Following another volatile trading session U.S. Equity Markets finished the day lower, led by the 2.48% fall in the NASDAQ 100. There seems to be a trend developing this week… U.S. markets crater in the afternoon, as European traders push American stocks lower. But, after European markets close around 5.00 pm, U.S. markets begin to recover. That was the case on Monday, and it happened again yesterday. Markets did not reach the lows they did on Tuesday (“only down about 2% versus Tuesday’s 4% intraday decline) before recovering. But the rally came 60 minutes too early, and markets lost steam going into the close…In the morning, the Ukraine and Russia conflict remained in focus, after the Pentagon placed U.S. troops on “heightened alert” for possible deployment to Eastern Europe in an attempt to de-escalate tensions. Investors are also focused on this evening’s Federal Reserve policy announcement, where the central bank could offer clues on when the first rate hike is coming. A more hawkish than expected tone (which would mean more than three rate hikes in 2022) would likely be bad news for stocks. There were still more declines than advances in the S&P 500 Index. One of the few bright spots was American Express (AXP), which surged after reporting strong earnings and saying that cardmember spending was at record high levels. Nvidia (NVDA) was among the worst performers, on reports that the semiconductor giant was close to giving up on its planned acquisition of Arm. Within the S&P 500, nine of the 11 sectors finished lower. European Markets closed higher. The Institute for Economic Research’s German business confidence index rose more than expected in January, as the supply chain situation improved during the month. The Confederation of British Industry said that high inflation has forced energy, labour, and materials costs to rise, possibly denting the economic recovery. The European Central Bank was said to assume a 45% loss in home values for flood-exposed areas in stress tests due later this week. In Asia, Bank of Japan Governor Haruhiko Kuroda said the central bank must maintain current easy-money policies and a moderately declining yen is economically positive. South Korea’s preliminary fourth-quarter gross domestic product (“GDP”) figures rose more than anticipated, growing at the quickest rate since 2010. Australia’s fourth-quarter Consumer Price Index figures were stronger than expected, hitting the highest level since 2014, driven by fuel and housing prices. The People’s Bank of China added roughly $8 billion worth of funds to the financial system to ensure stable liquidity ahead of the Spring Festival holiday. Elsewhere, Oil surged 2.41% as increased geopolitical tensions in Europe could potentially disrupt energy supply, while Gold rose 0.34% as a safe-haven asset.
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 901 points yesterday and is now ahead by 3113 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 1.22% higher at a price of 4356.
The Dow Jones Industrial Average closed 66 points lower for a 0.19% loss at a price of 34,297.
The NASDAQ 100 closed 2.48% lower at a price of 14,149.
The Stoxx Europe 600 Index closed 0.6% higher.
Yesterday, the MSCI Asia Pacific Index fell 0.8%.
Yesterday, the Nikkei closed 1.66% lower at a price of 27,131.
Currencies
The Bloomberg Dollar Spot Index closed 0.2% higher.
The Euro closed 0.2% lower at $1.1300.
The British Pound closed 0.1% higher at 1.3507.
The Japanese Yen rose 0.1%, closing at $113.83.
Bonds
Germany’s 10-year yield closed three basis points higher at -0.08%.
Britain’s 10-year yield closed four basis points higher at 1.17%.
US 10 Year Treasury closed one basis points higher at 1.79%.
Commodities
West Texas Intermediate crude closed 2.41% higher at $82.67 a barrel.
Gold closed 0.34% higher at $1,848.10 an ounce.
This morning on the Economic Front we have no European data of note. At 12.00 pm we have U.S. MBA Mortgage Applications, followed at 1.30 pm by Wholesale Inventories and the Trade Balance. At 3.00 pm we have New Home Sales. Also, at 3.00 pm we have the Bank of Canada Rate Decision. Finally, at 7.00 pm we have the FOMC Rate Decision and the Powell press conference at 7.30 pm.
Cash S&P 500
The S&P traded in a wide 120 Handle range yesterday as the market tried to consolidate Monday’s extraordinary rebound. However, weaker than expected earnings from Microsoft saw a small sell-off into the close and that selling continued overnight. It is clear from the wild January so far that the only way to trade these markets is in smaller size with no stops. This strategy has worked well again yesterday. Shortly after the European Markets opened the S&P hit my 4353 buy level before rallying to my 4381 T/P level. Subsequently, I emailed my Platinum Members to buy the S&P again at a price of 4305 (low 4286) before we rallied to my 4336 T/P level and I am still flat. At 8.00 pm the S&P hit a high of 4405 before selling off to sit at 4350 as I go to press, having hit a post Microsoft low of 4308. With the 14-Day RSI closing at an oversold 25 last night and the McClellan Oscillator closing at a still oversold level of– 254 I am happy to be a buyer of dips, no matter what the Fed does this evening. I will now lower my sell level to 4440/4470 with a 4501 stop. Today, I will again be a buyer on any dip lower to 4290/4320 with no stop. If I am taken long I will have a T/P level at 4341. If I am taken short I will have a T/P level at 4423 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 traded lower to my 1.1280 buy level. I am still long with a lower 1.1320 T/P level. I will add to this trade on any further dip to 1.1230 with a now lower 1.1185 stop. Ahead of the FOMC, I still do not want to be short the Euro at this time.
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
My DAX plan worked well with the market trading lower to my 15050 buy level before rallying to my 15145 T/P level and I am now flat. For the most part European Equity Markets are ignoring the carnage on Wall Street by having smaller declines. The DAX has support from 14930/15010 where I will again be a buyer with the same 14795 stop. If I am taken long I will have a T/P level at 15090. I still do not want to be short the DAX at this time.
Cash FTSE
The FTSE missed my 7295 buy level before having a solid trading session, ignoring most of the weakness in other markets. I will now raise my buy level to 7320/7370 with a higher 7275 stop. I still do not want to be short the FTSE at this time.
Dow Rolling Contract
Despite the fact that the U.S. Indices are very oversold and there is plenty of bounce motivation to be had in the days and weeks to come, but be absolutely clear: There is not only tremendous carnage that has taken place, there is massive technical damage inflicted on charts with lots of trapped supply above all of which will be resistance on the way up and as long as Indices cannot get above their broken moving averages risk remains lower. The Fed have over did QE by buying trillions of assets while fiscal stimulus was flowing through the system already. This excessive inflow of liquidity caused asset prices to melt up into a historic bubble and now investors and traders who chased the liquidity party have paid the price. Not only with massive losses but now with inflation to boot. If markets keep falling the Fed will not have to raise rates anytime soon and this what makes this evening’s FOMC Statement so important along with Powell’s press conference. Yesterday, my Dow plan worked well with the market trading the whole of my buy range for a 33850 average long position (low 33,550) before rallying 1000 points into the 8 pm rebound high. Unfortunately, I covered this long position too early at my revised 33976 T/P level and I am now flat. The Dow has support from 33650/33850 where I will again be a buyer with no stop. We have resistance from 34750/35000 where I will be an aggressive seller with a 35205 stop
Cash NASDAQ 100
My NASDAQ plan also worked well with the market trading lower to my 14210 buy level before rallying to my 14300 revised T/P level and I am now flat. Weaker than expected earnings from Microsoft saw the NDX get hit hard hitting an overnight low so far at 13971 before bouncing to sit at 14250 as I go to press. The NDX is severely oversold after falling a further 2.50% yesterday. We have support from 13800/13980 where I will again be a buyer with no stop. I still do not want to be short the NDX at this time.
March BUND
The Bund traded in a narrow range and I am still flat. Ahead of the FOMC, I will now lower my buy level to 168.80/169.50 with a tight 168.35 stop.
Gold Rolling Contract
Gold traded in a narrow range yesterday before rallying a further 0.4% into the New York Close. I will now raise my buy level to 1818/1830 with a higher 1805 stop. If I am taken long I will have a T/P level at 1838.
Silver Rolling Contract
No Change. I am still a buyer on any dip lower to 23.00/23.60 with the same 22.55 stop.
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