U.S. Equity Markets edged higher as investors gave a tepid vote of confidence to the battery of economic and financial measures from global policy makers aimed at easing the market turmoil. Oil soared and the US Dollar extended its rally. The Nasdaq Composite Index led gains as bargain hunters snapped up tech shares, with Tesla Inc., Twitter Inc. and Netflix Inc. all up at least 5%. The Dow Jones Industrial Average climbed back above 20,000. Crude surged the most on record as Middle East producers began to show signs of strain and President Donald Trump said he would get involved in the oil price standoff at the “appropriate time.” Treasury yields dipped. Stocks gained in Europe after falling across most of Asia. Sovereign bonds soared in Italy, Spain and Portugal after the region’s central bank boosted its efforts to stabilise the economy and capital markets. The Japanese Yen, so often a haven amid market stress, slumped in a sign of the extraordinary demand for the Greenback, which strengthened for an eighth day to its highest in at least 15 years. WTI oil jumped as much as 36% after a plunge that had taken it to almost $20 a barrel on Wednesday. Investors took a break from what has been a wave of selling to evaluate the unprecedented policy actions taken to fight the economic effects of the Coronavirus pandemic. Trump sought to reassure doubting Republicans that he’s aiming to help workers through the crisis, not necessarily corporations, a priority made all the more urgent after data showed U.S. Jobless Claims came in higher than expected. The latest efforts to mitigate the damage include the Bank of England cutting its Bank Rate and increasing its bond buying programme, the European Central Bank launching a 750 billion euro ($815 billion) debt-buying plan, and the Federal Reserve’s support for money-market mutual funds. South Africa cut interest rates and Germany may authorise emergency debt issuance. Overnight, U.S. and European equity futures gained and the dollar halted an eight-day rally as investors took stock of an unprecedented rush of global stimulus measures.
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The S&P 500 Index rose 0.5%, closing at 2409.
The Dow Jones Industrial Average rose 0.95% to close at 20,087.
The Nasdaq Composite added 2.3%.
The Stoxx Europe 600 Index rose 2.9%.
The MSCI Asia Pacific Index declined 3.1%.
The MSCI Emerging Market Index fell 2.4%.
Here is a summary of the main Changes in F.X. Markets:
The Bloomberg Dollar Spot Index gained 1.3%.
The Euro sank 2.2% to $1.0677.
The British Pound fell 0.6% to $1.1534.
The Japanese Yen weakened 2.4% to 110.78 per dollar.
The yield on 10-year Treasuries declined three basis points to 1.16%.
Germany’s 10-year yield rose four basis points to -0.20%.
Britain’s 10-year yield fell 7 basis points to 0.72%.
Japan’s 10-year yield climbed three basis points to 0.08%.
West Texas Intermediate crude rose 25% to $25.43 a barrel.
Gold weakened 0.4% to $1,479.78 an ounce.
This morning on the Economic Front we already had the release of German PPI which came in weaker than the -0.2% expected with a -0.4% print. At 9.00 am we have Euro-Zone Current Account and this is followed at 9.30 am by UK Public Sector Borrowing Requirement. At 12.30 pm we have Canadian Retail Sales. Finally, at 2.00 pm we have U.S. Existing Home Sales.
June S&P 500
I have now rolled to the June Contract which trades at a Discount of 11 Handles to the March Contract. It looks like the temporary bottom that I have been looking in the US Markets arrived on Wednesday when the VIX peaked at 85 while the Fear & Greed Index hit 1. The S&P has now rallied 230 Handles off the 2273 Wednesday low to this morning’s 2505 high so far. Yesterday after the March Contract traded lower to my 2345 buy level I covered this position at my revised 2364 T/P level. This morning the S&P hit my 2490 sell level. As the March Contract expires today I emailed my Platinum Members to exit any short position at 2474 and I am now flat. The June S&P has support from 2380/2410 where I will be a buyer with a 2355 stop. If I am taken long I will have a T/P level at 2438. Ahead of the weekend I do not want to be short the S&P and as a result I have no sell level today.
The Euro has fallen over 900 points since last Monday week’s 1.1495 high print to hit an overnight low at 1.0652 which was near the bottom of my aggressive buy range. I bought the Euro at 1.0700 before we rallied to my 1.0795 T/P level and I am now flat. We are seeing across the board Dollar selling this morning with currencies like the Aussi and Sterling rallying over 3% since yesterday. Today I will be a buyer of the Euro from 1.0670/1.0720 with a 1.0630 stop.
June Dollar Index
The Dollar traded the whole of my sell range for a 102.30 average short position before selling off to my 101.40 T/P level this morning and I am now flat. Despite the Dollar falling 1.5% overnight we are still overbought and today my sell level will be from 101.80/102.30 with a 1.0275 stop.
I have now rolled to the June Contract which trades at a 30 point discount to the March Contract. We have seen an incredible rally since yesterday’s 8210 low to this morning’s 9170 high in the March Contract. Yesterday after the DAX hit my 8350 buy level I covered this position too early at my revised 8425 T/P level and I am now flat. There is no doubt that this week has seen the most incredible volatility across all asset classes that I have witnessed in my 35 years of trading. Given the extent of the 1000 point rally in the DAX I am a more confident buyer in this market as long as we hold yesterday’s low. Today I will be a small buyer from 8600/8750 with a 8495 stop.
My FTSE plan worked well with the market trading lower to my 5000 buy level before rallying to a high so far this morning at 5413. Unfortunately I covered this position at 5040 and I am now flat. I am going to stay flat the FTSE today as we roll to the June Contract and I want to check the technical levels in more detail before taking a position.
Dow Rolling Contract
My 18500/19300 target level in the Dow has certainly worked really well as we have now rallied 2100 points off Wednesday’s 18900 low print to this morning’s 21000 high print. Yesterday the Dow opened weak and traded to my 19300 buy level before rallying to my 19750 T/P level and I am now flat. The Dow has initial resistance from 21600/21750 where I will be a small seller with a 21850 tight stop. If I am taken short I will have a T/P level at 21450. The Dow has left a massive Gap to last night’s 20,087 close and I will be an aggressive buyer on any dip lower to 19950/20200 with a 19775 stop. If I am taken long I will have a T/P level at 20375.
I have now rolled to the June Contract which trades at a small 20 point Discount to the March Contract. Yesterday the March Contract missed my 7020 buy level by 13 points before rallying an incredible 600 points and I am still flat. The NASDAQ has initial support from 7200/7350 where I will be a buyer with a 7090 stop.
I had the correct view in buying the Bund but unfortunately after I bought the Bund at an average rate of 169.40 I was stopped out of this trade at 168.65 and I am now flat. This is frustrating as the Bund is now trading at 169.40 having hit a high this morning above 170. Today I will be a small buyer from 168.30/168.80 with a 167.80 stop.
Gold Rolling Contract
The best decision all week was to leave Gold alone. The points are expensive especially in a market that is moving $70 every day. I am going to stay flat as I feel I have a better edge in Silver at this time.
Silver Rolling Contract
Silver just missed my 11.70 buy level with a 11.76 low print before rallying 100 points this morning, helped by a 1.5% fall in the Dollar. Today I will raise my buy level to 11.80/12.20 with a 11.35 stop.