U.S. Equity Markets fell for the first time in three days as investors digested mixed corporate earnings and worsening economic data. The US Dollar strengthened the most in about three weeks and Treasury yields increased. The S&P 500 and Dow Jones Industrial Average indexes closed lower, while information technology and consumer discretionary sectors kept the Nasdaq Composite in the green as investors continued to bet Apple Inc. and Microsoft Corp. will perform well in the stay-at-home world. A report showed U.S. companies cut a record 20.2 million jobs in April. The Stoxx Europe 600 Index slumped. After the close of regular trading, Lyft Inc. reported moderate growth of the ride-hailing business in a Quarter marred by the effects of the Coronavirus pandemic. Yields on 10-year Treasuries rose the most in a week with the U.S. increasing the amount of debt it plans to issue in Quarterly Refunding Auctions to a record high of $96 billion to provide government funding as the economy heads into a recession. Bonds declined in the Euro region as investors fretted over Tuesday’s German court ruling criticising the European Central Bank’s easing measures. The Euro weakened amid a slew of bleak economic forecasts by the European Union, heading toward its lowest close since mid-March, back when markets were roiled by demand for the U.S. currency. West Texas oil retreated after a rally that had doubled prices in the past five days. President Donald Trump said Tuesday Americans should begin returning to their everyday lives even if it leads to more sickness and death. Meanwhile, data from Germany provided further evidence of the pandemic’s devastating effect, as new cases in the Euro area’s biggest economy rose ahead of talks on easing restrictions. Traders may have seen a glimmer of hope in earnings from drug makers and online grocers, though insurers, banks and carmakers added to the chorus of companies taking a heavy hit. Elsewhere, shares in Shanghai rose as Chinese traders came back online after a five-day break. Australian equities fell, while Hong Kong and Korean benchmarks advanced. Japanese markets were shut for a public holiday.
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Equities
The S&P 500 Index fell 0.7% to close at 2848.
The Dow Jones Industrial Average decreased 0.9% to 23,664.
The Nasdaq Composite Index rose 0.5% to close at 8,854.
The MSCI All-Country World Index dipped 0.4%.
Currencies
Here is a summary of the main Changes in F.X. Markets:
The Bloomberg Dollar Spot Index rose 0.61%, to 1256.
The Euro dipped 0.4% to $1.0793.
The British Pound dipped 0.8% to $1.2341.
The Japanese Yen strengthened 0.4% to 106.10 per dollar.
Bonds
The yield on 10-year Treasuries gained five basis points to 0.70%.
Germany’s 10-Year Yield climbed five basis points to -0.50%.
Britain’s 10-year yield rose three basis points to 0.23%.
Commodities
West Texas Intermediate crude fell 1.4% to $24.14 a barrel.
Gold weakened 0.9% to $1,687.10 an ounce.
This morning on the Economic Front we already had the release of German Industrial Production which came in a -9.2% versus -7.4% expected. Earlier the Bank of England left Rates unchanged at 0.1%. At 10.00 am we have a speech from Bank of England Governor Bailey and this is followed at 1.30 pm by the latest Weekly Jobless Claims which are expected to rise by a further 3 million. At the same time we have Non-Farm Productivity and Unit Labour Costs. Finally, at 3.00 pm we have a speech from ECB President Lagarde.
June S&P 500
The late sell-off in the S&P saw the market hit my 2844 buy level. Overnight the S&P hit my second buy level at 2828 for a 2836 average long position with a low of 2823. Earlier this morning the S&P rallied to my revised 2854 T/P level and I am now flat. An announcement that China and the US plan talks by phone next week sees the S&P higher at 2872 as I go to press. It is amazing that every time the market looks like we are only to break lower we get what is perceived as a positive comment or intervention and we rally again. The equity rally is been led by 5 stocks while internally the market struggles as shown by the McClellan Oscillator which closed with a negative reading of 9 last night. Today I will leave my 2905/2922 sell level unchanged with the same 2935 stop. The S&P has strong support from 2820/2838 where I will be a buyer with a 2807 stop.
EUR/USD
Shortly after I posted yesterday the Euro traded lower to my 1.0795 stop on my 1.0880 long position and I am now flat. The Large Speculators are near record short the Dollar and long the Euro. These guys are normally wrong and is one reason why we have seen such a large move lower in the Euro over the past few days. The Euro has resistance from 1.0865/1.0905 where I will be a seller with a 1.0945 stop. The Euro has support at the March 23, low of 1.0635 and I will now be a buyer from 1.0590/1.0640 with a 1.0555 stop.
June Dollar Index
My latest 99.60 short Dollar position was wrong as I was stopped out of this trade at 100.05 and I am now flat. The fact that the Dollar closed over 100 is bullish. I will be a small buyer from 99.30/99.70 with a 98.85 tight stop.
June DAX
The DAX just missed my 10480 buy level into the New York close before trading 150 points higher at 10685 this morning. I will now raise my buy level slightly to 10380/10510 with a 10315 higher stop.
June FTSE
Having hit a low of 5780 overnight, the FTSE has bounced to trade at 5850 this morning. I am still flat and I will now raise my sell level to 5910/5980 with a higher 6055 stop. I still do not want to be long the FTSE at this time.
Dow Rolling Contract
My Dow plan worked well with the market trading lower to my 23780 buy level before rallying over 200 points. Unfortunately, I covered this position too early at my revised 23855 T/P level. Subsequently I emailed my Platinum Members to buy the Dow again at 23670 before covering this position before the close at 23725 and I am now flat. Overnight the Dow hit a low of 23520 before rallying 400 points to sit above 23900 this morning. Yesterday was the second consecutive trading session where the market sold off hard into the close only to reverse overnight. I am extremely bearish US Indices for all the obvious reasons but the aggressive actions from the Fed make it almost impossible to be short for any length of time. They can read history and Charts like the rest of us and they are doing everything in their power to prevent the Phase 3 meltdown. Today, I will be a buyer on any dip lower to 23450/23650 with a 23325 stop. Meanwhile my only interest in selling the Dow is from 24320/24550 with the same 24675 stop.
June NASDAQ
The NASDAQ just missed my 8870 buy level with an overnight low of 8929 before surging to trade at 9080 this morning. The NASDAQ is now only 7% of all-time highs which is insane given the valuations. However we have to respect the price action which is bullish. I will now raise my buy level to 8850/8940 with a higher 8775 stop. I will also narrow my sell level to 9150/9270 with the same 9325 tight stop.
June BUND
The BUND got hit hard yesterday as the market never came close to my sell range. The Bund has good support from 171.90/172.40 where I will be a buyer with a 171.35 stop.
Gold Rolling Contract
As I am back long Silver, I will now lower my Gold buy level to 1655/1668 with a 1644 stop.
Silver Rolling Contract
Overnight, Silver finally traded lower to my 14.80 buy level. I am still long and I will leave my T/P level unchanged at 15.05. I will now raise my stop to 14.45 and if any of the above levels are hit I will be back with a new update for my Platinum Members.
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