U.S. Equity Markets rebounded from Wednesday’s large sell-off on strong economic data, finishing the day higher, led by Dow which closed positive by 1%. Initial Jobless Claims filed in the week ending January 23 accounted for 847,000 people, according to the Department of Labour. This was below both the prior week’s 914,000 number and Wall Street’s estimate of 875,000. This is a good sign for the labour market’s recovery. Elsewhere, fourth-quarter gross domestic product (“GDP”) and December New Home Sales rose, but fell short of estimates. Vaccine news was also positive. Pfizer said that its vaccine was still effective against new COVID-19 strains in the U.S. and South Africa. The Robinhood “short-squeeze” stocks continued to make headlines, but without any real impact on broader markets. Stocks like GameStop and AMC Entertainment tumbled after free trading service Robinhood stopped allowing users to place buy orders in these names. European Markets also rebounded yesterday. The European Union was said to pressure AstraZeneca to take vaccine doses away from the U.K. in order to make up for supply deficits in the rest of Europe. After these reports, the U.K. said that it wanted all of the doses that it has paid for. European Central Bank Governing Council Member Olli Rehn said it will use all the tools needed to spark a rise in inflation. Euro-Zone Economic and Industrials Confidence data for January were stronger than expected, rising versus December, implying outlook sentiment is improving. Elsewhere, Oil fell 1.10% on little news.
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The S&P 500 closed 0.98% higher at a price of 3787.
The Dow Jones Industrial Average closed 300 points higher for a 1% gain at a price of 30,603.
The NASDAQ 100 closed 0.68% higher at a price of 13201.
The Stoxx Europe 600 Index closed 0.5% higher.
The MSCI Asia Pacific Index fell 0.3%.
Yesterday, the Nikkei closed 1.53% lower at a price of 28,197.
The Bloomberg Dollar Spot Index closed 0.1% lower.
The Euro closed 0.1% higher at $1.2124.
The British Pound closed 0.4% higher at $1.3728.
The Japanese Yen closed 0.1% lower at 104.20 per dollar.
Germany’s 10-year yield closed one basis points higher at -0.54%.
Britain’s 10-year yield closed three basis points higher at 0.29%.
US 10 Year Treasury closed four basis points higher at 1.05%.
West Texas Intermediate crude closed 1.1% lower at $51.68 a barrel.
Gold closed 0.3% higher at $1,841.20 an ounce.
This morning on the Economic Front we have German GDP and Unemployment at 7.00 am and 8.55 am respectively. This is followed by Euro-Zone Money Supply at 9.00 am. Next, we have U.S Personal Income/Spending at 1.30 pm, followed by the Chicago Purchasing Managers Index at 2.45 pm. Finally, at 3.00 pm we have Pending Home Sales and the University of Michigan Consumer Sentiment Index at 3.00 pm.
March S&P 500
Incredible volatility as the S&P rebounded to the key resistance level at 3800/3820 before selling off into the close. With the VIX falling 18%, but closing above both the 50 and 200 Day Moving Averages, we can expect more of this two-way volatility over the coming days. As I said yesterday, the price action is reminiscent of what happened last year ahead of the February crash. The S&P traded lower to my 3709 buy level before rallying to my 3725 T/P level. Subsequently the S&P traded he whole of my sell range for a 3785 average short position. These moves are stomach turning, especially if you are on the wrong side but (and it is not for everyone) it is the closing price that matters. I did not stop myself out when we traded to a high of 3822 before a late sell-off enabled me to cover this position at my 3769 revised T/P level and I am still flat. The sell-off yesterday morning stopped at the 50 Day Moving Average and this will act as strong support for today’s session. I will be a buyer from 3717/3735 with a 3702 ‘’Closing Stop’’. The S&P has strong resistance from 3808/3822 where I will be a seller with a 3835 ‘’Closing Stop’’.
The Euro finally rallied to my 1.2130 T/P level on my latest 1.2097 long position and I am now flat. The Euro has support from 1.2030/1.2080 where I will be a buyer with a 1.1985 stop. I still do not want to be short the Euro at this time.
March Dollar Index
I am still flat and I will now lower my buy level to 89.60/90.10 with a lower 89.25 stop.
I am glad I stayed flat the DAX yesterday given the volatility. The DAX managed to regain the key 13500 pivot point, closing above 13600. I still do not trust this market but there is no doubt the Central Banks are doing everything in their power to prevent another meltdown. The DAX has support from 13250/13330 where I will be a small buyer with a 13175 stop.
Frustratingly the FTSE missed my 6390 buy level by two points before rallying 100 points and I am still flat. I am not going to chase the market higher and I will leave my 6340/6390 buy level unchanged with the same 6285 stop.
Dow Rolling Contract
What a day for the Dow with the market missing my buy level by 50 points before surging over 800 points, before having a nasty 350 point sell-off into the close. I am still flat and I will now raise my buy level to 30150/30330 with a 29995 stop. I still do not want to be short the Dow at this time.
I am still flat the NASDAQ as the market just missed my buy level before rallying. I will now raise my buy level to 12895/12995 with a wider 12795 stop. If I am taken long I will have a T/P level at 13065.
I am still flat and I will now lower my buy level to 176.45/176.95 with a lower 175.95 stop.
Gold Rolling Contract
Ahead of the weekend I am not going to chase Gold higher. Therefore, I will continue to be a buyer on any dip lower to 1802/1814 with the same 1789 stop.
Silver Rolling Contract
While Gold struggled, Silver surged, and now trading 8% higher than Wednesday’s low. I am still flat and I will now raise my buy level to 25.00/25.60 with a tight 24.55 stop. If I am taken long I will have a T/P level at 26.05.