U.S. Equities tumbled to an almost 12-week low and Bond Yields plunged to records on rising concern the Coronavirus will upend global supply chains critical to economic growth. The S&P 500’s four-day rout reached 7.6%, with losses accelerating Tuesday after the U.S. Centres for Disease Control and Prevention warned Americans to prepare for a Coronavirus outbreak at home. That follows a rapid increase in cases from Italy to Iran and Japan, with a growing list of companies warning that profits will suffer as economies around the world suffer. The S&P, Dow Jones Industrial Average and Nasdaq Composite indexes all set record highs this month. The 10-year U.S. Treasury Yield fell to a record low of 1.3055% as investors sought shelter from the virus’s impact on the outlook for growth. All 11 sectors in the S&P 500 fell with energy, material and financial shares leading the declines. Volatility spiked, sending the VIX surging past 30 for the first time since 2018. U.S. central bankers are closely monitoring the spreading coronavirus, but it is “still too soon” to say whether it will result a material change to the outlook, Federal Reserve Vice Chairman Richard Clarida said. Elsewhere, European stocks closed in the red, while bonds from the region were mixed. Crude oil slumped again after Monday’s slide of nearly 4%. Japanese shares tumbled more than 3% as traders returned after a holiday. Stocks fell in China and Australia and pushed higher in South Korea and Hong Kong. The Japanese Yen strengthened against the US Dollar for a third day. Erratic market moves suggest investors remain on edge over the economic impact of the virus. The World Health Organization has held off from declaring a global pandemic even as cases surged in South Korea, Italy and Japan.
To mark my 2000th 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 lost 15 points yesterday and is now ahead by 803 points for February, having made 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
Analysts at Oxford Economics Ltd. said the epidemic could wipe more than $1 trillion from global domestic product, while the International Monetary Fund lowered its growth forecasts for the world economy.
The S&P 500 Index sank 3.2% to 3128, the lowest in more than eleven weeks.
The Dow Jones Industrial Average fell 880 points to close at 27,081, the lowest level in four months.
The Nasdaq 100 fell 2.7% closing at 8834.
The Stoxx Europe 600 Index fell 1.8% to 404.
Currencies
Here is a summary of the main Changes in F.X. Markets:
The Bloomberg Dollar Spot decreased 0.2%.
The Euro rose 0.2% to $1.0885.
The British Pound gained 0.6% to $1.3006.
The Japanese Yen strengthened 0.6% to 110.10 per dollar.
Bonds
The yield on 10-year Treasuries declined five points to 1.32%, the lowest on record.
The yield on 30-year Treasuries fell three basis points to 1.80%, the lowest on record.
Germany’s 10-year yield fell three basis points to -0.51%.
Britain’s 10-year yield fell three basis points to 0.51%.
Commodities
West Texas Intermediate crude sank 3.1% to $59.79 a barrel.
Gold strengthened weakened 0.6% to $1,632 an ounce.
This morning on the Economic Front we have no data of note from either the Euro-Zone or the UK. At 12.00 pm we have U.S MBA Mortgage Applications. Finally, we have New Home Sales at 3.00 pm.
March S&P 500
Initially my S&P plan worked well with the market trading the whole of my buy range for a 3227 average position before the market rallied to my 3238 T/P level. Subsequently I bought the S&P again at an average rate of 3216 before being stopped out of this position at 3199 and I am now flat. The S&P never caught a bid all-day and eventually closed near the lows at 3128. The S&P has now fallen 275 Handles since its 3396.75 high print last Thursday morning. The market is severely oversold but as we have seen over the past 24 hours this does not mean we can’t fall further. One indicator that I have been keeping a close eye on is the McClellan Oscillator for any clues that we are close to a low. This indicator flashes a buy signal on any reading below -250. Last night we closed at -285, so conditions are there for a meaningful spike higher. The S&P has nearby support at yesterday’s 3120 low and today I will be a buyer from 3085/3105 with a wider 3072 stop. Initially we will have resistance at the January low of 3215 and I will be a small seller from 3210/3225 with a 3237 stop.
EUR/USD
The Euro continues to strengthen as expected. However, I have not been able to get a long position on board and I am still flat. Today, I will raise my buy level to 1.0790/1.0830 with a higher 1.0745 stop. I still do not want to be short the Euro at this time.
March Dollar Index
The Dollar again missed my sell range before closing 50 points lower. This move has been flagged by the DSI which had closed over 90% bulls for most of the last two weeks. I am not going to chase the Dollar lower and I will leave my 99.45/99.85 sell level unchanged with the same 100.15 stop.
March DAX
The DAX traded the whole of my buy range for a 12940 average long position. As I was already long the three US Indices I did not buy the market myself. Subsequently the DAX rallied back above 13000 and I emailed my Platinum Members that anyone who was long the market to take their profit and go flat. Incredibly the DAX sold off 400 points from this rebound high and has now fallen over 1200 points from last week’s high. The DAX has support from 12390/12460 and I will be a small buyer in this area with a 12320 stop.
March FTSE
My FTSE plan did not work well. After I bought the market at 7070 I was quickly stopped out of this position at 6995 and I am now flat. The FTSE is severely oversold. For this reason I have bought the market in small size at 6870. I will add to this position at 6820. I have a T/P level on this position at 6950. My stop is at 6785 and if any of the above levels are hit I will be back with a new update for my Platinum Members.
Dow Rolling Contract
An incredible few days in the Dow with the market falling 2500 points from the high made two weeks ago. My Dow plan actually worked well yesterday with the market trading lower to my 27940 buy level before we rallied 200 points and I used this move higher to exit this position at my revised 28020 T/P level and I am now flat. I am shocked to see the market close 880 points lower last night. Thankfully we had no second buy level in this market as for the first time in many months the ‘’buy the dip’’ was slammed. Given the -285 print in the McClellan Oscillator I am more confident today in being a buyer as I expect a decent retracement from at or near current prices. Although the Dow closed below its 200 Day Moving Average at 27229 I would not be surprised to see us close back above here this evening. The Dow has nearby support from 26760/26920 and I will be a buyer on any dip to this area with a 26670 stop. Although the price action is horrible I do not want to be short the Dow at this time.
March NASDAQ
After the NASDAQ traded lower to my 9100 buy level I emailed my Platinum Members to exit any long position at 9140 and I am still flat. The NASDAQ broke and closed below 8900 which technically is bearish. However, given how oversold all three US Indices are I would not be chasing lower prices. As long as the NASDAQ can hold 8800 on a closing basis I will continue to be a buyer on dips. Today I will be a buyer from 8700/8760 with a tight 8655 stop. If I am taken long I will have a T/P level at 8905.
March BUND
Yesterday the Bund traded higher to my 175.80 sell level. I am still short and I will add tom this position on nay further move higher to 176.40 with a higher 176.75 stop. I will leave my T/P level unchanged at 175.50 and if any of the above levels are hit I will be back with a new update for my Platinum Members.
Gold Rolling Contract
No Change as I am still a seller from 1675/1690 with the same 1702 stop.
Silver Rolling Contract
I am still long Silver at 18.30 as the market continues to underperform the price action in Gold. I will now lower my T/P level to 18.45 while leaving my 16.85 stop unchanged.
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