U.S. Equity Markets tumbled and Treasuries surged as investors worried the Federal Reserve’s emergency cut won’t be enough to combat the economic impact of the Coronavirus. The S&P 500 fell for the eighth time in nine days following the Federal Reserve’s 50 basis-point cut of its benchmark rate. Fed chair Jerome Powell said during a press conference that the U.S. economy remains strong but the virus outbreak will weigh on activity “for some time.” The two-year Treasury yield sunk to 0.70%, while the 10-year plunged below 1% for the first time ever. Banks led losses on Equity benchmarks. Investors had piled out of risk assets last week as the spreading virus threatened to derail global growth, only to pour back in Monday in anticipation of concerted action from Group of Seven officials. Oil pared its rebound Tuesday, approaching $46 a barrel, while Gold rose. The Japanese Yen was higher versus the Dollar. The OECD warned that growth will sink to levels not seen in more than a decade and ever more businesses are warning about the impact of the illness. The Governor of the Bank of England, Mark Carney, said it would take all necessary steps to help the economy. Australia lowered its benchmark by a Quarter Percentage Point. Its currency rose, however, underscoring how traders’ expectations have rapidly shifted in recent days. In other news, Joe Biden cemented a remarkable comeback on the biggest Primary night of the Democratic presidential campaign with victories in nine states across the country, including upsets in Texas and Massachusetts, even as Bernie Sanders took the biggest prize of the night, California. Biden, whose campaign was faltering just days ago, scored wins in Virginia, North Carolina, Arkansas, Oklahoma, Tennessee, Alabama and Minnesota. His victories in Texas and Massachusetts were especially stinging for Sanders, who had supplanted Biden at the top of polls in recent weeks.
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 made 645 points yesterday and is now ahead by 1145 points for March, having made 2223 points in February, 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
U.S. stock futures rebounded overnight after yesterday’s sharp decline, and European contracts rose, as investors took in Super Tuesday election results alongside the Federal Reserve’s emergency interest-rate cut. Treasuries stayed higher. Joe Biden’s surprise comeback in the race blunted the chance of a Bernie Sanders nomination that had unsettled some investors. Futures on the S&P 500 rose more than 1% after the index tumbled almost 3% in wake of the 50 basis-point Fed move that failed to ease concerns about an economic downturn. A volatile session for Asian stocks saw declines in Australia offset gains in South Korea, while Japan ended little changed. Chinese and Hong Kong shares fluctuated. Ten-year Treasury yields stayed below 1% after falling below that level for the first time Tuesday. The Yen and Euro retreated against the Dollar.
The S&P 500 Index fell 2.8% to close at 3003.
The Dow Jones Industrial Average dropped 2.96%, closing at 29,914.
The Stoxx Europe 600 Index gained 1.4%.
The MSCI Asia Pacific Index rose 0.5%.
Currencies
Here is a summary of the main Changes in F.X. Markets:
The Bloomberg Dollar Spot Index fell 0.4%.
The Euro rose 0.4% to $1.1178.
The British Pound gained 0.5% to $1.2812.
The Japanese Yen strengthened 1% to 107.23 per dollar.
Bonds
The yield on 10-year Treasuries decreased 16 basis points to 1%.
The two-year rate lost 20 basis points to 0.70%.
Germany’s 10-year yield dropped two basis points to -0.64%.
Commodities
Gold Futures added 2.7% to $1,637.10 an ounce.
West Texas Intermediate crude rose 1.1% at $47.24 a barrel.
This morning on the Economic Front we already had the release of German Retail Sales for January which came in as expected with a rise of 0.9%. Next we have German, Euro-Zone and UK Markit Services PMI at 8.55 am, 9.00 am and 9.30 am respectively. This is followed at 10.00 am by Euro-Zone Retail Sales and U.S MBA Mortgage Applications at 12.00 pm. At 1.15 pm we have the ADP Employment Change, followed by the Markit Services PMI at 2.45 pm. Finally, we have ISM Manufacturing and the Bank of Canada Rate decision at 3.00 pm.
March S&P 500
As speculated by me over the past few days the Fed came out and did an emergency 0.5% rate cut. Initially the S&P surged before falling an incredible 160 Handles from its 3137 post rate cut high. My S&P plan worked really well as after we hit my 3135 sell level the S&P traded lower to my 3118 T/P level before falling to my 3040 buy level. Subsequently we rallied 35 Handles from my buy level, hitting my 3058 T/P level and I am now flat. You cannot take your eyes off this market as the S&P made a low at 2973 before rallying to close at 3003. If you are brave and trade in small size these are the best trading conditions that we have seen in many years. Personally I did over 40 trades on each of the last two days. I see two key critical ranges for the S&P: 2850 to 3150 with 3000 as Fair Value. If we trade in this level over the next 1 to 2 weeks I will look for a move back to the highs. Building value below the 2850 puts us in my lower range of 2850 to 2610. Building value in this area over a 1 to 3 week time frame is the first signal of a top in the market showing a move to 2000. Today I will be a buyer from 2965/2985 with a 2949 stop. If I am taken long I will have a T/P level at 3005. I will be a small seller from 3110/3135 with a 3153 stop. If I am taken short I will have a T/P level at 3095. Remember the VIX closed at 36.94 last night and as long as the VIX trades above 25 we can expect to see wild S&P swings.
EUR/USD
I am still flat the Euro and frustrated that I have not been able to get a long position on board. I will now raise my buy level to 1.1050/1.1090 with a higher 1.1005 stop.
March Dollar Index
The Dollar closed 0.4% lower yesterday helped by the narrowing of the interest rate differential with its major trading currencies. I am still flat and I will now lower my sell level to 97.70/98.10 with a lower 98.45 stop.
March DAX
I am still flat the DAX. I am not happy that this market is closed from 9.00 pm to 7.00 am each day as the opening price each morning can lead to large Gaps. With so much going on in my four other Indices I am going to stay flat the DAX until the market calms down.
March FTSE
Late yesterday the FTSE finally traded lower to my 6660 buy level. As I wanted to be flat overnight I emailed my Platinum Members to exit any long position at 6680 and I am still flat. Having traded to an overnight low at 6575 the FTSE has rallied to trade at 6730 as I go to press. Today I will again look to buy the FTSE from 6590/6650 with a 6545 stop.
Dow Rolling Contract
The Dow fell short of my 27130 sell level with a rebound high at 27084 before getting crushed to my 26190 buy level. Subsequently we rallied to my 26350 T/P level and I am now flat. The last hour was wild with the Dow making a low at 25720 before closing at 25914 and I am still flat. Building value in the 25600 to 27000 area is bullish showing a move back to the highs and possibly new highs. On this basis I will be a buyer from 25650/25850 with a 25495 stop. If I am taken long I will have a T/P level at 26030. Building value between 22500 to 25600 is the first signal of a top in the market, targeting the next major level of 18500. My only interest in selling the Dow is from 26900/27100 with a 27210 stop. If I am taken short I will have a T/P level at 26750.
March NASDAQ
My NASDAQ plan worked well with the market trading higher to my 8960 sell level before trading lower to my 8890 T/P level and I am now flat. The critical range for the NASDAQ is from 7830 to 9000. Building value in this area is bullish for a move back to the highs from late January. However, building value between 6840 to 7830 is the first signal of a top in the market, targeting the next major level of 4500. Today I will be a seller from 8860/8940 with a 9005 stop. If I am taken short I will have a T/P level at 8790. I still do not want to be long the NASDAQ at this time.
March BUND
My 177.80 average short Bund position worked well with the market trading lower to my 177.35 T/P level with a 176.83 low print before surging following the Fed Rate Cut. The Bund is trading at 178 as I go to press. We have short-term resistance from 178.30/178.70 where I will be a seller with a 179.05 wider stop.
Gold Rolling Contract
Gold rallied over $60 on the Fed Rate Cut as thankfully we had no sell level yesterday. Gold has initial support from 1605/1615 and I will be a buyer in this area with a 1597 stop.
Silver Rolling Contract
Silver never came close to my buy level before rallying 80 points and I am still flat. I will now raise my buy level to 16.45/16.85 with a higher 16.10 stop.
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