U.S Equity Markets again closed higher, led by the Russell 2000 which made its 13th new all -time high for 2020, closing with a gain of 0.87%. Equity Markets held steady gains before stumbling late in the day. Early yesterday morning, President Donald Trump questioned the dollar amount on direct payments being offered in Congress’s recently agreed upon aid bill. He said $600 was not enough, requesting it be raised to $2,000. He said the American people need it. He also requested Congress eliminate wasteful spending. While never saying he would outright veto the measure, Trump suggested he won’t sign it unless changes are made. This raised the possibility of increased fiscal spending, brightening the economic outlook. But in typical Wall Street fashion, the market sold off late in the day ahead of a long holiday weekend. European Markets closed higher on the last trading day before Christmas. Negotiators from the U.K. and European Union were said to be in agreement on the final outline of a trade accord. Up until now, the major stumbling block had been Fishing Rights. The agreement is an incremental positive for global stock markets because the lack of an agreement could have hurt the fragile growth picture both regionally and globally. At the same time, the European Commission called on all European countries to lift their travel bans on visitors from the U.K. And France reopened trade and transportation connections with Britain. It also said it will allow travel for citizens who can show negative COVID-19 test results. Elsewhere, Oil rose 2.23% after inventory data showed crude stockpiles fell to their lowest levels since November, while Gold finished the day 0.4% higher on Dollar weakness.
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Equities
The S&P 500 closed 0.07% higher at a price of 3690.
The Dow Jones Industrial Average closed 114 points higher for a 0.38% gain at a price of 30,129.
The NASDAQ 100 closed 0.51% lower at a price of 12,653.
The Stoxx Europe 600 Index closed 0.6% higher.
The MSCI Asia Pacific Index rose 0.2%.
This morning the Nikkei closed 0.54% higher at a price of 26,668.
Currencies
The Bloomberg Dollar Spot Index closed 0.2% lower.
The Euro closed 0.2% higher at $1.2201.
The British Pound rose 0.40% to close at $1.3495.
The Japanese Yen closed 0.2% lower at 103.57 per dollar.
Bonds
Germany’s 10-year yield closed four basis points higher at -0.55%.
Britain’s 10-year yield closed ten basis points higher at 0.28%.
US 10 Year Treasury closed three basis points higher at 0.94%.
Commodities
West Texas Intermediate crude closed 2.23% higher at $46.71 a barrel.
Gold closed 0.40% higher at $1,872.20 an ounce.
This morning on the Economic Front we have no data of note on either side of the Atlantic.
March S&P 500
The S&P fell shy of my initial 3705 sell level by four Handles before selling off 20 Handles into the close. Ahead of the long weekend in the U.S I will now raise my sell level to 3715/3730 with a higher 3745 stop. Yesterday’s Cash high at 3711 filled the Gap from last Friday’s 3709 close. However, we still have a large number of ‘’Open Gaps’’ below the market since the S&P started it’s latest rally on October 30 from a low of 3220. Optimism and Sentiment is near record levels with almost every Wall Street analyst expecting the S&P to rally between 5 and 20% next year. There are no ‘’Bears’’ around. The National Association of Active Investment Managers Exposure Index closed at a price of 104.78, which is a record long exposure for Fund Managers, to a degree that we have never seen before in this data series. In my opinion this is a dangerous time to be long without a tight stop. The S&P has initial support from 3635/3655 where I will be a small buyer with a 3623 stop. Below here the S&P has long-term support from 3560/3590 where a break and close below would be the first signal since last February of a long-term top in the market. I will be an aggressive buyer in this area with a 3545 stop. If I am taken short I will have a T/P level at 3702. If I am taken long I will have a T/P level at 3668. If I am taken long a second time I will have a T/P level at 3614.
EUR/USD
No Change. I am still a buyer from 1.2090/1.2140 with the same 1.2045 stop. Even though the Euro is severely overbought as shown by the latest Daily Sentiment Indices reading at 91% bulls. I will not chase the Euro lower and I will leave my 1.2290/1.2340 sell level unchanged with the same 1.2405 wider stop. If I am taken long I will have a T/P level at 1.2180. If I am taken short I will have a T/P level at 1.2245.
March Dollar Index
I am still flat the Dollar and ahead of the Christmas break I will now lower my buy level to 89.30/89.80 with a lower 88.75 stop. If I am taken long I will have a T/P level at 90.35.
March DAX
The DAX is closed today and I will stay flat until my next commentary on Wednesday.
March FTSE
The FTSE is closed today at 12.30 pm and does not re-open until Tuesday. With so much uncertainty ahead of the final Brexit Agreement I will also stay flat the FTSE until I return next Wednesday.
Dow Rolling Contract
The Dow again traded in a narrow range and I am still flat. The Dow has key support at 29600 and a break and close below here opens up the possibility of a move lower to 28900/29000. A break and close below this key support level will be the first sign of a top in the market. Today I will be a small buyer from 29650/29830 with a 29535 tight stop. My only interest in selling the Dow is on a further rally higher to 30550/30750 with a higher 30925 ‘’Closing Stop’’. If I am taken long I will have a T/P level at 29950. If I am taken short I will have a T/P level at 30410.
March NASDAQ
Frustratingly the NASDAQ just missed my 12580 buy level before rallying to trade at 12670 as I go to press. I will continue to be an aggressive seller from 12805/12900 with a wider 13005 stop. I will leave my 12500/12580 buy level unchanged with the same 12395 stop. If I am taken short I will have a T/P level at 12750. If I am taken long I will have a T/P level at 12640.
March BUND
The Bund fell 100 points yesterday and I am still flat. With the Bund closed today and tomorrow I will stay flat the Bund until I return next Wednesday.
Gold Rolling Contract
Gold has traded sideways for most of the past month and I am still flat. I will not chase the price of Gold higher, leaving my 1820/1835 buy level unchanged with the same 1809 stop. If I am taken long I will have a T/P level at 1845.
Silver Rolling Contract
Shortly after I posted yesterday morning, Silver rallied to my 25.50 T/P level on my latest 25.20 long position and I am now flat. Silver has support from 24.30/24.90 where I will be a buyer with a 23.75 stop. If I am taken long I will have a T/P level at 25.25.
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