U.S Indices rebound from yesterday’s sell-off, led by the Nasdaq 100 which closed higher by 1.88%. The big news story was the Congressional Testimony from Federal Reserve Chair Jerome Powell and Treasury Secretary Steven Mnuchin. In a prepared Statement, Powell said the central bank will do all it can to support the economy. He also noted activity levels are already rebounding from the record contraction we saw in the second quarter of this year. He added that consumer spending has recovered 75% of the pre-coronavirus levels. In Mnuchin’s testimony, he said the next stimulus package from Congress should focus on jobs and kids, as well as providing support to travel and restaurants. In terms of economic data, Existing Home Sales rose to the highest level since December 2006, in another sign of strength for the housing market. European Indices closed mixed after European Central Bank President Christine Lagarde said Europe faces an uncertain recovery, while reiterating the central bank has more stimulus options if needed. Bank of England Governor Andrew Bailey ruled out the central bank’s use of negative rates in the near future. Britain raised its virus-alert level from three to four as Government officials continued to warn it could re-impose lockdowns if individuals did not do their part. Germany’s IFO Institute said the economy was still on course for a recovery, but the German state of Bavaria imposed lockdown restrictions. Elsewhere, Oil bounced back small after yesterday’s decline while both Gold and Silver closed unchanged.
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Equities
The S&P 500 closed 1..05% higher at a price of 3315.
The Dow Jones Industrial Average closed 140 points higher for a 0.52% gain at a price of 27,288.
The NASDAQ 100 closed 1.88% higher at a price of 11,186.
The Stoxx Europe 600 Index closed 0.7% higher.
The MSCI Asia Pacific Index rose 0.5%%.
This morning the Nikkei closed 0.06% lower at 23,346
Currencies
The Bloomberg Dollar Spot Index closed 0.3% higher.
The Euro closed 0.3% lower at $1.1705.
The British Pound closed 0.6% lower at $1.2735.
The Japanese Yen closed 0.4% lower at 104.95 per dollar.
Bonds
The yield on 10-year Treasuries closed one basis point higher at 0.67%.
Germany’s 10-year yield closed two basis points higher at -0.50%.
Britain’s 10-year yield closed four basis points higher at 0.20%.
Commodities
The Bloomberg Commodity Index fell 0.42%.
West Texas Intermediate closed 0.6% higher at $39.85 a barrel.
Gold closed flat at $1902.10 an ounce.
This morning on the Economic Front we already had the release of the German GFK Consumer Confidence which came in weaker than expected at -1.6. Next. We have German, Euro-zone and UK Markit Services/Composite Manufacturing PMI at 8.30 am, 9.00 am and 9.30 am respectively. This is followed by U.S MBA Mortgage Applications at 12.00 pm, followed by the Housing Price Index at 2.00 pm. At 2.45 pm we have U.S Markit Manufacturing PMI. Finally, at 3.00 pm we have the second day of Testimony from Fed Chair Powell to Congress, while Fed Member Quarles speaks at 7.00 pm.
December S&P 500
The S&P ha now closed most of the ‘’Open Gap’’ left from last Friday’s Chicago close at 3319 as yet again anyone trying to stay short the S&P for any length of time gets slammed. I know that these sell-offs can be stomach turning but as we have seen all year the market always comes back. As I have said countless times the Central Banks will not allow Bond Yields to rise or Equities to crash as it will undo all their good work to prop up the economy. I am still flat the S&P and I will continue to be a small seller from 3320/3336 with the same 3349 stop. I will now raise my buy level to 3260/3275 with a higher 3249 stop.
EUR/USD
The Euro broke and closed below its 50 Day Moving Average (1.1763) for the first time since mid-June as this key support has held any test over the past three months. This move lower saw my latest 1.1770 long position stopped at 1.1715 and I am now flat. The 50 Day MA should now act as strong resistance and I will now be a small seller from 1.1750/1.1790 with a tight 1.1825 stop. The Euro has short-term support from 1.1590/1.1630 where I will be a buyer with a 1.1545 stop. I will be an aggressive buyer from 1.1420/1.1480 with a 1.1365 wider stop.
December Dollar Index
The Dollar has surged further since I posted yesterday morning, trading at 94.20 as I go to press. The break and close over 93.50 is bullish and I will now raise my buy level to 93.20/93.70 with a 92.75 stop.
December DAX
The DAX fell shy of my 12490 initial buy level after Monday’s 600 point fall and I am still flat. Just like the FTSE, the DAX should benefit from the weaker Euro and even though a lot of technical damage was done with the DAX closing below the key 12800/12900 pivot area I would not chase this market lower. I will now raise my buy level to 12520/12620 with a 12455 stop.
December FTSE
The aggressive sell-off in Sterling saw the FTSE eventually hit my 5840 T/P level on my 5805 average long position and I am still flat. As long as Sterling remains weak, I will continue to be a buyer of the FTSE on dips. The FTSE has near-term support from 5770/5815 where I will be a buyer with the same 5745 tight stop.
Dow Rolling Contract
The Dow has now recovered over 700 points of the 900 points lost on Monday as yet again the buy the dip wins the day. Thankfully we had no sell level yesterday and I am still flat. The 50 Day MA is rising and comes in at 27517 this morning. This level should act as small resistance and I will be a seller from 27500/27700 with a tight 27825 stop. I will now raise my buy level to 26850/27050 with a 26695 tight stop.
December NASDAQ
The NASDAQ has led the recovery over the past two days, rallying over 500 points off Monday’s low. We are trading just below the 50 Day MA (11207) and this should act as initial resistance. I will be a small seller from 11250/11400 with a 11525 stop. My only interest in buying the NASDAQ is from 10800/10950 with 10695 stop.
December BUND
No Change as I am still a buyer on any dip lower to 173.65/174.05 with the same 173.15 stop.
Gold Rolling Contract
This morning Gold is trading lower on the back of the stronger Dollar. Gold is sitting in the middle of yesterday’s buy range and I have bought the market in small size here at 1875. I will leave my stop unchanged at 1853 while lowering my T/P level to 1889.
Silver Rolling Contract
After Monday’s 11% fall in Silver, the market is trading lower again this morning and I have bought the market in small size here at 23.35. I will add to this trade at 22.50 with the same 21.95 stop. I will now lower my T/P level on this position to 23.85.
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