U.S. Equity Markets finished yesterday’s session higher after a late rally, led by the NASDAQ 100 which finished with a gain of 1.11%. There was more positive news on the COVID-19 Omicron variant, as South African Medical Research Council official Fareed Abdullah said Omicron cases are declining rapidly, which points to similar outlooks for other countries. National Institute of Allergy and Infectious Diseases Director Dr. Anthony Fauci said that hospitalisations were growing at a slower rate than cases, indicating Omicron’s lower severity. These are positive signs that Omicron won’t have a drastic impact on the growth outlook. In terms of economic data, IHS Markit’s Manufacturing Purchasing Managers’ Index (“PMI”) for December unexpectedly fell, but remained well into expansion territory. The economic data picks up after last week’s lack of headlines, with Non-Farm Payrolls on Friday the big release to look forward to. Within the S&P 500, six of the 11 sectors finished lower. European Markets closed higher. British Health Minister Sajid Javid said the government would hold off on new COVID-19 restrictions as the number of intensive care patients was stabilising. French Health Minister Olivier Véran said the government was reducing the recommended COVID-19 isolation period for infected but fully vaccinated individuals from 10 to seven days. Markit Euro-Zone’s final Manufacturing PMI figures for December were in line with the initial reading, signalling 18 straight months of expansion. In Asia, Markit South Korea’s Manufacturing PMI data for December was up from November, marking the 15th consecutive month of expansion, as new orders rose. Markit Taiwan’s Manufacturing PMI numbers for December hit the highest level since August, as output rebounded. Chinese developers fell in Hong Kong after trading in China Evergrande’s shares was halted following a report the Danzhou government asked the company to tear down 39 illegal buildings. Markets were closed in mainland China, Japan, and Australia in observance of the New Year’s holiday. Elsewhere, Oil closed 1.16% higher after OPEC reiterated that Omicron will only have a mild short-term impact on crude demand, while Gold fell 1.33% on Dollar strength.
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For anyone following my Platinum Service it lost 610 points last week, to end 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, 2077 points in January, and 2273 points last December. 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 0.64% higher at a price of 4796.
The Dow Jones Industrial Average closed 246 points higher for a 0.68% gain at a price of 36,585.
The NASDAQ 100 closed 1.11% higher at a price of 16,501.
The Stoxx Europe 600 Index closed 1.1% higher.
This morning, the MSCI Asia Pacific Index rose 0.7%.
This morning, the Nikkei closed 1.77% higher at a price of 29,301.
Currencies
The Bloomberg Dollar Spot Index closed 0.4% higher.
The Euro closed 0.3% lower at $1.1291.
The British Pound closed 0.3% higher at 1.3461.
The Japanese Yen fell 0.4%, closing at $115.71.
Bonds
Germany’s 10-year yield closed three basis points higher at -0.12%.
Britain’s 10-year yield closed eight basis points higher at 0.97%.
US 10 Year Treasury closed 13 basis points higher at 1.63%.
Commodities
West Texas Intermediate crude closed 1.16% higher at $76.08 a barrel.
Gold closed 1.33% lower at $1,799.10 an ounce.
This morning on the Economic Front we already have German November Retail Sales which rose 0.6% versus -0.5% expected. At 8.55 am we have German Unemployment, followed at 9.30 am by U.K. Mortgage Approvals and Money Supply. Finally, we have U.S. JOLTS Job Openings and ISM Manufacturing PMI at 3.00 pm.
Cash S&P 500
The S&P finished 2021 with its third consecutive year of double- digit gains, closing at a price of 4766. While the headlines keep showing record highs for the U.S. Indexes, the truth remains that there has been a lot of sizeable corrective activity taking place beneath the Indices. The S&P 500 produced double- digit growth in 2019 when there was no earnings growth, it produced double digit growth in 2020 when there was double digit negative earnings growth. The Last year the S&P showed a down year was in 2018 when earnings growth was positive. In my opinion, the only discernible constant influencing the market direction has been the Federal Reserve, not earnings. Last month saw the 13th consecutive new monthly record highs for the S&P, matching the 13 months of consecutive new highs on the Fed’s Balance sheet. The only corrective moves we saw last year was during times when the Fed’s Balance Sheet either temporarily dropped or paused. The middle two weeks in December summed up the year with the S&P hitting a low of 4531 on December 20th as the Fed’s Balance Sheet fell before further QE saw a massive 280 Handle rally over the Christmas Holiday. Since 2019, the Fed has added $5 trillion to their Balance Sheet, while over the same period the ECB has added $4.5 trillion for a combined $9.5 trillion. If the Fed has hot flooded the Balance Sheet the S&P would probably be trading closer to 3000. Once the Fed tapers we will see a serious correction in the market. Since 2009, history tells us that markets correct in earnest once QE ends. Unlike 2009/2020, Inflation is now a real issue and with Bond Yields rising we may soon see a proper correction that will eventually see the S&P test its 200-Day Moving Average which comes in at 4386. However, a correction of this magnitude will see the Fed add more liquidity making it very difficult to be short as Fed Chair Powell does not want a ‘’Crash’’ on his watch. Since my last commentary I was stopped out of my 4740 short position at 4763 and I am still flat. The S&P has resistance from 4814/4830 where I will again be a seller with a 4841 Stop. The S&P has short-term support from 4768/4783 where I will be a small buyer with a 4753 Stop. If I am taken short I will have a T/P level at 4799. If I am taken long I will have a T/P level at 4796.
EUR/USD
The Euro traded in a narrow 100 point range over the Christmas period and I am still flat. I will now lower my buy level to 1.1200/1.1250 with a 1.1155 lower stop. If I am taken long I will have a T/P level at 1.1285. I will not chase the Euro lower, leaving my 1.1405/1.1455 sell level unchanged with the same 1.1501 stop.
March Dollar Index
The Dollar traded in a narrow range over the Holiday period and I am still flat. The Dollar has support from 95.50/95.90 where I will be a buyer with a 94.95 stop. If I am taken long I will have a T/P level at 96.25.
Cash DAX
The DAX surged yesterday, closing above 16000 and I am still flat having been stopped out of my latest 15560 short position at 15705. The DAX has further resistance from 16150/16250 where I will be a small seller with a 16305 tight stop.
Cash FTSE
The FTSE is trading at its highest level in 22 months. This morning the FTSE is opening at a price of 7460. We have short-term resistance from 7495/7545 where I will be a seller with a 7605 stop. The FTSE has support from 7320/7370 where I will be a buyer with a 7265 stop.
Dow Rolling Contract
The Dow made a new closing high at 36585 yesterday but not a new intra-day extreme which occurred on December 30 at 36,679. The Dow has now rallied over 1800 points since testing its 200-Day Moving Average (34780) on Monday December 20. Yesterday, the Dow made a low of 36246, before turning around and rallying 300 points into the close. Since my last Daily Commentary, I was stopped out of my 35710 short position at 35945 and I am still flat. I still believe that the Dow will run into trouble in the early part of 2022. We have strong resistance from 36900/37200 where I will be an aggressive seller with a 37405 wider stop. The Dow has strong support from 36,415/36240 where I will be buyer with a 36050 stop.
Cash NASDAQ 100
Although the NDX rallied 200 points of yesterday’s intra-day low the market did not close at a new all-time high, unlike both the Dow and S&P. Yesterday’s late surge saw Apple close with a valuation above $3 Trillion. The NDX has support from 16310/16430 where I will be a buyer with a 16195 stop. The NDX has strong resistance from 16740/16900 where I will be an aggressive seller with a 17005 stop. If I am taken long I will have a T/P level at 16520. If I am taken short I will have a T/P level at 16660.
March BUND
The Bund got hit hard since my last Daily Commentary, falling over 300 points to sit at 170.80 this morning. The Bund is now oversold and has support from 169.80/170.40 where I will be a buyer with a 169.35 stop.
Gold Rolling Contract
We are seeing very little price action in Gold and I am still flat. Gold has short-term support from 1767/1782 and I will move my buy level to this area with a higher 1755 stop.
Silver Rolling Contract
No Change. I am still an aggressive buyer from 21.40/22.20 with a 20.85 stop. If I am taken long I will have a T/P level at 22.65.
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