U.S. Equity Markets finished the day higher, rebounding from earlier losses, led by the 0.28% gain in the Dow. Incredibly, the VIX closed a further 4% lower at a price of 21.88. Markets started the day in negative territory before eking out modest gains. The big driver of the rally was further weakness in the Dollar. Following last week’s Federal Reserve announcement, investors are wondering how much further interest rates will rise. Policymakers guided for peak rates of 5.1% next year compared with the current Federal-Funds target range of 4.25% to 4.50%. The guidance means the central bank only needs to raise rates by another 50 basis points to 75 basis points before it is there. As a result, peak interest rates may be closer than we think. The change in monetary policy will cause institutional investors to rotate out of the U.S. Dollar and seek higher returns in other currencies like the Yen, Euro, and British Pound. Those central banks are still in a more aggressive rate-tightening mode. That bodes well for risk assets like stocks and precious metals. A weaker Dollar means U.S.-based companies that sell their goods abroad are likely to see a boost to margins and sales as their products become more affordable in foreign markets. A declining greenback also means the value of gold and silver will rise. European Markets closed lower. On the heels of the BOJ’s decision, investors worried about the European Central Bank and Bank of England’s interest-rate policies going forward. Both institutions are still trying to play catch up with the Federal Reserve. By boosting rates further, it will help to support their currencies, which further fights inflation. As a result, interest-rate-sensitive sectors like technology and real estate led to the downside. In Asia, the Bank of Japan’s (“BOJ”) final monetary policy decision for 2022 caught investors off guard. The central bank said it would lift the yield cap on 10-year sovereign bonds from 0.25% to 0.50%. In other words, if the yield on those government bonds reaches 0.50%, the central bank will step in to defend it by increasing the size of its balance sheet. The change is important because 10-year sovereign bonds are used all around the world as a benchmark rate for making loans. By saying it will let the yield cap rise, the Japanese central bank effectively raised borrowing costs without having made an official interest-rate hike. Governor Haruhiko Kuroda, who as I said yesterday is stepping down in April, has vehemently defended easy-money policies. He has repeatedly stated the BOJ will continue to keep rates low until it sees inflation rise sustainably. Tuesday’s announcement signalled otherwise. Elsewhere, Oil rose 0.81% while Gold ended the day with a 1.71% gain.
To mark my 2675th 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 276 points yesterday and is now ahead by 1073 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 0.10% higher at a price of 3821
The Dow Jones Industrial Average closed 92 points higher for a 0.28% gain at a price of 32,849.
The NASDAQ 100 closed 0.11% lower at a price of 11,072.
The Stoxx Europe 600 Index closed 0.40% lower.
This morning, the MSCI Asia Pacific rose 0.4%.
This morning, the Nikkei closed 0.68% lower at a price of 26,387.
Currencies
The Bloomberg Dollar Spot Index closed 0.3% lower.
The Euro closed 0.1% higher at $1.0621.
The British Pound closed 0.2% higher at 1.2164.
The Japanese Yen rose 0.5% closing at $131.70.
Bonds
Germany’s 10-year yield closed 10 basis points higher at 2.30%.
Britain’s 10-year yield closed 10 basis points higher at 3.60%.
U.S.10 Year Treasury closed 10 basis points higher at 3.69%.
Commodities
West Texas Intermediate crude closed 0.81% higher at $76.51 a barrel.
Gold closed 1.71% higher at $1812.10 an ounce.
This morning on the Economic Front we already had the release of German GFK Consumer Sentiment which printed – 37.8 versus -38 expected. At 1.30 pm we have Bank of Canada CPI Index, followed by U.S Existing Home Sales and Consumer Confidence at 3.00 pm. Finally, we have a 20-year Treasury Auction at 6.00 pm.
Cash S&P 500
Yesterday was another choppy session before a late rally saw the S&P close slightly higher on the day. This could be significant as the S&P is now trading higher this morning at 3840 as I go to press. We are now in the Santa Rally period. I continue to hold my 3857 latest long position with the same 3892 T/P level. I will now lower my stop to 3774 which is just below yesterday’s low print. The McClellan Oscillator improved to close at a still oversold -166 last night. Another positive from yesterday was the Green close in equities despite Bond Yields rising 10 basis points across-the-board. If anything changes I will be back with a new update for my Platinum Members.
EUR/USD
No Change. The Euro again 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 1.0460/1.0540 with a higher 1.0385 ‘’Closing Stop’’.
March Dollar Index
My Dollar plan worked well with the market trading lower to my 103.50 buy level before rallying to my 104.10 T/P level and I am now flat. This morning the Dollar is trading lower at 103.65 following a further 0.5% rally in the Japanese Yen. Since the BOJ intervened in the Yen, six weeks ago, $YEN has moved 20 big figures. This is an enormous move. The 14-Day RSI closed at an overbought 70 print last night. The Dollar is oversold and I am comfortable with my strategy of buying dips. The Dollar has support from 102.60/103.30 where I will again be a buyer with 101.95 ‘’Closing Stop’’.
Cash DAX
European Markets continues to ignore the sell-off in American Indexes, trading in narrow ranges with a positive bias. This morning the DAX is trading 150 points higher from where I marked prices yesterday morning at a price of 13960. I will now raise my buy level to 13750/13850 with a higher 13645 ’wider ‘’Closing Stop’’.
Cash FTSE
I used yesterday’s brief rally to exit my 7340 long position at 7366 and I am still flat. The FTSE has support from 7290/7350 where I will again be a buyer with the same 7235 ‘’Closing Stop’’ .
Dow Rolling Contract
My latest 32725 long Dow position worked well as the market rallied to my 32890 T/P level and I am now flat. The Dow is oversold. I still expect higher prices into year-end. Today, my buy level will be from 32600/32860 with a tight 32395 ‘’Closing Stop’’.
Cash NASDAQ 100
The NDX closed lower for the sixth consecutive trading session. Thankfully, we have rebounded overnight, trading at a price of 11140 as I go to press. I am still long at an average rate of 11383 with the same 10995 ‘’Closing Stop’’. Meanwhile, I will leave my 11480 T/P level unchanged. If there are any changes, I will come back with an updated email to my Platinum Members.
March BUND
No Change. I am still long at an average rate of 136.60 with the same 135.75 ‘’Closing Stop’’. I will now lower my T/P level to 136.95.
Gold Rolling Contract
Gold surged yesterday, never coming close to my buy level. The break and close over 1800 is short-term bullish. I will now raise my buy level to 1786/1801 with a higher 1773 ‘’Closing Stop’’.
Silver Rolling Contract
Silver rallied to my 23.60 T/P level on my latest 23.20 long position and I am now flat. Given the strength of the 24.00/25.50 resistance area I am reluctant to chase the market higher. However, I am long-term bullish of Silver given out cheap Silver is in relation to Gold. Today, I will be a buyer from 22.80/23.50 with no stop. If triggered, I will have a T/P level at 24.30.
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