U.S. Equity Markets finished yesterday’s session lower as Indexes closed in the red for the fifth consecutive day. The NDX led the declines, closing lower by 1.42%. Overnight, the Bank of Japan tweaked its Yield Curve Control Policy sending the Yen soaring and S&P Futures lower. Markets started the day in positive territory before spending the rest of the session in the ‘’Red’’. Last week was an important one for stock market bears. Two important positive catalysts were removed: the U.S. Bureau of Labour Statistics’ Consumer Price Index (“CPI”) growth for November and the Federal Reserve’s final monetary policy announcement for the year. The market rallied ahead of those events as short sellers unwound their bets. But since the release of both reports, stocks have headed lower. The CPI numbers were better than anticipated. But the narrative against stocks has turned from inflation growth hurting demand to falling inflation being a sign of an imploding economy. Central Bank speakers did not help either. New York President John Williams, Cleveland President Loretta Mester, and San Francisco President Mary Daly all said interest rates must go even higher. The central bank pursuing more rate hikes in the face of slowing growth makes it even easier for the shorts to make their case against the economy and stocks. The worry now is that the central bank will raise interest rates too far, making the economic growth outlook even worse. Within the S&P 500, ten of the 11 sectors finished lower. European Markets closed higher. The business outlook in Germany – the European Union’s largest economy – rebounded for the third straight month. Companies are increasingly optimistic about future demand as they anticipate inflation growth has peaked, leading to increased disposable income for households and businesses. In Asia, Markets fell to start the week. One of the major drivers has been a rally in the Japanese Yen. Bank of Japan board member Naoki Tamura recently said it should review current monetary policy when the time is appropriate – in reference to the pending departure of Governor Haruhiko Kuroda in April. A recent Reuters report said the central bank is already making contingency plans for when that transition happens. Kuroda has long been a champion of easy-money policies, which has driven the Yen lower. But Tamura’s comments hinted at switching back to tightening policy once more. This caused the Yen to rally and stocks to drop. There are concerns that a strengthening currency would hurt potential sales abroad by domestic Japanese companies. Other Asian markets dropped on concerns of rate increases by the Fed, the Bank of England, and the European Central Bank. Investors worried that demand from the primary markets where Asian companies ship their goods could be quickly falling apart. Elsewhere, Oil rose 1.8% while Gold closed lower by 0.30%.
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For anyone following my Platinum Service it made 112 points yesterday and is now ahead by 797 points for December after closing November with a gain of 4789 points, while finishing October with a record gain of 9619 points, making 6660 points in September, after closing August with a gain of 2228 points, having made 2660 points in July, following a gain of 3371 points in June. The Service made 3651 points in May, after making 762 points in April, following a gain of 5883 points in March. The Platinum Service made an impressive 5324 points in February, after ending January with a gain of 3878 points, more than making up for December’s 932 points loss. 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 0.90% lower at a price of 3817
The Dow Jones Industrial Average closed 162 points lower for a 0.49% loss at a price of 32,757.
The NASDAQ 100 closed 1.42% lower at a price of 11,084.
The Stoxx Europe 600 Index closed 0.36% higher.
This morning, the MSCI Asia Pacific fell 0.8%.
This morning, the Nikkei closed 2.46% lower at a price of 26,568.
Currencies
The Bloomberg Dollar Spot Index closed 0.3% higher.
The Euro closed 0.1% higher at $1.0609.
The British Pound closed 0.4% lower at 1.2142.
The Japanese Yen rose 3.5% closing at $132.32.
Bonds
Germany’s 10-year yield closed 4 basis points higher at 2.20%.
Britain’s 10-year yield closed 17 basis points higher at 3.50%.
U.S.10 Year Treasury closed 8 basis points higher at 3.59%.
Commodities
West Texas Intermediate crude closed 1.8% higher at $75.90 a barrel.
Gold closed 0.3% lower at $1784.10 an ounce.
This morning on the Economic Front we already had the release of German November PPI which fell a huge 3.9% versus -2.5% expected. At 9.00 am we have Euro-Zone Current Account. This is followed by U.S. Housing Starts and Building Permits at 1.30 pm. Finally, we have Euro-Zone Consumer Confidence at 3.00 pm.
Cash S&P 500
Not an easy market to trade when you have had the wrong view over the past week. The S&P continues to drip lower on low volume. The S&P has now fallen over 350 Handles since last Tuesday’s post CPI print. This seems very similar to last June when sentiment and market action was extremely negative before out of the blue the S&P reversed and rallied 600 Handles in a few weeks. The tape is awful resulting in the McClellan Oscillator closing at -202 last night. I still believe we will get a Santa rally given the backdrop. Incredibly the VIX closed a further 1% lower. I am still long the S&P at 3857. I will now have a 3780 ‘’Closing Stop’’ on this position, while leaving my 3892 T/P level unchanged. If any of the above levels are hit, I will be back with an update for my Platinum Members
EUR/USD
No Change. The Euro traded in a narrow range yesterday and I am still flat. Today, I will continue to be a seller on any further rally to 1.0700/1.0770 with the same 1.0835 ‘’Closing Stop’’. I will now raise my buy level to 1.0440/1.0520 with a higher 1.0365 ‘’Closing Stop’’.
March Dollar Index
My Dollar plan worked well with the market trading lower to my 103.80 buy level before rallying to my 104.40 T/P level and I am now flat. This morning the Dollar is trading lower at 103.90 following the 3% rally in the Japanese Yen. We have support from 102.80/103.50 where I will again be a buyer with a 102.25 ‘’Closing Stop’’.
Cash DAX
The BOJ policy tweak saw the DAX trade the whole of my buy range for a 11780 average long position. As I have enough exposure with my long American Indexes, I have now exited this long position here at 13832 and I am now flat. The DAX has further support from 13580/13680 where I will be a strong buyer with a 13495 ’wider ‘’Closing Stop’’.
Cash FTSE
No Change. I am still long the FTSE at 7340 with a now lower 7385 T/P level. I will add to this position at 7280 while leaving my 7235 ‘’Closing Stop’’ unchanged.
Dow Rolling Contract
The Dow traded the whole of my buy range for a now 32725 average long position. I will now lower my T/P level to 32890 while leaving my 32395 wider ‘’Closing Stop’’ unchanged.
Cash NASDAQ 100
The NDX got crushed yesterday and again overnight. The tape is awful. Adding to the gloom is the fact that Apple Shares fell almost 2% yesterday, to sit a new low for the year at a price of $132. How much of the tech selling is tax loss related forced selling, I cannot say but the big tech charts like Apple are now sporting the same drip down chart patterns. Yesterday’s move lower saw my 11200-buy level filled for a now large 11383 average long position. I will leave my 10995 ‘’Closing Stop’’ unchanged while lowering my T/P level to 11480.
March BUND
The Bund hit my 137.00 buy level yesterday before closing at a price of 137.20. However, this morning the Bund is trading 100 points lower on the back of the BOJ. I have now added to my long position at 136.20 for a now 136.60 average long position. I will leave my 135.75 ‘’Closing Stop’’ unchanged, while lowering my T/P level to 137.15.
Gold Rolling Contract
No Change. I am still a buyer on any dip lower to 1657/1772 with a tight 1645 ‘’Closing Stop’’.
Silver Rolling Contract
No Change. I am still long from last Thursday at 23.20. I will add to this position at 22.40 with no stop. I will now lower my T/P level to 23.60 on this position. If any of the above levels are hit I will be back with a new update for my Platinum Members.
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