U.S. Equity Markets rallied to a seven-week high on better-than-estimated revenue for Google’s parent company and hopes for a Coronavirus treatment. Oil surged. The S&P 500 Index gained 2.7% in a broad advance, with four stocks up for every one that fell after Gilead Sciences Inc. said its experimental drug helped Covid-19 patients recover faster. The Nasdaq Composite Index rose to within 1% of erasing losses for the year, led by Alphabet Inc. after it reported an ad-sales slowdown that was not as bad as expected. Oil Futures rebounded after plunging 27% in two sessions. The US Dollar weakened. Investors shrugged off warnings from the Federal Reserve that the ongoing public health crisis “poses considerable risks to the economic outlook over the medium term.” Data also showed the biggest contraction since 2008 in the first quarter as the world’s largest economy shrank at a 4.8% annualised pace. Meantime, investors are weighing plans by countries around the world to restart activity, with hard-hit nations like Spain saying they need at least eight more weeks to fully lift restrictions. Post-market earnings from mega-caps like Facebook Inc. will also give more insight into the impact of the outbreak. Elsewhere, the Stoxx Europe 600 Index posted a third straight advance. Asian shares also rose. Japan closed 2.15% higher this morning having been closed yesterday for a holiday. Colombia’s Peso led a rally in emerging-market currencies, which were headed toward their best gain in 10 months.
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For anyone following my Platinum Service it made 35 points yesterday and is now ahead by 4743 points for April, having made an incredible 9264 points in March, 2223 points in February, 2142 points in January, 818 points in December, 780 points in November, 1649 points in October, 1620 points in September and 2387 points in August 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
Federal Reserve Chairman Jerome Powell voiced concern that the Coronavirus crisis could leave permanent scars on the U.S. economy and said policy makers of all stripes needed to do more to limit the damage. In a sober 48-minute teleconference with reporters after the Fed left interest rates pinned near zero, Powell suggested that the economic battle against the virus would be far from over even if a recovery begins in the third quarter from the deepest recession since the Great Depression. The ongoing public health crisis “poses considerable risks to the economic outlook over the medium term,” Fed policy makers said in a statement on Wednesday after two days of talks. The central bank’s sombre assessment contrasted with hopes for a rapid rebound among stock market investors and President Donald Trump and indicates that the Fed could keep the Federal Funds rate at rock bottom levels for years.
The S&P 500 Index increased 2.7%, closing at a price of 2939.
The Dow Jones Industrial Average rose 532 points for a 2.2% gain to close at 24,633.
The NASDAQ 100 surged 3.62%, closing at 8982.
The Stoxx Europe 600 Index advanced 1.8%.
The MSCI Asia Pacific Index climbed 1.1%.
The MSCI All-Country World Index gained 2.4%.
Currencies
Here is a summary of the main Changes in F.X. Markets:
The Bloomberg Dollar Spot Index fell 0.6%.
The Euro increased 0.5% to $1.0879.
The British Pound rose 0.3% to $1.246.
The Japanese Yen strengthened 0.3% to 106.60 per dollar.
Bonds
The yield on 10-year Treasuries was little changed at 0.61%.
Germany’s 10-year yield decreased two basis points to -0.50%.
Britain’s 10-year yield was little changed at 0.28%.
Commodities
West Texas Intermediate crude climbed 25% to $15.38 a barrel.
Gold rose 0.4% to $1,713.97 an ounce.
This morning on the Economic Front we already had the release of German Retail Sales which fell 5.6% versus -8% expected. At 8.55 am we have German Unemployment and this is followed at 10.00 am by Euro-Zone CPI, Unemployment and GDP. At 12.45 pm we have the ECB Statement, followed by the Lagarde press conference at 1.30 pm. At the same time we have the latest U.S Weekly Jobless Claims, which is expected to rise 3.5 million. Finally, at 245 pm we have the Chicago Purchasing Managers’ Index.
June S&P 500
No stopping this incredible market with the S&P rallying over 90 Handles yesterday as yet again anyone trying to short a US Equity Index gets slaughtered. The unprecedented action taken by the Fed where they own everything except the stock market sees the S&P now 30% higher off it’s March 23 low at 2270. Bullish sentiment has surged and if we are to see a Phase 3 as outlined by me over the past few weeks then this is the type of optimism that Phase 2 generates. The McClellan Oscillator closed at an extreme overbought level at +315. We are now in my sell zone which extends to the 200 Day MA at 3006. Just before the FOMC Statement was released the S&P hit my 2937 sell level before the market sold off to my revised 2927 T/P level and I am still flat. Today, I will be an aggressive seller from 2975/3000 with a 3015 stop. Given how overbought the S&P is, I do not want to be long the market at this time.
EUR/USD
April saw the smallest range in the Euro for many months. The 1.0900 level is critical as building value and settling above here opens up the strong possibility of a move higher to 1.1020/1.1060 and then 1.1220. Today I will move my buy level higher to 1.0780/1.0830 with a 1.0725 stop. I no longer want to be short the Euro at this time.
June Dollar Index
I am still flat the Dollar with the market again closing below 100. The Dollar has resistance from 99.90/100.50 where I will be a seller with a 100.90 stop.
June DAX
The DAX surged yesterday with the market never coming closing to my 10620 buy level as we open this morning above 11200. The DAX is severely overbought as we wait for the ECB Rate announcement at 12.45 pm. The DAX has strong resistance from 11270/11400 where I will be a seller with a 11480 stop.
June FTSE
My 5945 latest short position was wrong yesterday with the market hitting my thankfully tight 6010 stop shortly after I posted and I am still flat. Overnight the FTSE traded to a high of 6185 before selling off 90 points as I go to press. I will now look to sell the market from 6140/6220 with a 6285 stop. I still do not want to be long the FTSE at this time.
Dow Rolling Contract
The Dow has now rallied almost 6700 points off its March 23 low at 18213. An incredible move completely orchestrated by the Fed. Of course, the Fed had no choice but to intervene aggressively and we are now at the stage where Price Earnings are expensive and much hope is priced in that we will have a V-Shaped recovery. I cannot see this happening as the jobs lost will take a long time to recover. Remember we were slowing down for the six months into February which most analysts are ignoring. 86% of the American Economy is in the Service sector. Today I will lower my sell level slightly to 24995/25200 with a lower 25350 stop. The Dow has support from 23650/23950 where I will be a buyer with a 23495 stop.
June NASDAQ
With the NASDAQ trading to an overnight high at 9140, which was less than 8% off all-time highs, this incredible rally shows no sign of ending. The NASDAQ is severely overbought and due a correction. We have resistance from 9190/9300 where I will be a seller with a 9405 wider stop. The NASDAQ has initial support from 8800/8880 where I will be a small buyer with a 8725 tight stop.
June BUND
I am still flat the BUND as we wait for the ECB and Lagarde press conference at 1.30 pm. I will now raise my sell level to 173.55/174.05 with a higher 174.45 stop. I still do not want to be long the Bund at this time.
Gold Rolling Contract
Gold fell shy of my 1680 buy level with a 1692 low before rallying into the New York close to sit at 1720 this morning. I will now raise my buy level to 1685/1695 with a tight 1674 stop.
Silver Rolling Contract
I am still flat and today I will raise my buy level to 14.70/15.10 with a 14.35 stop.
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