U.S. Equity Markets sold off sharply on interest rate fears, led by the NASDAQ 100 which ended yesterday’s session with a loss of 2.88%, resulting in the VIX surging, to close 24% higher at a price of 23.25. Interest rate fears were back, with the 10-year Treasury hitting the highest level in three months. The stock market bears are going to use this to try and push markets lower, saying that rising yields mean inflation expectations are rising. Elsewhere, Federal Reserve Chair Jerome Powell spooked markets again. Powell noted inflation could remain high for a while. The comment was in line with his previous statements. In his statement, Powell noted household spending had cooled in July and August in COVID-sensitive sectors. And he said near-term supply constraints held back economic output. In terms of economic data, the Richmond Fed Manufacturing Index fell into contraction, while Consumer Confidence fell unexpectedly. European Markets fell sharply. Growth from Knowledge’s German consumer confidence data for October unexpectedly rose, as business and income expectations saw large gains. European Central Bank Governing Council member Pablo Hernandez de Cos said the central bank has not discussed asset purchase tapering and that stimulus removal needs to be measured. ECB President Christine Lagarde said that the Euro-Zone economy has recovered quickly, while reiterating the central bank sees the recent inflation increase as temporary. In Asia, The People’s Bank of China said it would maintain flexible, appropriate, and targeted monetary policy, while protecting the rights of housing consumers. Japan’s Economy Minister Yasutoshi Nishimura said the government is seeking an advisory panel’s approval to end the COVID-19 state of emergency as infections are subsiding. The Bank of Korea’s Consumer Confidence Index numbers for September improved versus August as household spending plans hit the highest level since June. Australia’s Retail Sales figures for August fell less than anticipated, also exceeding July levels, as department store and restaurant spending improved. Elsewhere, Gold closed 1.07% lower on Dollar strength, while Bitcoin fell 4% on little news.
To mark my 2400th 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 21 points yesterday and is now ahead by 2809 points for September, having closed August with a gain of 1543 points, 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 2.04% lower at a price of 4352.
The Dow Jones Industrial Average closed 569 points lower for a 1.63% loss at a price of 34,300.
The NASDAQ 100 closed 2.88% lower at a price of 14,770.
The Stoxx Europe 600 Index closed 1.5% lower.
This morning, the MSCI Asia Pacific Index fell 1.2%.
This morning, the Nikkei closed 2.12% lower at a price of 29,544.
Currencies
The Bloomberg Dollar Spot Index closed 0.2% higher.
The Euro closed 0.2% lower at $1.1678.
The British Pound closed 1.1% lower at 1.3561.
The Japanese Yen fell 0.3%, closing at $111.52.
Bonds
Germany’s 10-year yield closed three basis points higher at -0.18%.
Britain’s 10-year yield closed four basis points higher at 1.00%.
US 10 Year Treasury closed two basis points higher at 1.54%.
Commodities
West Texas Intermediate crude closed 0.21% lower at $75.29 a barrel.
Gold closed 1.07% lower at $1,732.10 an ounce.
This morning on the Economic Front we already had the release of German August Import Price Index which rose 1.4% versus +1.2% expected. At 9.30 am we have UK Mortgage Approvals, Net Lending to Individuals and Money Supply. This is followed at 10.00 am by Euro-Zone Business Climate and Consumer Confidence. At 12.00 pm we have U.S. MBA Mortgage Applications, followed by Pending Home Sales at 3.00 pm. Finally, we have speeches from Fed Chair Powell and ECB President Lagarde at 4.45 pm and 5.30 pm respectively.
December S&P 500
Initially my S&P plan worked well with the market trading the whole of yesterday’s buy range for a 4396.50 average long position before the market rallied to my 4405 revised T/P level. I tried to be too clever and bought the market again at a price of 4378 before getting stopped out of this trade at 4356 and I am now flat. The Fed are now trapped as it is quite clear that inflation is not ‘’transitory’’ and is now a serious problem. Growth has slowed remarkably over the past three months, leaving equity markets at nose-bleed levels. However, markets will not fall in a straight line and we will see ferocious rallies as the S&P sells off. The S&P did close below my 4380 support level, and the 4385/4400 area should act as strong resistance on any test. Today, I will be a small seller in this area with a 4411 tight ‘’Closing Stop’’. The S&P has strong support from 4312/4327 where I will again be a buyer with a 4299 ‘’Closing Stop’’.
EUR/USD
The Euro tested its recent 1.1663 low before having a small rally into the New York close and I am still flat. I will continue to be an aggressive buyer from 1.1580/1.1630 with the same 1.1535 stop.
December Dollar Index
Late yesterday, the Dollar rallied to my 93.75 sell level. I am still short and I will add to this trade at 94.15 with the same 94.41 tight stop. The 94.00 level is strong resistance and I would expect some profit-taking at this price. Meanwhile, I will leave my T/P level unchanged at 93.50.
December DAX
After the DAX traded lower to my 15410 buy level, I was fortunate that we saw a small rally to my revised 15448 T/P level before the market got slammed for a further 200 points. The DAX has now fallen almost 600 points since Monday, which is a huge move for this contract. The DAX has further support from 15100/15180 where I will again be a buyer with a 15035 stop.
December FTSE
My FTSE plan worked well with the market trading lower to my 6980 buy level before rallying to my 7010 T/P level and I am now flat. The aggressive sell-off in Sterling over the past 10 days has helped the FTSE to outperform the other major Indexes. The FTSE has support from 6900/6950 where I will again be a buyer with a tight 6865 stop.
Dow Rolling Contract
Just like the DAX above, I was lucky with my Dow call yesterday. After the market hit my initial 34710 buy level we saw a quick 100 point rally, enabling me to cover this position at my 34768 revised T/P level as emailed to my Platinum Members and I am still flat. The Dow subsequently fell over 500 points before rallying overnight to trade at 34500 as I go to press. We have resistance from 34630/34780 where I will be a small seller with a 34905 ‘’Closing Stop’’. I no longer want to be long the Dow at this time, believing that we will eventually break the 30000 level over the coming months.
December NASDAQ
The NASDAQ got hit hard yesterday after 10-year Treasury Yields broke above 1.50%. Rising Bond Yields usually take a bigger toll on tech stocks and it was no surprise that the NDX ended the day with a loss of 3%. Thankfully, we had no buy level in this market and are still flat. The NASDAQ has strong resistance from 14910/15000 where I will be a seller with a wider 15105 ‘’Closing Stop’’.
September BUND
No Change. I am still a buyer on any dip lower to 168.80/169.30 with the same 168.35 stop.
Gold Rolling Contract
I am still flat. Ahead of the key Central Bank speeches this afternoon, I will now lower my Gold buy level to 1705/1719 with a 1693 stop.
Silver Rolling Contract
My Silver plan worked well with the market trading lower to my 22.10 buy level before rallying to my 22.40 revised T/P level and I am now flat. Today, I will again be a buyer on any dip lower to 21.45/22.05 with the same 20.95 stop. If I am taken long I will have a T/P level at 22.45.
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