U.S. stocks fell to a 12-week low, while Treasuries advanced amid persistent concern the bond-market recession warning is growing louder as the trade war shows no signs of easing. The S&P 500 closed at the lowest since March 11, though it cut a drop that reached 1.3% by half late in the session. The Index dipped below its average price for the past 200 days for the first time since March before bouncing back. It ended under its 100-day moving average for the first time since February. After months of over-optimism, investors are finally realizing a quick fix is not likely on US-China trade. In fact, an escalation in trade tensions increasingly seems more likely than a near-term resolution. The risk-off tone was set in overnight as Chinese media reports suggested Beijing may cut exports of rare-earth minerals used in the defense and energy sectors, opening another front in its trade war with the U.S. The US Dollar rose for a third day versus major peers, including the Japanese Yen. Gold climbed and oil retreated.
To mark my 1850th 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 lost 9 points yesterday and is now ahead by 1809 points for May, having made 955 points in April, 1027 points in March, 1013 points in February, 1671 points in January, 2803 points in December, 1541 points in November and 2094 points in October. 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
Investors are gauging warning signals in fixed-income markets with little expectation of a quick improvement in the global growth outlook or the U.S.-China trade war, as the full impact of American tariff hikes is yet to kick in. Beijing is gearing up to use its dominance of rare earths as a counter. A raft of American data this afternoon and tomorrow will give traders more to chew on as they reassess the Federal Reserve’s policy path. The S&P 500 fell 0.7% reversing earlier session lows of a 1.3% decline. The Dow Jones Industrial Average slid 0.9% to the lowest since Feb. 11. The Russell 2000 Index dropped to its lowest since Jan. 30. The Stoxx Europe 600 Index fell 1.4% to the lowest since Feb. 21 while the MSCI All-Country World Index declined 1.1%, the lowest since February.
Currencies
The Bloomberg Dollar Spot Index jumped 0.3%, the highest in more than five months. However we still have not broken the key 98.20/98.60 resistance area. The strong Dollar saw the Euro closed 0.2% lower at $1.1134, the weakest in a week. Finally the British Pound declined less than 0.05% to $1.2647, the weakest in almost five months as the fall-out from the European Elections and PM May’s exit continues.
Bonds
The 10-year Treasury yield dipped below 2.21% before rebounding to 2.26% — still the lowest since September 2017. The yield gap between three-month and 10-year Treasuries, often watched as an early signal of pending recession, slid to a 2007 low of minus 13 basis points. Investors will get a closer look at the health of the American economy when a batch of data lands this afternoon. The yield on 10-year Treasuries dipped one basis point to 2.26%, the lowest since September 2016. Germany’s 10-year yield declined two basis points to -0.18%, the lowest in about three years. Meanwhile in Asia, Japan’s 10-year yield dipped two basis points to -0.09%, the lowest in almost three years on the largest decrease in almost six weeks.
Commodities
West Texas Intermediate crude dipped 0.6% to $58.79 a barrel. Although closed 0.4% higher at $1,284.20 an ounce, it is opening softer in London this morning at $1277.
This morning on the Economic Front we have no data of note in the Euro-Zone as most of Europe is closed for Ascension Day. At 1.30 pm we have US Weekly Jobless Claims, Wholesale Inventories and GDP. Finally we have Pending Home Sales at 3.00 pm followed by a speech from Fed Member Clarida at 5.00 pm.
June S&P 500
My S&P plan worked well with the market trading lower to my 2771 buy level with a 2766 low print before rallying to a rebound high so far at 2788 and I used this rally to cover my position at my revised 2781 T/P level and I am now flat. Despite the aggressive sell-off for the US Indies over the past 36 hours the VIX only closed 2.2% higher at 17.90 which is well below its early May high of 23.38. Crucially the VIX is so far holding below the key resistance level of 20. If the VIX can continue to underperform then I would expect the S&P to hold in and possibly trade higher. The McClellan Oscillator closed near oversold levels with a -161 closing print last night while the Fear & Greed Index is now showing a reading of Extreme Fear. Today I will again look to buy the S&P on any dip lower to 2765/2775 with a 2757 stop.
EUR/USD
I am still flat the Euro and today I will again lower my buy level slightly to 1.1055/1.1095 with a 1.1015 lower stop. Despite the bearish price action I still do not want to be short the Euro at this time.
June Dollar Index
As mentioned in my Economic Commentary above the Dollar has so far being unable to break the key 98.30/98.60 resistance area. I am still flat and today I will still be a seller on any rally to this area with a 98.95 stop.
June DAX
My DAX plan worked well as the market has so far held its test of the key 11800 support level. This move lower saw the market hit my 11810 buy level before rallying to a rebound high this morning at 11885. As mentioned in one of my emails to my Platinum Members yesterday I expected the 11800 area to hold as the DAX was trading outside the bottom of its Daily Bollinger Band and Williams Index. As I was aggressively long the S&P I covered my DAX position at 11830 and I am still flat. Today I will again look to buy the market from 11770/11830 with the same 11715 stop.
June FTSE
My FTSE plan also worked well with the market trading lower to my 7140 buy level before rallying to my revised 7168 T/P level and I am now flat. Today I will again look to buy the FTSE on any dip lower to 7105/7155 with a 7075 stop. I still do not want to be short the FTSE at this time.
Dow Rolling Contract
Unfortunately I was stopped out of my 25315 average long position at 25180 and I am still flat. The Dow made a low of 24938 yesterday before spending the rest of the session trading sideways to higher and is currently at a price of 25150 as I go to press. Even though the Dow is still below its 200 Day Moving Average I am reluctant to go short especially as the CBOE Put/Call Ratio has spiked above 1.23 which is a relatively elevated level of pessimism. For example this ratio spiked to 1.41 on December 20 before the Dow bottomed a few days later and subsequently rallied 5000 points over the following few months. Today I will be a buyer of the Dow on any dip lower to 24900/25050 with a 24780 stop.
June NASDAQ
The NASDAQ has key support from 7120/7170 and today I will be a buyer on any dip to this area with a 7065 wider stop. A break and close below 7125 for a few days is bearish for a subsequent move lower to at least 6875.
June BUND
Very late in yesterday’s trading session I was stopped out of my 167.75 short position at the Day’s high at 168.10 which is frustrating. In the US Bond Market the Daily Sentiment Index has risen to 91% bulls. In my view the rise in Bond prices should be in its very latter stages especially with the Bund trading with a yield of negative 19 basis points. Today I will again look to sell the Bund from 167.98/168.35 with a 168.65 stop.
Gold Rolling Contract
No Change as I am still a buyer on any dip lower to 1260/1269 with the same 1252 stop. The DSI for Gold closed at 21% bulls so we are getting close to a buy signal based on this key sentiment indicator.
Silver Rolling Contract
I emailed my Platinum Members yesterday afternoon to exit any 14.30 long Silver position at 14.43 and I am now flat. Silver is getting close to a long-term buy level. With the DSI closing at 16% bulls last night which is close to my single digit buy signal I will again look to buy Silver on any dip lower to 13.90/14.30 with a 13.55 stop. If I am taken long I will have a T/P level at 14.60.
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