Following one of the most extraordinary reversals off earlier lows U.S. equity markets finished yesterday’s session with a small gain, led by the NASDAQ 100 closing higher by 0.49%. Equities are having a hard time catching a bid in recent weeks, and yesterday afternnon was no different. There were two main reasons for the selling – Russia/Ukraine tensions and Goldman Sachs’ (GS) new Federal Reserve rate-hike outlook. Over the weekend, the U.S. State Department told all family members of Ukrainian embassy staffers to leave the country. It also warned all U.S. citizens to get out, though they would have to find their own way back to the U.S. The U.S. said the threat level had not changed, but it was doing this out of an “abundance of caution.” This sparked concerns of a global conflict. Meanwhile, Goldman Sachs, the investment bank said inflation risks are tilted to the upside. As a result, it sees the possibility for more than four rate hikes this year to combat inflation. This adds to investors’ inflation fears and means the Fed could hike more than expected, which would hurt the growth outlook. Now, the S&P 500 Index joined the Nasdaq Composite Index in a “correction” (on an intraday basis) – a 10% decline from all-time highs. But they did not stay at those low levels for long… Markets came roaring back into the close, as investors bought the afternoon dip. The declines once again outnumbered the advances in the S&P 500. Tech stocks were among the weakest, as they are seen as the most vulnerable to increases in interest rates. Netflix (NFLX) continued its post-earnings decline from last week, as Wall Street continued to downgrade the stock. Retail was a bright spot, led by Kohl’s (KSS) on reports that the department-store operator received a takeover offer. Within the S&P 500, eight of the 11 sectors finished higher. European Markets closed lower. Investors weigh the potential for Russia to cut off European energy supplies due to escalating Ukraine tensions, with Germany particularly exposed to Russian gas for energy. Markit Euro-Zone’s preliminary composite PMI data for January was weaker than expected as services-sector activity eased. European Central Bank Governing Council member Olli Rehn said he expects inflation to subside going forward, moving back to the central bank’s 2% target. In Asia, Japan’s Chief Cabinet Secretary Hirokazu Matsuno said 16 additional prefectures were seeking COVID-19 restrictions, bringing the total to 32 out of 47. The People’s Bank of China cut the interest rate on its 14-day reverse repo, saying it will ensure stable liquidity ahead of the upcoming Spring Festival. Markit Japan’s preliminary composite Purchasing Mangers’ Index (“PMI”) figures for January fell back into contraction territory as declining services-sector activity offset manufacturing gains. Taiwan’s government said China sent 39 aircraft into its air defense identification zone, stoking political tensions. Elsewhere, Oil fell 1.64% as weak economic data prompted concerns of slowing crude demand, while Bitcoin rebounded to close only 4% lower.
To mark my 2475th 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 767 points yesterday and is now ahead by 2212 points for January, after ending December with a loss of 932 points, 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, having ended March with an impressive gain of 3769 points, 3286 points in February, and 2077 points last January. 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 closed 0.28% higher at a price of 4410.
The Dow Jones Industrial Average closed 99 points higher for a 0.29% gain at a price of 34,364.
The NASDAQ 100 closed 0.49% higher at a price of 14,509.
The Stoxx Europe 600 Index closed 1.7% lower.
Yesterday, the MSCI Asia Pacific Index rose 0.1%.
Yesterday, the Nikkei closed 0.24% higher at a price of 27,588.
Currencies
The Bloomberg Dollar Spot Index closed 0.2% higher.
The Euro closed 0.2% lower at $1.1320.
The British Pound closed 0.4% lower at 1.3490.
The Japanese Yen fell 0.2%, closing at $113.95.
Bonds
Germany’s 10-year yield closed two basis points lower at -0.11%.
Britain’s 10-year yield closed four basis points lower at 1.13%.
US 10 Year Treasury closed one basis points higher at 1.78%.
Commodities
West Texas Intermediate crude closed 1.64% lower at $80.71 a barrel.
Gold closed 0.49% higher at $1,841.10 an ounce.
This morning on the Economic Front we have German IFO Business Climate at 9.00 am. This is followed by U.S. Housing Market Index at 2.00 pm. Finally, we have Consumer Confidence and the Richmond Fed Manufacturing Index at 3.00 pm.
Cash S&P 500
One of the most extraordinary trading sessions in the history of the S&P was witnessed yesterday as the S&P fell 200 Handles from Monday morning highs only to reverse this sell-off completely in the last two hours of trading. Early afternoon lows saw the VIX spike to a high above 38, before reversing to close higher by only 3% at a price of 29.90. All of this two- way market action and we still have the FOMC Statement and Powell press conference to look forward to tomorrow. I cannot see them hiking rates given the backdrop. As we have seen since the March 2020 bottom all sell-offs are met with aggressive buying and yesterday’s theme continued this trend. Given how oversold the market was last week, coupled with a McClellan Oscillator reading of -300 I said not to have any stop in the market, as I was expecting a ferocious rally. The problem is no one knows from what turning point hence the trade in small strategy as you just cannot operate a fixed stop in these markets at this time. The S&P traded the whole of my buy range for a 4375 average long position with a low of 4222, before rallying to hit my 4410 revised T/P level and I am now flat. This is the first time in the history of the S&P that the market has rallied 200 -Handles from an intra-day low. There is doubt January is setting all sorts of records and we still have five trading sessions left. As I go to press the S&P is trading lower at 4365. We have short-term resistance from 4460/4490 where I will be a small seller with a 4511 stop. Today, I will again be a buyer on any dip lower to 4330/4355 with no stop. If I am taken long I will have a T/P level at 4381. If I am taken short I will have a T/P level at 4445 and if any of the above levels are hit I will be back with a new update for my Platinum Members.
EUR/USD
The Euro missed my buy level by five points before having a small rally into the New York close. I will now raise my buy level to 1.1245/1.1295 with the same 1.1195 stop. If I am taken long I will have a T/P level at 1.1330.
March Dollar Index
No Change. I am still a buyer on any dip lower to 94.80/95.30 with the same 94.35 stop. If I am taken long I will have a T/P level at 95.60.
Cash DAX
I should have had no stop in the DAX as the market rallied 450 points off its evening low into the 9.00 pm close. I bought the DAX at an average rate of 15320 before getting stopped at 15195 and I am now flat. The DAX has support from 14980/15070 where I will be a small buyer with a 14795 wider stop. If I am taken long I will have a T/P level at 15145. I still do not want to be short the DAX at this time.
Cash FTSE
My FTSE plan worked well with the market trading the whole of my buy range for a 7330 average long position before rallying to my 7375 revised T/P level and I am now flat. Today, I will again be a buyer from 7240/7295 with a 7175 stop. I still do not want to be short the FTSE at this time.
Dow Rolling Contract
Early Monday morning the Dow rallies to our 34490 T/P level per yesterday’s commentary before selling off to an afternoon low at 33145. Obviously, the Fed stepped with the Dow rallying to an overnight high so far at 34405, before selling off to sit at 34120 as I go to press. What a 24 hours!. I bought the Dow at a price of 34000 in small size before exiting this trade at my 34285 T/P level and I am now flat. With the McClellan Oscillator closing again at an oversold reading of -270 I will continue to look to buy the dip. The Dow has support from 33750/33950 where I will again be a buyer with no stop. I still do not want to be short the Dow at this time. If I am taken long I will have a T/P level at 34190.
Cash NASDAQ 100
The NDX missed my 14600 T/P level before trading lower to my second buy level at 14250 for a 14335 average long position. I had to ware this position to a low at 13705, before the market turned around aggressively and rallied 800 points into the close, hitting my 14515 revised T/P level and I am now flat. When I look at monthly charts I can see that the NDX was trading at its most oversold level since 1998. Subsequently, the NDX rallied for most of the next two years before crashing in March 2000. I have to respect yesterday’s reversal. We have short-term support from 14100/14250 where I will again be a buyer with no stop. If I am taken long I will have a T/P level at 14380.
March BUND
No Change as the Bund continued to rally and I am still flat. I will now raise my buy level to 169.35/169.95 with a higher 168.83 stop.
Gold Rolling Contract
Gold traded in a narrow range yesterday before rallying 0.5% into the New York Close. I will now raise my buy level to 1814/1825 with a higher 1799 stop. If I am taken long I will have a T/P level at 1833.
Silver Rolling Contract
My Silver plan worked well with the market trading lower to my 23.60 buy level before rallying to my 23.92 revised T/P level and I am now flat. Today I will again be a buyer from 22.90/23.50 with the same 22.55 stop.
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