U.S. Equity Markets reversed afternoon gains to close sharply lower, led by the NASDAQ 100 which closed with a loss of 1.07%. Bond yields backed off yesterday, providing some relief for equities. Remember, in recent days, higher bond yields have sparked fears of slowing growth, which has sent investors to the exit doors of risk assets. There was also optimistic news on Omicron, with some reports saying that the variant’s impact has already peaked in several of the early hotspots. Housing market economic data was strong. Both December’s Housing Starts and Building Permits rose from November and beat estimates. Building Permits now sit at the highest level since January 2021, while Housing Starts are at the highest level since March 2021. That is a sign of more strength in the housing market. The Nasdaq closed 10% below its all-time high, officially entering a correction. Stocks were a little more balanced in yesterday’s session than they were on Tuesday, though the declines still outnumbered the advances within the S&P 500. Bank of America (BAC) and Morgan Stanley (MS) posted strong quarterly results, marking the first positive reports out of the big banks so far. But weakness from U.S. Bancorp (USB) and State Street (STT) still weighed on the financial sector. Procter & Gamble’s (PG) earnings beat boosted the staples sector, especially the news that it passed higher input costs onto customers without issue. Within the S&P 500, nine of the 11 sectors finished lower. European Markets closed higher. U.K. Consumer price index (“CPI”) data for December was stronger than expected, rising to the highest level since 1992, but still better than feared. European Central Bank Governing Council member François Villeroy de Galhau said the central bank will take action if inflation remains elevated. British Prime Minister Boris Johnson was said to be ready to end restrictions in place to limit Omicron’s spread, including mandatory work from home and COVID-19 passes to attend large events. In Asia, People’s Bank of China Deputy Governor Liu Guoqiang said it would employ the use of more monetary policy tools to ensure ample financial-system liquidity and stabilise economic growth. Bank of Japan Governor Haruhiko Kuroda said he expects both long- and short-term interest rates to remain at current levels or lower, in an effort to stem rate hike speculation. Japanese Prime Minister Fumio Kishida said the government would elevate COVID-19 restrictions in Tokyo and the surrounding prefectures to stem the infection’s spread. South Korean Finance Minister Hong Nam-ki said the government expects housing prices to stabilise on interest rate hikes from the Bank of Korea and Federal Reserve. Elsewhere, Oil rose 0.66% as the International Energy Agency said that crude demand would surpass pre-pandemic levels in 2022, while Gold gained an impressive 1.72% on Dollar weakness.
To mark my 2475th 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 145 points yesterday and is now ahead by 740 points for January, after ending December with a loss of 932 points, 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, and 2077 points last 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
The S&P 500 closed 0.97% lower at a price of 4532.
The Dow Jones Industrial Average closed 339 points lower for a 0.96% loss at a price of 35,028.
The NASDAQ 100 closed 1.07% lower at a price of 15,047.
The Stoxx Europe 600 Index closed 0.5% higher.
Yesterday, the MSCI Asia Pacific Index fell 1.2%.
Yesterday, the Nikkei closed 2.80% lower at a price of 27,467.
Currencies
The Bloomberg Dollar Spot Index closed 0.2% lower.
The Euro closed 0.2% higher at $1.1438.
The British Pound closed 0.2% higher at 1.3615.
The Japanese Yen rose 0.3%, closing at $114.27.
Bonds
Germany’s 10-year yield closed five basis points lower at -0.07%.
Britain’s 10-year yield closed three basis points higher at 1.26%.
US 10 Year Treasury closed three basis points lower at 1.85%.
Commodities
West Texas Intermediate crude closed 0.66% higher at $84.03 a barrel.
Gold closed 1.72% higher at $1,841.10 an ounce.
This morning on the Economic Front we have German PPI at 7.00 am. This is followed by ECB CPI and a speech from ECB Member De Guindos at 10.00 am. Next, we have the Minutes from last month’s ECB Meeting at 12.30 pm, followed by U.S. Weekly Jobless Claims and the Philly Fed Manufacturing Survey at 1.30 pm. Finally, we have Existing Home Sales at 3.00 pm.
Cash S&P 500
The S&P traded in a wide range as volatility ramped up after 10 Year Yields again tested a two-year high at 1.90%. The S&P made a morning low at 4543 before rebounding to an afternoon high at 4611, before getting slammed into the close, to hit a new low for the day at 4525. This level hit my buy range and I am now long at a price of 4530. As I mentioned in yesterday’s commentary we must hold the 4500 support area or else we run the risk of testing the 200-day MA which comes in this morning at 4425. I will add to this position on any further dip to 4499 with a 4485 stop. I will now lower my T/P level to 4545. With the 14 Day RSI closing lower at 33 last night, I still do not want to be short the S&P at this time.
EUR/USD
No Change. I am still a buyer from 1.1240/1.1290 with the same 1.1195 stop. If I am taken long I will have a T/P level at 1.1330.
March Dollar Index
I am still flat. Today, I will again be a buyer on any dip lower to 94.80/95.30 with the same 94.35 stop. If I am taken long I will have a T/P level at 95.60.
Cash DAX
My DAX plan worked well with the market trading lower to my 15650 buy level before rallying to my 15700 T/P level with a rebound high of 15898. This morning, the DAX is trading lower at 15774. We have strong support from 15570/15640 where I will again be a buyer with a 15495 wider stop. Ahead of the ECB Minutes, I still do not want to be short the DAX at this time.
Cash FTSE
The FTSE just missed my 7615 initial sell level by one point before following the U.S Markets lower into the Chicago close. Given the positive price action for the FTSE I will not chase the market lower, leaving my 7625/7675 sell range unchanged with the same 7705 stop.
Dow Rolling Contract
My Dow plan worked well with the market trading lower to my 35150 buy level before rallying to my 35330 T/P level. Subsequently, I emailed my Platinum Members to buy the Dow again which I did near the close at a price of 35040. I will add to this position at 34840 with a lower 34695 stop. I will also lower my T/P level to 35180 and if any of the above levels are hit I will be back with a new update for my Platinum Members. The 200 Day MA for the Dow is just below at 34950 and I would expect a decent bounce of this key support.
Cash NASDAQ 100
Wrong! Shortly after I posted last night the NDX stopped me out of my 15360 latest long position at 15195. However, overnight the NDX did trade lower to my second buy level at 15010 before rallying and I have now exited this position here at 15090 and I am now flat. The NDX has now fallen over 10% from its early January high and is short-term oversold. I will continue to be a small buyer from 14850/15000 with the same 14775 stop. The 200 Day MA for the NDX comes in just below here at 14993. With the RSI closing at 33 I would expect this level to offer decent support on any initial test. Given how oversold the NDX is, I do not want to be short the market at this time. If I am taken long I will have a T/P level at 15120.
March BUND
Frustratingly, the Bund missed my 164.90 buy level by five points before rebounding to an afternoon high at 165.50. I will not chase the Bund higher leaving my 164.40/164.90 buy level unchanged with the same 167.95 stop.
Gold Rolling Contract
Gold rallied above the key 1830/1840 resistance level yesterday for a gain of 1.7%. This is impressive price action. I will now raise my buy level to 1807/1822 with a higher 1797 stop.
Silver Rolling Contract
Silver just missed my buy level before continuing its rally from late Tuesday and I am still flat. I am bullish of Silver and I will again raise my buy level to 23.00/23.60 with a higher 22.55 tight stop.
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