U.S. Equity Markets have resumed their decline, finishing the day lower led by the NASDAQ which fell 3.56%, while the VIX surged 34%, closing above both its 50 and 200 Day Moving Averages at a price of 28.57. Rising bond yields again forced an equity sell-off. Remember, this sparks fears that it will cost more for technology companies to borrow money to fuel their growth. This is why the tech-heavy Nasdaq Index led the selling. And yesterday, the yield on the 10-year Treasury rose above the dividend yield of the S&P 500, meaning that yield-focused investors could now turn away from stocks. In terms of economic data, Jobs data were positive. Jobless Claims fell sharply from the week prior, and the four-week moving average fell to 807,750. If this trend were to continue, it would be a positive trend for the job market and overall economic rebound. Vaccine news was also positive, with reports suggesting that the FDA could approve Johnson & Johnson’s vaccine as early as this weekend. European Markets declined on rising bond yields. But outside of yields, news was positive. The European Central Bank’s (“ECB”) Governing Council member Isabel Schnabel said the bank would tackle any major increases in interest rates. This indicates that borrowing costs will continue to remain low. Germany’s DIW Economic Institute said the country has better adapted to the recent slew of lockdowns and restrictions compared to early 2020. This may suggest that Germany’s economy has proven to be largely resilient through the pandemic. Germany’s Consumer Confidence for March beat estimates due to increased confidence in regard to individual income and spending. The EU increased its number of COVID-19 vaccinations administered to 28.9 million yesterday. The region’s daily average of administered doses last week was 801,600. Elsewhere, Oil closed 0.28% higher as lower-than-expected crude oil supplies from the U.S. continued to support markets, while Gold sold off sharply, closing 1.50% lower.
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For anyone following my Platinum Service it lost 10 points yesterday and is still ahead by 2647 points for February, having finished January with a gain of 2077 points, 2273 points in December, 2025 points in November, 2779 points in October, 3042 points in September, 2383 points in August, 3128 points in July, 2580 points in June, 2456 points in May, 4773 points in April, and an incredible 9264 points in March. 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 closed 2.45% lower at a price of 3829.
The Dow Jones Industrial Average closed 560 points lower for a 1.75% loss at a price of 31,402.
The NASDAQ 100 closed 3.56% lower at a price of 12,828.
The Stoxx Europe 600 Index closed 1.2% lower.
The MSCI Asia Pacific Index fell 1.2%.
This morning the Nikkei closed 4.0% lower at a price of 28,966.
The Bloomberg Dollar Spot Index closed 0.3% lower.
The Euro closed 0.1% higher at $1.2189.
The British Pound closed 1.1% lower at $1.4001.
The Japanese Yen closed 0.1% lower at 106.17 per dollar.
Germany’s 10-year yield closed eight basis points higher at -0.22%.
Britain’s 10-year yield closed six basis points higher at 0.79%.
US 10 Year Treasury closed ten basis points higher at 1.49%.
West Texas Intermediate crude closed 0.28% higher at $62.59 a barrel.
Gold closed 1.50% lower at $1,772.80 an ounce.
This morning on the Economic Front we already had the release of German January Import Price Index which rose 1.9% versus +1% expected. At 1.30 pm we have U.S Trade Balance, Personal Consumption Expenditures and Wholesale Inventories. Finally, we have the Chicago Purchasing Managers’ Index at 2.45 pm and the University of Michigan Consumer Sentiment Index at 3.00 pm.
March S&P 500
Incredible volatility yesterday with the VIX surging 34% as the S&P fell over 120 Handles from where I marked prices 24 hours ago. With extreme volatility you have to be quick to take any gains before they evaporate. Yesterday after the S&P traded lower to my 3910 buy level I emailed my Platinum Members to exit any long position at 3921 and I am still flat as I had no other buy level. The 10- Year Treasury Yield spiking above 1.50% for the first time in over 12 months saw downward pressure on the S&P with the market again testing its 50 – Day Moving Average this morning at 3802. Treasuries are now yielding more than the S&P after a doubling of yields in just a few weeks. We are in dangerous territory as the Central Banks cannot afford for Yields to rise given the level of debt globally while pension funds are sitting on nearly $18 trillion with a negative yield. This could quickly become a disaster unless the Fed and ECB step in any buy Bonds. They have no choice. The S&P has resistance from 3850/3865 where I will be a small seller with a 3881 ‘’Closing Stop’’. We have support from 3775/3795 where I will be a small buyer with a 3759 ‘’Closing Stop’’.
The Euro rallied above 1.2230 yesterday before selling off late and this move lower continued overnight to my 1.2150 buy level. I will add to this trade at 1.2100 while lowering my stop on this position to 1.2055.
March Dollar Index
The reversal in the Dollar saw the market hit my 90.35 sell level this morning. I am still short with a lower 90.71 stop. I will now raise my T/P level on this position to 90.10
After the DAX traded lower to my 13885 buy level we saw a small rally and I emailed my Platinum Members to exit any long position at 13930 and I am still flat. The DAX is trading at 13720 – well below the key 13800 previous support level. As a result, I will be a small seller from 13810/13890 with a tight 13945 stop. I do not want to be long the DAX at this time.
The FTSE traded the whole of my buy range and I am now long at an average price of 6595. We have had an excellent month’s trading. I will now lower my exit level on this FTSE position to a small loss at 6570 while leave my stop unchanged at 6528. If any of the above levels are hit I will be back with a new update for my Platinum Members.
Dow Rolling Contract
My Dow plan did not work well. I bought the market at an average rate of 31750 before been stopped near the close at 31495 and I am still flat. The Dow has resistance from 31510/31650 where I will be a small seller with a 31805 ‘’Closing Stop’’. A break and close over 31650 this evening is a buy signal for a move to 32000 and higher. We have support from 31030/30880 where I will be a buyer with a 30795 ‘’Closing Stop’’.
My NASDAQ plan worked well with the market trading lower to my 13180 buy level before rallying to my 13260 T/P level and I am still flat. After my T/P level was triggered I did not envisage that the NASDAQ would trade to an overnight low of 12665. The NASDAQ has now fallen over 1250 points since its early February highs. Today, I will be a small buyer from 12600/12700 with a 12525 stop. The NASDAQ is now trading well below its 50 Day MA (13128) which should act as strong resistance on any test. I will now be a seller from 13080/13180 with a 13250 tight stop.
The ECB are obviously intervening in the Bund this morning as the market has jumped from the off to currently trade at 173.40. Unfortunately, I was stopped out of my 173.15 near the close last night at 172.55 and I am still flat. Very Frustrating! Today, I will again be a buyer from 172.40/172.90 with a 171.95 stop which is just below yesterday’s spike low print of 172.05. If I am taken long I will have a T/P level at 173.35.
Gold Rolling Contract
I was lucky yesterday as after Gold hit my 1788 buy level we saw a quick rally to my 1785 revised T/P level and I am still flat. This morning Gold is trading lower at 1758. We have support from 1725/1738 where I will again be a buyer with a 1712 stop.
Silver Rolling Contract
Silver followed Gold lower, trading the whole of my buy range for a now 27.10 average long position. I will leave my stop unchanged at 26.35 while lowering my T/P level to 27.20 as I want to be flat over the weekend.