Rising Bond Yields saw U.S. Equity Markets get hit hard again yesterday, led by the 2.17% fall in the NASDAQ 100. This move higher in Bond yields saw investors rushing out of risk assets. Remember, the thought is that higher Bond Yields will make it more expensive for tech companies to borrow money to fuel growth. Now, Wall Street sees rising bond yields as a headwind to growth. That is why we saw high-growth sectors – like technology and communications – underperform again yesterday. And since these sectors have high weightings in the major indexes, the drawdown dragged broader markets lower. This will be something to keep an eye on moving forward for near-term market direction. The Federal Reserve was in focus again. Early in the day, Philadelphia Fed President Patrick Harker said that inflation was too high and that the central bank would need to steadily hike rates and reduce its balance sheet to bring inflation back down. In the evening, the Fed released the Minutes from its most recent meeting. In the Minutes, Fed voters agreed to begin winding down the balance sheet by $95 billion per month. Recent commentary suggests that this will start at the May Meeting. And the Fed also made the case for 50-basis-point rate hikes, indicating that we will see those as well in the coming months. This sent markets even lower, as it means rapid tightening from the central bank – which could choke off growth. Aside from technology and growth stocks, rail stocks like Union Pacific (UNP) underperformed after a report showed another drop-off in North American rail traffic. Tobacco stocks like Philip Morris (PM) boosted the consumer staples sector, after analysts at Jefferies said that there is unseen value in these companies as they work to expand beyond traditional cigarettes into areas like cannabis. Within the S&P 500, six of the 11 sectors finished lower. European Markets closed lower. German Factory Order data for February contracted more than anticipated as metal-production demand fell. Euro-Zone Producer Price Index (“PPI”) figures for February were in line with expectations as rising energy costs continue to push year-over-year gains higher. Germany’s Economic Minister Robert Habeck signalled a willingness from Berlin to speed up the timeline for independence from Russian energy supplies. European Central Bank Chief Economist Philip Lane said he expects energy prices to peak by the middle of this year and inflation to ease thereafter. In Asia, Caixin China’s composite Purchasing Managers’ Index (“PMI”) data for March fell back into contraction territory, hitting the lowest level since February 2020. China’s National Health Commission said it would extend COVID-19 lockdowns in the city of Shanghai until it can analyse mandatory test results and better evaluate the situation. The Bank of Korea warned inflation could stay near 4% for the foreseeable future due to rising energy and food costs related to the conflict in Ukraine. Japanese voter polls showed individuals are increasingly worried about the threat posed by Russia and China, wanting Tokyo to spend more on military defenses. Elsewhere Oil fell 4%, while Bitcoin fell 5% along with technology stocks.
To mark my 2500th 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 205 points yesterday, and is now ahead by 799 points for April after closing March with a gain of 5883 points. The Platinum Service made an impressive 5324 points gain in February, after ending January with a gain of 3878 points, more than making up for December’s 932 points loss, 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, after ending March with an impressive gain of 3769 points. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1600 points I have a YouTube Channel which contains recent interviews I have given This can be viewed by clicking HERE Please subscribe to this for new interview notification
Equities
The S&P 500 closed 0.97% lower at a price of 4481.
The Dow Jones Industrial Average closed 144 points lower for a 0.42% loss at a price of 34,496.
The NASDAQ 100 closed 2.17% lower at a price of 14,498.
The Stoxx Europe 600 Index closed 1.2% lower.
Yesterday, the MSCI Asia Pacific Index fell 0.9%.
Yesterday, the Nikkei closed 1.58% lower at a price of 27,350.
Currencies
The Bloomberg Dollar Spot Index closed 0.1% higher.
The Euro closed 0.1% lower at $1.0895.
The British Pound closed 0.1% lower at 1.3059.
The Japanese Yen fell 0.1%, closing at $123.78.
Bonds
Germany’s 10-year yield closed three basis points higher at 0.64%.
Britain’s 10-year yield closed six basis points higher at 1.71%.
US 10 Year Treasury closed four basis points higher 2.59%.
Commodities
West Texas Intermediate crude closed 4% lower at $96.89 a barrel.
Gold closed 0.01% lower at $1922.10 an ounce.
This morning on the Economic Front we have German Industrial Production at 7.00 am, followed by Euro-Zone Retail Sales at 10.00 am. Next, we have the Minutes from last month’s ECB Meeting at 12.30 pm. This is followed by U.S Weekly Jobless Claims. Finally, we have speeches from Fed Members Bullard, Bostic and Evans at 2.00 pm, 6.55 pm and 7.00 pm respectively.
Cash S&P 500
For the second consecutive trading session the S&P traded in a wide 80 Handle range as Tech Stocks again got slammed after the 10-Year Yield touched a year-to-date high of 2.65%. This, move lower saw the whole of my second buy level for an average 4480 long position. Ahead of the FOMC Minutes, I exited this position at a price of 4482. Subsequently, we saw wild price action on the release of the Statement with the S&P hitting a rebound high at 4499 before falling 50 Handles. The S&P regrouped some of these losses, closing at 4481. As a result of yesterday’s wild price action, the S&P closed below its 200 Day Moving Average (4490) while holding above its 50 Day MA for now at 4420. I am still long the S&P from Tuesday at 4527. I will continue to hold this position with no stop but given the amount of points we are ahead this month I will look to exit this position at 4510 with the intention of getting longer at a lower level. The late rally saw the VIX close just 5% higher having traded over 14% higher at one stage. I will look to buy the S&P again on any further move lower to 4425/4445 with a 4399 stop.
EUR/USD
I am still flat. I will continue to be a buyer on any dip lower to 1.0780/1.0840 with the same 1.0725 stop. The Euro has resistance from 1.0960/1.1010 and I will still be a small seller in this range with a tight 1.1055 stop.
March Dollar Index
I am still flat the Dollar. Today, I will again raise my sell level to 100.10/100.70 with a higher 101.25 stop. If I am taken short I will have a T/P level at 99.55.
Cash DAX
Thankfully, we had no buy level in the DAX yesterday as the market is now trading 250 points lower from where I marked prices 24 hours ago. The DAX has support from 13830/13930 where I will be a small buyer with a 13745 wider stop. I no longer want to be short the DAX at this time.
Cash FTSE
The FTSE continues to ignore the carnage in both the European and U.S. Indexes, closing unchanged. Earlier the FTSE traded lower to my 7575 T/P level on Tuesday’s 7610 short position and I am still flat. The FTSE has resistance from 7640/7700 where I will again be a seller with a 7755 tight stop.
Dow Rolling Contract
My Dow plan worked well with the market trading lower to my 34330 buy level before rallying to my revised 34480 T/P level and I am still flat. The Dow continues to outperform the Technology Stocks despite the higher Bond Yields. The Dow has support from 33900/34150 where I will again be a buyer with a 33765 stop. I will not chase the Dow lower leaving my 34900/35150 sell level unchanged with the same 35305 stop.
Cash NASDAQ 100
The NDX got slammed for a second consecutive 2% loss, trading the whole of my buy range for a now 14630 average long position. I have no stop on this position and I will now lower my T/P level to 14670. If any of the above levels are hit I will be back with a new update for my Platinum Members.
June BUND
No Change. I am still long and wrong at a price of 158.30 with no stop and the same 158.70 T/P level.
Gold Rolling Contract
No Change. I am still a buyer on any dip lower to 1890/1905 buy level with the same 1881 tight stop.
Silver Rolling Contract
I am still flat and today I will continue to be a buyer from 23.20/23.80 with the same 22.65 stop.
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