U.S. Equity Markets traded sideways as investors digested economic data, finishing the day mixed in what turned out to a quiet trading session. The NASDAQ 100 again closed higher, while the S&P and Dow finished flat. Economic data was the main driver. Jobless claims fell from the week prior, but not as much as Wall Street had expected. But the four-week moving average of Jobless Claims rose once again. This sparked concerns that the job market’s recovery will continue to be choppy and uncertain. But the housing market showed strength. Housing Starts and Building Permits jumped in December, with both hitting the highest level since 2006. And the Philadelphia Federal Reserve’s Manufacturing Index came in well above expectations. These are all fairly positive signs for the economy. There were also some headlines on stimulus, with reports that President Joe Biden was already facing pressure to lower the size of his $1.9 trillion package in order to gain bipartisan support. European Markets closed higher. The European Union leaders group convenes this morning to discuss the vaccination rollout and potential border closures. Italian Prime Minister Giuseppe Conte has lawmakers’ backing to increase fiscal deficit spending by $39 billion to support the economy through the latest wave of COVID-19 cases. Bank of England Governor Andrew Bailey said he expects the British economy to have a “pronounced” recovery. The European Central Bank stands ready to do more to support economic growth, according to President Christine Lagarde during yesterday’s Monetary Policy announcement. As expected, the central bank left rates and asset purchases unchanged. But the ongoing aid mattered more than what the bank was doing. Elsewhere, Oil fell 0.58% as the EIA said that oil prices would stay around today’s levels until 2022, while Bitcoin closed over 8% lower on profit-taking.
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The S&P 500 closed 0.03% higher at a price of 3853.
The Dow Jones Industrial Average closed 12 points lower for a 0.04% loss at a price of 31,176.
The NASDAQ 100 closed 0.55% higher at a price of 13404.
The Stoxx Europe 600 Index closed 0.2% higher.
The MSCI Asia Pacific Index fell 0.3%.
Yesterday the Nikkei closed 0.82% higher at a price of 28,756.
The Bloomberg Dollar Spot Index closed 0.3% lower.
The Euro closed 0.4% higher at $1.2160.
The British Pound closed 0.5% higher at $1.3730.
The Japanese Yen closed unchanged at 103.49 per dollar.
Germany’s 10-year yield closed four basis points higher at -0.49%.
Britain’s 10-year yield closed three basis points higher at 0.33%.
US 10 Year Treasury closed two basis points higher at 1.10%.
West Texas Intermediate crude closed 0.56% lower at $52.98 a barrel.
Gold closed flat at $1,871.20 an ounce.
This morning on the Economic Front we have UK Retail Sales and Public Sector Net Borrowing at 7.00 am. This is followed by German, Euro-Zone, UK and U.S. Markit Manufacturing PMI at 8.55 am, 9.00 am, 9.30 am and 2.45 pm respectively. Finally, we have Existing Home Sales at 3.00 pm.
March S&P 500
Despite awful Jobless Claims reported yesterday, US Indices are trading at all-time highs. Market valuations have now reached never before seen levels of asset price disconnect from the underlying size of the economy at 193%. In my opinion this scenario is not sustainable without a meaningful correction first. Maybe the S&P trades above 4000 first before we see any correction. I am still flat the S&P and I will continue to be a seller on any further rally to 3867/3883 with the same 3901 wider stop. I will now raise my buy level to 3810/3825 with a 3799 ‘’Closing Stop’’. If I am taken short I will have a T/P level at 3858. If I am taken long I will have a T/P level at 3836.
The Euro consolidated Wednesday’s late rally and I am still flat. I will now raise my buy level to 1.2080/1.2120 with a higher 1.2035 stop. I still do not want to be short the Euro at this time.
March Dollar Index
The Dollar traded lower to my initial 90.20 buy level. I will add to this trade on any further dip lower to 89.70 with the same 89.35 stop. I will now lower my T/P level to 90.50 and if any of the above levels are hit I will be back with a new update for my Platinum Members.
The DAX continues to struggle at these lofted prices and I am still flat. I will not chase the market higher and I will leave my 13705/13785 buy level unchanged with the same 13645 stop.
The FTSE again just missed my initial buy level before having a small rally into the New York close. I will continue to be a small buyer from 6600/6640 with the same 6575 tight stop.
Dow Rolling Contract
It may mean nothing but despite the new high headlines in yesterday’s papers following the Inauguration of President Biden but we are seeing some subtle cracks appearing with both the Dow and Small Caps struggling to move higher. I am still flat the Dow and today I will lower my sell level to 31370/31520 with a lower 31635 ‘’Closing Stop’’. Meanwhile, I will leave my 30750/30950 buy level unchanged with the same 30595 stop. If I am taken short I will have a T/P level at 31240. If I am taken long I will have a T/P level at 31110.
After the NASDAQ traded higher to my initial 13380 sell level I emailed my Platinum Members to exit any short position at my revised 13350 T/P level. Subsequently the NASDAQ made a new high, hitting my second sell level at 13410 (as outlined to my Platinum Members) before trading lower to my 13398 T/P level and I am now flat. The NASDAQ is severely overbought, driven higher by the vertical movement in Netflix over the past few weeks. We have resistance from 13440/13540 where I will again be a seller with a 13625 stop.
The Bund traded lower to my buy range and I am now long at a price of 176.90. I will add to this trade on any further move lower to 176.40 with a lower 175.95 stop. I will now lower my T/P level on this position to 177.20 and if any of the above levels are hit I will be back with a new update for my Platinum Members.
Gold Rolling Contract
Gold just missed my 1850 initial buy level before having a small rally into the close. Ahead of the weekend I will now lower my buy level to 1825/1840 with an 1813 stop.
Silver Rolling Contract
No Change. I am still a buyer from 24.70/25.25 with the same 24.35 stop.