U.S. Equity Markets erased gains and ended lower after President Donald Trump said he would hold a press conference today to discuss China, potentially stoking tensions between the world’s two largest economies. The S&P 500 lost an advance of more than 1% on Trump’s announcement, with investors speculating the U.S. will take action against China that could destabilise the global economy, although the precise agenda was unclear. Traders have warily been watching an escalation between Washington and Beijing even as stocks surged for the past two days. Chinese lawmakers earlier approved a proposal for new national-security legislation in Hong Kong, a move Trump’s economic adviser called a “huge mistake.” Stocks fell for the first time in four days falling short of the longest rally of the pandemic era. Small caps that had been surging tumbled 2.5%, while bank and energy shares — darlings of the latest rotation — fell at least 1.6%. Tech also slipped, with Twitter losing almost 5% after Trump turned his ire on the company, threatening to loosen legal protections for social-media platforms. Earlier gains came as data showed the economic damage from the Coronavirus pandemic was less severe than anticipated. U.S. states’ jobless rolls shrank for the first time during the outbreak even as millions more Americans filed for unemployment benefits, while readings on Durable Goods Orders and Personal Consumption beat forecasts. Federal Reserve Bank of St. Louis President James Bullard said the economy may already have bottomed. Elsewhere, European Equities climbed amid optimism over economies reopening and a European Union fiscal stimulus plan. Shares rose throughout most of Asia, though the Hang Seng Index flirted with the lowest level since March after the U.S. said it could no longer certify Hong Kong’s political autonomy, a move that could have far-reaching consequences.
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The S&P 500 fell 0.2%, closing at a price of 3029, having hit an earlier rebound high at 3068.
The Russell 2000 lost 2.5% and the Dow Jones Industrial Average fell 0.6%, with the Dow closing at 25,400.
The NASDAQ 100 fell 0.25% to 9416.
The Stoxx Europe 600 Index gained 1.6%.
This morning the Nikkei closed flat at 21,877.
The MSCI Asia Pacific Index climbed 0.9%.
Here is a summary of the main Changes in F.X Markets:
The Bloomberg Dollar Spot Index dipped 0.3%.
The Euro increased 0.5% to $1.1060, the strongest in two months.
The Japanese Yen strengthened 0.1% to 107.63 per dollar.
The yield on 10-year Treasuries climbed one basis point to 0.69%.
Germany’s 10-year yield declined one basis point to -0.42%, the biggest fall in a week.
Britain’s 10-year yield increased one basis point to 0.206%.
The Bloomberg Commodity Index rose 0.1%.
West Texas Intermediate crude dipped 2.6% to $33.65 a barrel.
Gold Futures climbed 0.3% to $1,732 an ounce.
This morning on the Economic Front we already had the release of German Retail Sales which fell 5.3% versus -12.0% expected. At 9.00 am we have Euro-Zone Money Supply and CPI. This is followed at 1.30 pm by U.S. Trade Balance, Wholesale Inventories, Personal Income and Spending. Next, we have the Chicago Fed Manufacturing index at 2.45 pm and the University of Michigan Consumer Sentiment at 3.00 pm. Finally, this afternoon Federal Reserve Chairman Jerome Powell participates in a virtual discussion, while at 7.00 pm we have the President Trump Press Conference.
June S&P 500
The S&P looked like we were going to test the 3100 next resistance level before an announcement that President Trump would a press conference this evening on China sent the market 50 Handles lower. The initial up-move saw the S&P hit my second sell level at 3058 with a high of 3064, for a 3049 average short position before selling off to my revised 3031 T/P level with an overnight low at 3011. I am now flat as we head into another weekend where the S&P has opened higher for the last nine consecutive Mondays’. The 200 Day Moving Average for the June Contract comes at 2997. I will be a small buyer from 2990/3003 with a 2979 stop. Despite the 35+% rally in the S&P since the March 23 lows the VIX is struggling to break lower, closing 3.5% higher last night at a price of 28.59. A break and close over 32 in the VIX will be a sell signal for the U.S Indices. Today I will be a small seller in the S&P from 3055/3075 with a 3091 stop.
Late in the U.S session the Euro rallied to my 1.1090 sell level before hitting my revised 1.1073 T/P level and I am still flat. Today I will be a small seller from 1.1150/1.1200 with a higher 1.1245 stop. I will now raise my buy level to 1.0940/1.0990 with a 1.0895 stop.
June Dollar Index
Just before the New York close the Dollar traded lower to my 98.40 buy level. I am still long and I will add to this position on any further dip to 97.80 with a now lower 97.55 stop. I will also lower my T/P level on this position to 98.65.
The DAX fell shy of my 11900 sell level before the market sold off as expected given how severely overbought the DAX is after rising over 1400 points since last Friday. The DAX has good support from 11300/11450 where I will be a buyer with a 11210 stop. I will now lower my sell level to 11800/11950 with a lower 12040 stop.
Shortly after I posted the FTSE traded lower to my 6170 T/P level from yesterday morning’s 6215 short position and I am still flat. This morning the FTSE is trading at 6185 as I go to press. I will continue to be a seller on rallies and my sell level will be from 6245/6295 with a 6340 tight stop. I still do not want to be long the FTSE at this time.
Dow Rolling Contract
I am still flat the Dow as the market fell shy of my initial 25925 sell level with a morning high of 25800 before falling 550 points and I am still flat. I will now lower my sell level to 25700/26000 with a lower 26155 stop. I still do not want to be long the Dow at this time.
The NASDAQ had a wild session yesterday selling off to a low of 9350 before rallying over 200 points after the U.S Markets opened. This move higher saw my 9530 sell level hit before the market sold off to my 9450 T/P level just before the close and I am still flat. At yesterday’s high the NASDAQ was less than 200 points from its February all-time high. The NASDAQ has resistance from 9520/9650 where I will be a seller with a 9725 stop. My only interest in buying the market is still on a move lower to 9080/9180 with the same 8995 stop.
With the Central Banks having affecting nationalised the Bond markets it is difficult to make money in these markets now as volatility has collapsed. The Bund has short-term support from 171.20/171.60 where I will be a buyer with a 170.85 stop.
Gold Rolling Contract
No Change as I am still a buyer from 1688/1698 with the same 1679 stop.
Silver Rolling Contract
NO Change as I am still a buyer from 16.50/16.90 with a 16.15 stop. If I am taken long I will have a T/P level at 17.15.
As Ireland is closed on Monday for the June Bank Holiday my next Daily Commentary will be on Tuesday June 2. Any of my calls that are not hit today and are subsequently executed on Monday, I will be back with an updated email for my Platinum Members.