that’s just what Wall Street wanted to hear…Earlier in the afternoon, releases for Retail Sales and the NAHB Housing Market Index were published. Retail sales missed estimates, potentially flashing a warning sign for consumer spending. But the NAHB Housing Market Index rose to a 10-month high, reiterating the ongoing strength in the housing market. But these were largely overlooked, with investors awaiting the Fed’s policy release. Within the S&P 500, 10 of the 11 sectors finished higher. European Markets closed higher. British Consumer Price Index (“CPI”) data for November was stronger than expected, hitting the highest level since 1992, as fuel and automobile costs rose. The International Monetary Fund suggested the Bank of England should take the soonest possible action to fight high inflation. European Central Bank economic projections for today’s policy meeting were said to show inflation will remain above 2% for 2022 before easing in 2023 and 2024. Now, investors will await the ECB’s policy release, which comes at 12.45 pm. In Asia, China’s industrial production figures for November beat expectations, rising from October, as manufacturing output increased. Bank of Japan Governor Haruhiko Kuroda said inflation should approach the central bank’s 2% target as rising raw material costs elevate prices. South Korean Prime Minister Kim Boo-kyum said the government may reintroduce restrictions for private gatherings and business hours in an attempt to stem coronavirus infections. Australian consumer confidence data for December eased from November, as household expectations for the economic outlook fell. Elsewhere, Oil closed 1.02% higher on a larger-than-expected drawdown in U.S. crude inventories, while after a volatile session Gold closed with a gain of 0.29%.
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For anyone following my Platinum Service it made 210 points yesterday, and is now down by 661 points for December, having made 2466 points in November, 1028 points in October, 2866 points in September, 1543 points in August, and 996 points in July. The Platinum Service made 1366 points in June, 1439 points in May, 1244 points in April, having ended March with an impressive gain of 3769 points, 3286 points in February, 2077 points in January, and 2273 points last 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
The S&P 500 closed 1.63% higher at a price of 4709.
The Dow Jones Industrial Average closed 383 points higher for a 1.08% gain at a price of 35,927.
The NASDAQ 100 closed 2.35% higher at a price of 16,289.
The Stoxx Europe 600 Index closed 0.6% higher.
This morning, the MSCI Asia Pacific Index rose 1.1%.
This morning, the Nikkei closed 2.13% higher at a price of 29,066.
Currencies
The Bloomberg Dollar Spot Index closed 0.3% lower.
The Euro closed 0.2% higher at $1.1298.
The British Pound closed 0.1% higher at 1.3260.
The Japanese Yen fell 0.3%, closing at $114.05.
Bonds
Germany’s 10-year yield closed one basis points higher at -0.36%.
Britain’s 10-year yield closed one basis points higher at 0.73%.
US 10 Year Treasury closed one basis points higher at 1.45%.
Commodities
West Texas Intermediate crude closed 1.02% higher at $71.73 a barrel.
Gold closed 0.29% higher at $1,779.10 an ounce.
This morning on the Economic Front we have German, Euro-Zone and U.K. Markit Services PMI at 8.30 am, 9.00 am and 9.30 am respectively. At 10.00 am we have Euro-Zone Industrial Production, followed by the Bank of England Rate Decision at 12.00 pm. Next, we have the ECB Rate Decision at 12.45 pm, followed by the Lagarde Press conference at 1.30 pm. At the same time we have U.S. Weekly Jobless Claims, Philly Fed Manufacturing Survey, Housing Starts and Building Permits. At 2.15 pm we have Industrial Production and Markit Services PMI at 2.45 pm, Finally, we have the Kansas Fed Manufacturing Activity Index at 4.00 pm.
December S&P 500
Thankfully we had no sell levels in any of the Equity Markets that I cover in my Daily Commentary as yet again the Fed came to the rescue and prevented a break of the 50-Day Moving Averages in all three U.S. Indexes, slamming any short-positions with the S&P rallying 125 Handles off yesterday afternoon’s 4612 low print. Internals are atrocious with a few stocks holding everything up, including Apple which is now has a valuation of $3tn. This market with over 200% Market Cap to GDP is in la la land in terms of valuation disconnect from the Economy. The Small Cap Russell 2000 hit a new 3.5 month low yesterday before having a small rally into the close, but still trades below its 200 Day MA. My S&P plan worked well yesterday as the market hit my initial 4615 buy level before rallying to my 4625 revised T/P level ahead of the FOMC Statement and I am now flat. The S&P is trading at 4734 this morning, just below all-time highs. Today, I will be a small seller from 4750/4765 with a 4781 stop. The S&P has support from 4652/4667 where I will be a buyer with a 4639 stop.
EUR/USD
I am still flat the Euro. The Euro just missed my initial buy level by 10 points before rallying back above 1.1300. I will now raise my buy level to 1.1195/1.1255 with a tight 1.1149 stop. The Euro has resistance from 1.1380/1.1430 where I will be a small seller with the same 1.1471 stop.
March Dollar Index
My Dollar plan worked well with the market hitting my 96.80 sell level before selling off to my 96.45 T/P level and I am now flat. This morning the Dollar is trading at 96.40. We have resistance from 96.70/97.20 where I will again be a seller with a 97.61 tight stop.
December DAX
The DAX reversed Tuesday’s sell-off to sit 250 points higher this morning and I am still flat. I expect the ECB to remain dovish when we get their Policy Statement at 12.45 pm while of course lagarde will still stay inflation is ‘’transitory’’ when she does her press conference. The DAX has support from 15500/15570 and I will Raise my buy level to this area with a 15435 stop. I still do not want to be short the DAX at this time.
December FTSE
The FTSE just missed my second buy level at 7160 before rallying to my 7240 T/P level on my 7220 latest long position and I am still flat. Today, I will again be a buyer on any dip lower to 7140/7190 with a 7095 stop. If I am taken long I will have a T/P level at 7230.
Dow Rolling Contract
The Dow has been extremely frustrating to trade over the past few weeks. The Fed again rescued off-side long positions with their dovish Policy Statement yesterday, helping the Dow to rally almost 700 points of yesterday’s 35389 low print. Unfortunately, the Dow just missed my 35250 initial buy level and I am still flat. I will now raise my buy level to 35670/35870 with a higher 35435 stop. I still do not want to be short the Dow at this time.
December NASDAQ
Incredible volatility in the NDX as the market led yesterday’s impressive 2.35% rally, with a 550 point surge into the close. The NDX has support from 16050/16150 where I will be a small buyer with a 15945 stop.
March BUND
No Change. I am still a seller from 174.80/175.30 with a 175.71 stop. I still do not want to be long the Bund at this time.
Gold Rolling Contract
Gold reversed earlier losses and I am still flat. I will now raise my buy level to 1745/1760 with a 1729 stop. If I am taken long I will have a T/P level at 1767.
Silver Rolling Contract
My Silver plan worked well as the market traded lower to my 21.50 aggressive buy level before rallying post FOMC to my 22.05 T/P level and I am now flat. Today, I will again be a buyer from 21.30/21.90 with a 20.75 higher stop.
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