U.S. stocks retreated further on Thursday and investors sought refuge in gold and bonds as the world’s two largest economies hardened their trade-war stances. The Japanese Yen gained against the US Dollar, while 10-year Treasury yields fell to their lowest since 2017. The S&P 500 Index dropped for a fourth session in five, and the Dow Jones Industrial Average lost 286 points, after the Chinese Communist Party’s flagship newspaper published two commentaries assailing U.S. moves to curb Chinese companies. Stocks in industries seen as susceptible to trade disruptions — including semiconductors, automobiles and energy — retreated. Emerging-market shares slid and West Texas crude fell below $60 a barrel, while yields on bunds and gilts hit two-year lows. Risky assets remain under pressure and havens in demand as investors dig in for what looks like a protracted trade dispute. One expert predicts tensions could endure until 2035, while economists are also turning more pessimistic. Goldman Sachs Group Inc. now sees higher odds of a stalemate between the two nations, and Nomura Holdings Inc. has shifted to forecasting a full-blown escalation of tariffs.
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 200 points yesterday and is now ahead by 1766 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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The S&P 500 Index declined 1.2% to close at 2822 while the Dow finished 286 points lower at 25490. Crucially the Dow closed above its 50 Day Moving Average which comes in at 25434 this morning. The Stoxx Europe 600 Index had its worst day in two weeks as automakers tumbled after an EU official said the U.S. was unlikely to start trade talks with the bloc soon while it’s preoccupied with China. The Stoxx closed with a loss of 1.4%. Despite the weaker Pound, the U.K.’s FTSE 100 Index fell 1.4%. The MSCI Emerging Market Index also fell 1.4% to a 19-week low.
The US Dollar was little changed, while the British Pound struggled to end its two-week losing streak against the Euro, closing at 0.8830, Against the US Dollar, the Pound fell 0.1% to close at 1.2657. The Euro climbed 0.3% to $1.118. Meanwhile the Japanese yen advanced 0.7% to 109.59 per dollar, the biggest gain in two months. Elsewhere, China’s yuan dipped in onshore trading even after the People’s Bank of China set its daily fixing at a stronger-than-expected level for a fourth straight day.
The weaker than expected economic data saw the yield on 10-year Treasuries fall seven basis points to 2.31%, the lowest in about 19 months. In Europe Germany’s 10-year yield fell three basis points to -0.12% which is its lowest level in two years. Finally Britain’s 10-year yield declined six basis points to 0.953%, a 23-month low.
West Texas crude had its biggest two-day drop of the year as inventory data alleviated concerns over a supply crunch. Commodities slumped across the board as traders increasingly girded for a full-blown trade war. West Texas Intermediate crude decreased 5.4% to $58.13 a barrel, the lowest in over 10 weeks. Gold gained 0.8% to $1,283.91 an ounce. Overall, the Bloomberg Commodity Index sank 1.3%, its biggest decline in over 16 weeks.
This morning on the Economic Front we have UK Retail Sales and the CBI Distributive Trends Survey at 9.30 am and 11.00 am respectively. With the US Closed on Monday the only US Economic release is Durable Goods Orders at 1.30 pm.
June S&P 500
Despite the VIX rallying 14% to close at 16.86 the S&P had a nice rally off its 2805 low into the close and that rally has continued overnight with the S&P trading at 2833 exactly where it was trading when I posted yesterday morning. In my view until we take out the key 2790/2805 support area it is extremely difficult to be short as the buy the dip continues to be a force. Yesterday after I posted the S&P traded lower to my second buy level at 2826 for a 2832 average position, Subsequently I emailed my Platinum Members to exit any long position at 2837 and after this was achieved to re-buy the market at 2820 with a 2827 T/P level and I am now flat. With the US Markets closed on Monday I certainly do not want to have a position over the long weekend especially if Trump gets edgy and starts a series of tweets which will move the market. Today I will again look to buy the S&P on any dip lower to 2805/2819 with a 2797 stop. I do not want to have a short position over the weekend.
Frustratingly the Euro just missed my buy level with a 1.1107 low print before rallying late in the session to my 1.1185 sell level. As I wanted to be flat I covered this position at my revised 1.1180 T/P level. Today I will move my buy level higher to 1.1110/1.1150 with a 1.1070 stop. Ahead of the European Elections I do not want to be short the Euro at this time.
June Dollar Index
Mt Dollar Plan worked well with the market trading higher to my 98.25 sell level before trading lower to my 98.00 T/P level and I am now flat. This morning the Dollar is trading at 97.60 and today I will again look to sell the Dollar on any further rally to 98.05/98.35 with a 98.65 stop.
The DAX traded the whole of my buy range for a 11950 average long position. This morning the DAX is trading much higher at 12010 as the market held in well despite the aggressive sell-off in the US Indices. As I was long both the S&P and Dow at the time I covered my long DAX position too early at 11960 and I am now flat. Today I will again look to buy the DAX on any dip lower to 11860/11925 with a 11810 stop. Remember the 11850/11900 is key support for the DAX.
Despite the weaker Pound the FTSE got hit hard yesterday as thankfully we had no buy levels in the market. With the UK also closed on Monday and given the increasingly volatile political situation which should be clearer after PM May meets the Chairman of the 1922 Committee this afternoon I am going to stay flat the FTSE until the market re-opens on Tuesday morning.
Dow Rolling Contract
The good part about the Dow is that no matter where you bought the market in yesterday’s buy range you should would have made a nice gain. Personally I bought the Dow at 25495 before covering this position for a small gain at 25540 and I am still flat. It was key that the Dow closed over its 25434, 200 Day Moving Average as a break and close below 25400 for a few days will be bearish for a possible move lower to 24100. Today I will be a seller on any aggressive rally higher to 25800/25950 with a 26050 stop. My only interest in buying the market is on a dip lower to 25200/25350 with a 25080 stop.
After the NASDAQ traded lower to my 7310 buy level I covered this position at my revised 7325 T/P level and I am now flat. The NASDAQ has strong resistance from 7450/7510 and I will be a seller on any aggressive rally to this area with a 7555 stop. My only interest in buying the market is on a dip lower to 7210/7270 with a 7175 tight stop.
Although the Bund traded higher to my sell level yesterday I did not sell the market myself as I wanted to be flat overnight. If you did sell the Bund it is now trading 15/20 points lower than my initial sell range and I would take your gain here. With Bund Yields trading at a two-year low, this market is telling you of a more serious recession on the horizon for the Euro-Zone. Today I will look to sell the Bund from 167.50/167.90 with a 168.15 stop.
Gold Rolling Contract
Despite gold rallying $10 yesterday I still do not trust this market as my 1250 target level has never been hit. Today I will raise my buy level slightly to 1260/1269 with a 1252 stop.
Silver Rolling Contract
Silver finally rallied to my 14.60 exit level on my 14.80 long position and I am now flat. As mentioned yesterday I would like to see the Daily Sentiment Index have a reading of 10% or lower to be more comfortable in setting up a meaningful long position, Today my buy level will be form 13.95/14.35 with a 13.55 stop. If I am taken long I will have a T/P level at 14.59.