U.S. stocks capped a fourth day of losses, though finished well off the lows of the day, while the Japanese Yen strengthened versus the dollar as investors assessed the likelihood of fresh tariffs just hours before they are due to take effect. The yuan fell to its weakest since January. The S&P 500 is on pace for its worst week of the year after another trade-fomented decline. The bellwether had slumped as much as 1.5% before Trump said he received a “beautiful letter” from Chinese President Xi Jinping and that the two leaders would probably speak by phone. Talks began in Washington at 5 p.m. The gap between 3-month and 10-year Treasury rates briefly turned negative, traditionally a recession warning. Trade discussions will resume hours after concerns flared again about the strength of the Chinese economy — the country’s credit growth slowed in April to a level below all 27 estimates in a Bloomberg survey. Beijing has warned it will retaliate should the U.S. hike tariffs as advertised on Friday. Meanwhile, simmering geopolitical tension elsewhere — from North Korea testing missiles again to renewed stress between America and Iran — added to the gloomy mood.
To mark my 1825th 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@tradernoblecom for details
For anyone following my Platinum Service it made 206 points yesterday and is now ahead by 951 points for May, having made 955 points in April, 1027 points in March, 1013 points in February, 1671 points in January, 2803 points in December, 1541 points in November and 2094 points in October. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1600 points
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Incredible two-way volatility in both the S&P and Dow yesterday with the S&P rallying 50 Handles from its intra-day low. At the same time the Dow was was trading over 300 points lower before rallying 450 points of this low on the various news reports re the US/Chinese Trade talks. Even though the S&P broke its 50 Day Moving Average, the late rally saw the market only close 0.3% lower at 2870. Meanwhile the Nasdaq Composite Index dropped 0.4% and the Dow Jones Industrial Average slumped 0.5%. In Europe, the Stoxx Europe 600 fell the most this year closing 1.7% lower. The MSCI Emerging Market Index dropped 2.1%, and the MSCI Asia Pacific Index slumped 1.4%.
Developing-nation currencies weakened. The lira trimmed some losses after Turkey’s central bank unexpectedly raised borrowing costs for the country’s lenders. As usual we saw little movement in the majors with the Bloomberg Dollar Spot Index closing unchanged. The Euro made a high of $1.1256 before closing 0.2% higher at $1.1219. The Japanese Yen strengthened 0.4% to 109.72 per dollar, while the British pound was little changed at $1.3015.
The Treasury Yield Curve briefly inverted for the first time since March on the Equity Market rout before rallying with the yield on 10-year Treasuries falling 3 basis points to close at 2.45%. In Europe, Germany’s 10-year yield fell less than 1 basis point to negative 0.05%.
Crude oil edged lower and emerging-markets stocks tumbled, as West Texas Intermediate fell 0.9% to $61.57 a barrel. We did not see a huge amount of safe haven buying in the precious metals with Gold only closing 0.2% higher at $1284 an ounce. The Bloomberg Commodity Index fell 0.6%, the third decline in four days.
This morning on the Economic Front we have German Trade Balance and Current Account at 7.00 am. This is followed at 9.30 am by UK GDP, Trade Balance, Manufacturing Production, Index of Services and Total Business Investment. At 1.30 pm we have US CPI. Finally the Fed’s Brainard and Bostic are speaking at 1.30 pm and 2.05 pm respectively.
June S&P 500
A wild trading session yesterday which saw the VIX at one stage spike to a high of 23.70 before closing lower at 19.10. When markets break key technical levels such as the 50 Day Moving Average it is only the close that will validate a break lower or higher. Yesterday after the S&P broke its then 50 Day MA at 2858 we saw an acceleration lower to 2836 before incredibly the market rallied to a high so far overnight at 2889. Yesterday my S&P plan worked well with the market hitting my 2859 buy level shortly after the European Markets opened before rallying to my revised 2865.50 T/P level. Subsequently I emailed my Platinum Members to re-buy the S&P at a price of 2848 before unfortunately covering this position too early at 2852 and I am now flat. Anyone using my 5 Handle Rule yesterday worked great as the S&P gave a buy level at 2842 before having this huge rally into the close and again overnight. Initially the S&P spiked on Fox News reporting positive talks between the US and China. Subsequently Trump came out and said that Tariffs will be imposed from 12.01 am on Friday 10 May. This saw the S&P reverse from its overnight high of 2889 to a low so far of 2852.50. Given what happened last weekend I do not fancy having a position on board over the weekend. Today I will be a small buyer on any dip lower to 2832/2844 with a 2821 stop. If I am taken long and subsequently stopped out of this position I will be a more aggressive buyer from 2795/2808 with a 2787 stop. I still do not want to be short the market at this time.
My Euro plan worked well with the market rising to my 1.1245 sell level before falling to a low so far at 1.1211. As I wanted to be flat overnight I covered this position at 1.1228 and I am now flat. Today I will again look to sell the Euro from 1.1275/1.1315 with a 1.1345 tight stop.
June Dollar Index
I am still flat the Dollar and today I will now lower my sell level to 97.70/98.10 with a lower 98.45 stop.
I am still flat the DAX with the market again missing my sell range before having an aggressive move lower. Today I will lower my sell level to 12220/12280 with a 12325 tight stop. I still do not want to be long the DAX at this time.
No Change as I am still a buyer on any dip lower to 7095/7135 with the same 7060 stop.
Dow Rolling Contract
My Dow plan worked well with the market trading the whole of my buy range for an average long position at 25650. Subsequently the Dow fell a further 100 points before rallying to my too early T/P level at 25700 with a high so far of 25985 and I am now flat. Today I will again look to buy the Dow on any dip lower to 25410/25560 with a 25335 stop. Ahead of the weekend I certainly do not want to have a short position on board. The 200 Day Moving Average comes in at 25420 and I would expect any test of this area initially to be followed by a decent rally. However a break and close below 25400 this evening will be extremely bearish.
It took a long time but finally the NASDAQ rallied to my 7610 T/P level on my 7590 long position from early yesterday morning and I am now flat. Overnight the market rallied to a high so far at 7653. Today my only interest in buying the NASDAQ is on a further dip lower to 7380/7440 with a 7325 stop.
After the Bund traded higher to my 166.50 sell level I emailed my Platinum Members to exit any short position at 166.36 and I am now flat. The market closed slightly lower at 166.23. Even though the yield on the Bund is negative it is difficult to be short. However the Bund has strong resistance from 166.85/167.25 and I will be a seller in this area with a 167.60 wider stop.
Gold Rolling Contract
No Change as I am still a buyer on any dip lower to 1258/1266 with a 1249 stop.
Silver Rolling Contract
I am still long the market at 14.80 with a 14.45 stop. I will now lower my T/P level on this position to 14.88 as I want to try and be flat over the weekend.