U.S. Equity Markets fell as rising Trade tensions between America and China added to concern about the pace of recovery from the Coronavirus pandemic. Crude Oil rebounded from an earlier swoon and Gold declined. The S&P 500 declined 0.8%, with signs mounting that President Donald Trump will make his tough-on-China stance a key element of his re-election bid. The energy, technology and utilities sectors led the losses. After rallying as much as 32% from its March bottom, the Index failed to hold at its average price over the past 100 days, a key technical level it hasn’t closed above since February. Trade tension with China contributed to market weakness in 2019 before a deal was reached. Stocks hit the lows of the day after China responded to overnight accusations from Trump, warning that it will safeguard its sovereignty, security and interests, and threatened countermeasures. Earlier, a report showed another 2.44 million Americans claiming Jobless benefits. Markets were already on the back foot after the Senate overwhelmingly passed a bill that could bar some Chinese companies from listing on U.S. exchanges. Trump stoked tensions by tweeting criticism of Xi Jinping’s leadership, days before the biggest Chinese political gathering of the year. The Stoxx Europe 600 Index fell, with nearly all 19 sector groups in the red. Deutsche Lufthansa AG shares bucked the trend after the carrier said it was close to a multibillion-euro bailout deal from the German government. Concern over the stress between the U.S. and China and global Coronavirus cases reaching 5 million are vying for investor attention with optimism over reopening economies and progress on thwarting the pandemic. The U.S. legislation could lead to Chinese mega-companies such as Alibaba Group Holding Ltd. and Baidu Inc. being barred from exchanges. Overseas listings of Hong Kong shares fell as Chinese authorities prepared to pass national security measures, threatening to reignite violent protests in the city. The iShares MSCI Hong Kong ETF, the biggest listed exchange-traded fund, fell 3.7% in New York, the biggest drop since the global market volatility two months ago. Hang Seng Index Futures for May delivery were off 1.6%. The fresh Jobless data has once again underscored the economic hit from the virus. The latest jump in claimants takes the number of newly unemployed since the crisis began nine weeks ago to almost 40 million.
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The S&P 500 Index dipped 0.8%, closing at a price of 2948.
The Dow Jones Industrial Average fell 0.4% to 24,474.
The NASDAQ 100 closed 1.13% lower at 9378.
The Stoxx Europe 600 Index fell 1.8%.
The German DAX fell 1%, closing at 11,060.
Here is a summary of the main Changes in F.X. Markets:
The Bloomberg Dollar Spot Index increased 0.2% to 1242.
The Euro decreased 0.3% to $1.0949.
The Japanese Yen was little changed at 107.57 per dollar.
The British Pound was little changed at $1.2221.
The yield on 10-year Treasuries fell two basis points to 0.67%.
Germany’s 10-year yield fell three basis points to -0.50%.
Britain’s 10-year yield decreased two basis points to 0.21%.
West Texas Intermediate crude increased 1.3% to $33.94 a barrel.
Gold decreased 1.2% to $1,726.1 an ounce.
This morning on the Economic Front we already had the release of UK Retail Sales which fell 18.1% versus -15.5% expected. At 12.30 pm we have the Minutes from the last ECB Meeting on Monetary Policy. This is followed at 1.30 pm by Canadian Retail Sales. Ahead of the Memorial Weekend we have no U.S. Data. Finally, at 3.30 pm we have a speech from the ECB’s Lane.
June S&P 500
Rising US/China tensions saw a further sell-off in the S&P Futures Market to an overnight low at 2904. Yesterday after the Weekly Jobless Claims were released the S&P surged to a high at 2972 before spending the rest of the session trading sideways to lower. This overnight move has me long the S&P here at an average rate of 2915. I will add to this position on any further move lower to 2895 with a now lower 2883 stop. The 2890/2910 area is good support for the market as I look for the last Night’s Chicago ‘’Gap’’ at 2944 to close when the US Markets open this afternoon. Ahead of the three-day weekend in the U.S, I do not want to be short the S&P at this time. I will now lower my T/P level on this position to 2928. If any of the above levels are hit I will be back with a new update for my Platinum Members.
The Euro traded to a high at 1.1010 yesterday afternoon before we saw sellers return to push the Euro lower to trade at 1.0920 this morning. I am still flat and today I will lower my buy level to 1.0840/1.0880 with a 1.0795 stop.
June Dollar Index
The Dollar just missed my 98.90 buy level before rallying to trade at 99.70 this morning. I will now raise my buy level to 98.80/99.30 with a higher 98.35 stop.
This morning the DAX has gaped lower from last night’s New York close and I have bought the market in small size at the bottom of yesterday’s buy range at 10870. I will leave my stop unchanged at 11805. I will now lower my T/P level on this position to 10930.
My FTSE plan worked well with the market trading higher to my 6080 sell level before hitting my revised 6046 T/P level and I am now flat. For those of you who did stay short overnight the FTSE is now trading at 5910. The UK Markets are closed on Monday and where possible I do not want to have a position over the weekend. The FTSE has strong support from 5760/5840 where I will be a buyer with a 5695 stop.
Dow Rolling Contract
The Dow rallied after the Weekly Jobless Claims were released before selling off in the last 20 minutes to my 24180 buy level. I am still long and I will now lower my T/P level on this position to 24270. I will add to this trade at 23950 with the same 23785 stop. If any of the above levels are hit I will be back with a new update for my Platinum Members.
My latest 9440 short NASDAQ position worked well with the market trading lower to my 9390 T/P level. Subsequently I emailed my Platinum Members to go short again at 9430 before covering this position way too early at 9395 and I am now flat. This morning the NASDAQ has hit a low so far at 9240. We have strong support from 9120/9190 where I will be a buyer with a 9050 stop.
The Bund fell shy of my 172.50 buy level with a low 172.64 low print before rallying to sit at 173.40 this morning, Today I will raise my buy level to 172.40/172.90 with a higher 171.95 stop. With the Fed and ECB buying Bonds there is no point in being short as Yields will not be allowed to rise any time soon.
Gold Rolling Contract
I am still flat Gold as the market continues to trade sideways near seven-year highs. Gold has support from 1702/1712 where I will be a buyer with a 1693 stop.
Silver Rolling Contract
Shortly after I posted yesterday Silver traded higher to 17.25 T/P level on my 17.10 long position and I am still flat. The massive rally in Silver over the past few weeks has coincided with a surge in the Daily Sentiment Index to 91%. Traders are more optimistic toward Silver since the September 2019 peak when the DSI was at 95%. Then only other comparable reading was on February 21 of this year, when the DSI rose to 87%. The prior sentiment extremes corresponded with price highs. Silver declined 41% from September 2019 to March 18 this year when the DSI dropped to just 8% bulls. The sentiment has now come full circle. Long-Term I am bullish Silver but with the DSI near extreme levels I am looking for Silver to trade lower before committing some capital. Silver has support from 15.70/16.30 where I will be a buyer with a 15.35 stop.
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