U.S. Equities halted a two-day slide as investors digested the latest round of corporate earnings and optimism about the eventual reopening of the economy increased. Oil rose from historic lows. The S&P 500 Index rebounded from the worst sell-off in three weeks amid quarterly results that sparked speculation a recovery will be sooner than expected. Chipotle Mexican Grill rose on sales that topped estimates, while Texas Instruments advanced on solid results. Treasury Secretary Steven Mnuchin said he anticipates most of the economy will restart by the end of August. House lawmakers on Thursday are set to pass another round of aid. The Oil market continued to hold investor attention. A day after trading negative, Futures for West Texas Intermediate crude surged above $13 a barrel after President Donald Trump ordered the Navy to destroy any Iranian gun boats that harass American ships at sea. The biggest oil exchange-traded fund reshuffled the mix of futures it owns to track crude prices for a second day, extending their average expiration amid unprecedented volatility in its markets. Investors are continuing efforts to assess the pandemic’s damage to the global economy, with the Oil market chaos suggesting it will be deeper or longer than anticipated by those who drove the S&P 500 up 28% from its March lows. Governments are devising ways to return people to work even as they discover infections are more extensive than they insisted only weeks ago. The Stoxx Europe 600 Index increased broadly in the wake of Tuesday’s slump. Treasuries fell along with European bonds and the US Dollar strengthened.
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Equities
The S&P climbed 2.3% to close at 2798.
The Dow Jones Industrial Average rose 2% to close at 23,469.
The NASDAQ rose 3.1% to close at 8664.
The Stoxx Europe 600 closed 2.5% higher.
Japan’s Topix index gained 1.4%.
MSCI Asia Pacific index rose 0.9%.
Currencies
Here is a summary of the main Changes in F.X. Markets;
The Bloomberg Spot Index rose 0.2% to close at 1260.
The Yen was little changed at 107.70 per dollar.
The offshore Yuan traded at 7.0892 per dollar.
The Euro fell dipped 0.4% to $1.0817, the lowest level in four weeks.
The British Pound climbed 0.3% to $1.2330.
Bonds
The yield on 10-year Treasuries rose five basis points to 0.62%.
Germany’s 10-Yield gained 7 basis points to – 0.41%.
Britain’s 10-Year Yield rose three basis points to 0.33%.
Commodities
West Texas Intermediate crude expiring in June rose 18% to $13.69 a barrel.
Brent Crude climbed 7% to $20.54 a barrel.
Gold advanced 1.8% to $1,718 an ounce.
This morning on the Economic Front we already had the release of German GFK Consumer Confidence which came in much weaker than the -1.8 expected with a – 23.4 print. Next, we have German, Euro-Zone and UK Markit Composite PMI which will be released at 8.30 am, 9.00 am and 9.30 am respectively. This is followed at 1.30 pm by the U.S Weekly Jobless Claims where the expectation is a rise of 4.2 million. Finally, we have Markit Services PMI at 2.45 pm, New Home Sales at 3.00 pm and the Kansas City Fed Manufacturing Activity Index at 3.30 pm.
June S&P 500
As I mentioned yesterday it is extremely difficult to be short the markets given the level of Central Bank intervention. I still believe that we will see much lower prices when Phase 3 finally starts but there is a strong possibility we can still see the S&P close its March 4 and 6 ‘’Open Gaps’’ at 2935 and 2965 first, before the market finally rolls over. Yesterday the S&P opened strong and held onto this Gap for all of Wednesday as we again look to test the key 2820 resistance level. After the S&P hit my 2782 sell level we saw a small sell-off to 2770 and I used this move lower to exit this short-position at my revised 2776 T/P level and I am now flat. Value above 2815 will be a signal to set up longs for a move to 2850/2860, 2900 and then 2930/2960 where I will be an aggressive seller with a 2995 stop. The S&P has short-term support from 2745/2765 where I will be a buyer with a 2729 stop.
EUR/USD
No Change as I am still a buyer on any dip lower to 1.0690/1.0750 with a 1.0655 stop. I will now lower my sell level to 1.0890/1.0940 with a 1.0985 stop.
June Dollar Index
I am still flat and today I will again raise my buy level to 9.40/99.90 with a higher 98.95 stop. I still do not want to be short the Dollar at this time.
June DAX
The DAX never came close to my buy level yesterday as the market tries to build value above the key 10000/10200 support area. Today I will move my buy level higher to 10130/10230 with a 10055 stop.
June FTSE
Late Yesterday the FTSE hit my 5770 sell level before selling off to my revised 5755 T/P level and I am still flat. This morning the FTSE is trading at 5760 as it looks to test the key 5830/5920 resistance area. I will be a seller in this range with a 6005 wider stop.
Dow Rolling Contract
The Dow gaped higher at yesterday’s Open and traded sideways to higher for most of the session before we saw a late sell-off into the close. Yesterday’s volume was the lowest in two months. Despite the narrow range, the VIX remains high, closing again above 40. After the Dow hit my initial 23450 sell level we saw a 100 point fall and this move lower enabled me to cover this position at my revised 23410 T/P level and I am still flat. The Dow needs to break last Friday’s 24249 high for the market to test the next key resistance area from 25000/25500 where I will be an aggressive seller. Short-term the Dow has resistance from 23800/24050 where I will be a seller with a 24225 stop. The Dow has support from 22950/23200 where I will be a buyer with a 22795 stop.
June NASDAQ
The NASDAQ has rebounded well off its test of the 50 Day Moving Average on Tuesday at 8350. Having got stopped out of a long position on that day at 8435 I should have bought in front of 8350 before we rallied 300 points. After the NASDAQ hit my 8600 sell level yesterday we saw a small sell-off and as I did not want to stay short overnight I covered this position at 8588 and I am now flat. The NASDAQ has strong resistance from 8710/8800 where I will be a seller with a 8885 stop. I will move my buy level higher to 8430/8530 with a 8340 wider stop.
June BUND
The BUND got hit hard yesterday closing over 100 points lower. I am still flat and I will now lower my sell level to 172.40/172.90 with a 173.35 stop.
Gold Rolling Contract
Gold has rallied off Tuesday’s 1665 low print to close at 1718 last night. I am still flat and today I will raise my buy level to 1675/1688 with a higher 1663 tight stop.
Silver Rolling Contract
Even though Silver is trading higher I am reluctant to chase this market higher and I will leave my 14.20/14.60 buy level unchanged with the same 13.80 stop. If I am taken long I will have a T/P level at 14.95.
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