U.S. Equity Markets fell from a six-week high, with investors on edge as Oil Futures plunged to unprecedented levels and a spate of corporate earnings on tap. The S&P 500 halted a two-day gain and the Dow Jones Industrial Average fell more than 2%. Chevron and Exxon led losses in the blue-chip Index as West Texas oil futures expiring today turned negative for the first time, primarily because the end of the May contract forces physical receipt at a time when storage capacity is low. June prices fell below $22 a barrel. After the close of trading, IBM reported a drop in First-Quarter revenue and pulled its profit forecast for the year. Meanwhile, Congress continued to negotiate a fresh spending bill to offset the pandemic’s effects, and signs have emerged that New York is past the worst of its outbreak. The Stoxx Europe 600 Index edged higher. Shares retreated across much of Asia, though the benchmark in Shanghai rose. European bonds dropped as Treasuries advanced. Investors start the week weighing both the oil crash and signs that Congress is close to a fresh spending package. The pace of earnings season is about to pick up, with almost one-fifth of S&P 500 companies reporting this week. Coca-Cola Co. and Netflix Inc. are among the other companies due to report in the coming days. Governments and policy makers are continuing attempts to limit the economic damage of the pandemic. U.S. lawmakers are moving closer to a deal to top up funds for small businesses, China pledged more stimulus as banks lowered borrowing costs and European officials are discussing creating a bad bank for the region, according to the Financial Times.
To mark my 2050th 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 145 points yesterday and is now ahead by 3428 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
The S&P 500 fell 1.8%, closing at a price of 2823.
The Dow Jones decreased 2.5%, closing at 23,646.
The NASDAQ 100 closed 1.20% lower at 8726.
The Stoxx Europe 600 Index increased 0.5%.
The MSCI Asia Pacific Index gained 1.2%.
Currencies
Here is a summary of the main Changes in F.X. Markets:
The Bloomberg Dollar Spot Index dipped 0.4% to 1255.
The Euro dipped 0.2% to $1.0856.
The British Pound weakend 0.5% to $1.2432.
The Japanese Yen weakened 0.2% to 107.79 per dollar.
Bonds
The yield on 10-year Treasuries fell three basis points to 0.62%.
Germany’s 10-year yield advanced two basis points to -0.45%.
Britain’s 10-year yield climbed three basis points to 0.34%.
Commodities
The U.S Federal Reserve claims that it can create at will, but as we have seen over the past few years markets do not follow the Fed. Yesterday, the May Futures Crude Oil Contract plunged to an intra-day low of -$40.32 as the CME allowed the Contract to be priced below zero. It is truly a historic Crash. Even, the June Contract dropped to an intra-day low of $20.19 and is down 66% over the past four trading sessions. The Fed’s Balance Sheet is at a record $6.3 trillion. Crude after peaking at $147.27 in July 2008 is negative. The June Contract has declined 86.4% from the July 2008 peak. With the Fed buying everything except the stock market, will they start buying Oil as well?
Gold fell 2% increased 0.8% to 1696.80 an ounce
West Texas Oil fell 276% to $-32.14 a barrel, reaching the lowest on record after its seventh consecutive decline.
This morning on the Economic Front we have the German and Euro-Zone ZEW Survey at 10.00 am. This is followed at 1.30 pm by Canadian Retail Sales. Finally, at 3.00 pm we have U.S Existing Home Sales.
June S&P 500
When I see the biggest Oil crash ever and nothing else really moves I have to wonder why? Of course it is the Federal Reserve. The Energy Select Sector SPDR Fund (XLE) only closed 1% lower as crude crashes – the Fed to the rescue of Shale Companies? Seems to be the only answer. What a world we are living in when the Central Bank eliminates the healthy risk of loss, eliminates real price discovery and actually encourages moral hazard. Governments are telling us if we are allowed to go out or not and Central Bankers are telling us what is allowed to go down or not. Either the Equity Markets are completely off the rails with regards to what is happening in the Oil markets and the dire economic situation or the correlation is officially dead. Seems to be the latter.
Yesterday my S&P plan worked well with the market trading lower to my 2814 buy level before rallying to my 2828 T/P level and I am now flat. Overnight the S&P hit a low of 2772 before bouncing to trade at 2790 as I go to press. The S&P has strong support from 2750/2770 where I will be a buyer with a 2737 stop. Given the actions of the Fed it will not surprise me if the S&P rallies to my aggressive 2950/2980 target and sell area first before we see Phase 3 kick in. Short-term the S&P has resistance from 2855/2875 where I will be a seller with a 2888 stop.
EUR/USD
I am still flat the Euro and today I will lower my sell level to 1.0875/1.0925 with a 1.0961 tight stop. The Euro has support from 1.0690/1.0750 where I will be a buyer with a 1.0645 stop.
June Dollar Index
No Change as I am still a buyer from 99.10/99.60 with the same 98.75 stop.
June DAX
Thankfully we had no buy level in the DAX yesterday with the market trading 300 points lower from where I marked prices 24 hours ago. The DAX has strong support from 10100/10250 which must hold or else we will see the 9100 tested again. Today I will be a buyer in this area with a 9995 wider stop.
June FTSE
Frustratingly the FTSE just missed my 5825 sell level by 10 points late yesterday before selling off to trade at 5700 this morning. I will now lower my sell level to 5770/5850 with a 5910 stop. I still do not want to be long the FTSE at this time.
Dow Rolling Contract
Just before the close the Dow traded lower to my 23680 buy level with an initial 23620 low print before rallying back above 23750. After the madness in the Oil market I did not want to have an overnight position and I covered my Dow long at 23685 as emailed to my Platinum Members and I am still flat. I am still expecting the Dow to test the 25000 area before Phase 3 kicks in. However, the May Oil Contract does not expire until this evening so we may have some more fireworks in oil before equity markets stabilise. Today I will be a small buyer from 22950/23200 with a 22825 stop. I do not want to be short the Dow at this time.
June NASDAQ
I am still flat the NASDAQ as the market continues to hold above both its 50 and 200 Day Moving Averages. I will now raise my buy level to 8520/8610 with a higher 8435 stop. I do not want to be short the NASDAQ at this time.
June BUND
No Change as I am still a small seller on any rally higher to 173.15/173.65 with the same 174.05 stop.
Gold Rolling Contract
I am still flat Gold and I will now raise my buy level to 1655/1668 with a 1644 stop. If I am taken long I will have a T/P level at 1676.
Silver Rolling Contract
I am still flat Silver and today I will raise my buy level to 14.20/14.70 with a higher 13.82 stop. I no longer want to be short Silver at this time.
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