U.S. Equity Markets closed mixed yesterday with the S&P leading the main Indices lower with a loss of 0.38% while the small cap Russell 200 closed 2.05% higher. President-elect Joe Biden rolled out the first part of his Economic Stimulus Plan after the close with a price tag of $1.9 trillion. It will focus on Coronavirus aid. While this has been a catalyst for a move higher the last few weeks, the worry now is whether it will garner widespread support. Even with Democratic control of the Senate, they will still need Republican help to pass the measure. That came as Federal Reserve Chairman Jerome Powell said the central bank remains “strongly committed” to using all of its monetary policy tools to support economic growth. He elaborated that now was not the time to consider tightening monetary policy once more. This supported similar commentary from other Fed officials in recent days. In addition, the number of American Coronavirus vaccinations keep rising. The total increased to 10.8 million through yesterday, a jump of roughly 900,000 versus the day prior. European Markets rose once more. They started off in positive territory and held onto those gains throughout the day. Investors remain optimistic about increased government stimulus leading to a resurgence in economic growth. Central bank officials on both sides of the Atlantic said they expect Coronavirus vaccine rollouts, as well as more fiscal spending to support the second half of the year. At the same time, preliminary Gross Domestic Product numbers from Germany indicate that Europe’s largest economy is weathering the storm better than anticipated. Elsewhere, Bitcoin rallied 5.64% after trading platform eToro said it was having difficulty keeping up with customer demand for cryptocurrencies, while Oil closed 1.30% higher on optimism Biden’s stimulus plan will support a pick-up in growth.
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The S&P 500 closed 0.38% lower at a price of 3795.
The Dow Jones Industrial Average closed 68 points lower for a 0.22% loss at a price of 30,991.
The NASDAQ 100 closed 0.58% lower at a price of 12898.
The Stoxx Europe 600 Index closed 0.3% higher.
The MSCI Asia Pacific Index rose 0.2%.
This morning the Nikkei is closed 0.62% lower at a price of 28,519.
The Bloomberg Dollar Spot Index closed 0.3% higher.
The Euro closed 0.1% lower at $1.2145.
The British Pound closed 0.2% higher at $1.3660.
The Japanese Yen closed 0.3% higher at 103.67 per dollar.
Germany’s 10-year yield closed two basis points lower at -0.55%.
Britain’s 10-year yield closed two basis points lower at 0.29%.
US 10 Year Treasury closed unchanged at 1.10%.
West Texas Intermediate crude closed 1.30% higher at $52.65 a barrel.
Gold closed 0.42% lower at $1,851.20 an ounce.
This morning on the Economic Front we already had the release of UK GDP which fell 2.6% versus – 4.6% expected. The UK Trade Balance was also released, coming in much worse than expected with a – £16 billion print. At 10.00 am we have Euro-Zone Industrial Production and this is followed at 1.30 pm by U.S Retail Sales, PPI and the New York Empire State Manufacturing Index. Capacity Utilisation and Industrial Production will be released at 2.15 pm. Finally, at 3.00 pm we have Business Inventories and the University of Michigan Consumer Sentiment Index.
March S&P 500
We are seeing a major contraction in U.S jobs. Last month some 140,000 Americans lost their job. This is a major concern gong forward and certainly does not justify the elevated stock prices at this time. Just before the close the S&P traded lower to my 3787 buy level before having a small 10 Handles bounce. As I wanted to be flat overnight I covered this position at my 3792 revised T/P level. The S&P is opening lower at 3776 this morning. The 3753/3768 is crucial support as a break and close below here opens up the possibility of a move lower to the next support level from 3715/3730. Today I will be a small buyer from 3753/3768 with a 3745 tight stop. If stopped, I will be an aggressive buyer from 3715/3730 with a wider 3699 ‘’Closing Stop’’. Ahead of the weekend I do not want to be short the S&P especially as internally the market was strong in yesterday’s trading session.
I am still flat the Euro and I will now lower my buy level to 1.2040/1.2090 with a lower 1.1995 stop. Meanwhile I will continue to be a seller on any further rally to 1.2230/1.2270 with the same 1.2305 stop.
March Dollar Index
Late yesterday the Dollar sold off to my 90.05 buy level before rallying this morning to my 90.35 T/P level and I am now flat. Today, I will again be a buyer from 89.70/90.20 with a tight 89.25 stop.
I am still flat and ahead of the weekend I will now lower my buy level to 13740/13810 with a lower 13685 stop. I still do not want to be short the DAX at this time.
The FTSE traded in a narrow range yesterday and I am still flat. I will continue to be an aggressive buyer from 6630/6670 with the same 6585 stop.
Dow Rolling Contract
Overnight, the Dow traded to a low of 30805, just missing my initial 30780 buy level before rallying to trade at 30925 as I go to press and I am still flat. I will now lower my buy level to 30500/30710 while leaving my 30325 wider ‘’Closing Stop’’ unchanged. I will now lower my sell level slightly to 31280/31480 with a 31625 stop.
Overnight the NASDAQ traded lower to my 12840 buy level before rallying 50 points. I covered this position at 12865 and I am still flat. Today, I will again be a buyer on any dip lower to 12730/12800 with a 12685 stop. If stopped, I will continue to be an aggressive buyer from 12475/12375 with the same 12295 ‘’Closing Stop’’.
It is very hard to be short the Bund for any length of time even with yields trading at -55 basis points. The ECB continue to intervene in the Bond Market as they do not want yields to rise anytime soon. I will now raise my buy level to 176.80/177.20 with a 176.35 stop. The Bund has resistance from 178.40/178.90 where I will be a small seller with a 179.25 stop.
Gold Rolling Contract
No Change as I am still a buyer from 1800/1815 with the same 1789 stop.
Silver Rolling Contract
Silver traded in a narrow range yesterday and I am still flat. I am reluctant to chase the price higher and therefore I will leave my 24.10/24.70 buy level unchanged with the same 23.65 stop. If I am taken long I will have a 25.05 T/P level.