U.S Indices had a wild trading session before rallying into the close with economic data the focus. Another 1.43 million people filed Initial Jobless Claims in the week ending July 25, according to the Department of Labour. This was below Wall Street’s estimate of 1.45 million. This also marks two straight weeks of increases in Jobless Claims. Second-quarter GDP came in at -32.9%, beating estimates, but also marking the worst decline on record. On the vaccine front, Johnson & Johnson (JNJ) announced that its Coronavirus vaccine candidate produced an antibody response in a non-human trial. The next stimulus package remains in the headlines, with the White House set to meet with Congressional leaders to find common ground. Earlier the markets sank after President Trump tweeted that he was in favour of delaying the November Election on safety grounds. A rally in big technology companies lifted stocks from Thursday’s lows, tempering concern over a bumpy economic rebound. Apple Inc., Amazon.com Inc., Alphabet Inc. and Facebook Inc. jumped in extended trading as results crushed Wall Street estimates. The iPhone maker also announced a 4-for-1 stock split to make the shares more accessible to a broader base of investors. Meanwhile in Europe, Stock markets declined after Germany’s second-quarter GDP came in much weaker than expected, indicating the Coronavirus-lockdown’s impact on Europe’s largest economy was worse than thought. Bank of France governor François Villeroy de Galhau said the Country’s economic slump may not have been as bad as forecast. The U.K. extended its isolation period for individuals showing Coronavirus symptoms to 10 days, from seven. The U.K. also announced it would be extending its lending programme to highly indebted firms, widening the scope of its small business support. Elsewhere, Oil fell 3% while Treasuries and the US Dollar closed lower.
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The S&P 500 decreased 0.4% to close at a price of 3246 after a volatile trading session.
The Dow fell 225 points for a 0.85% loss to close at 26,313.
The NASDAQ rose 0.50%, closing at 10,715.
The Stoxx Europe 600 Index decreased 2.2%.
The MSCI Asia Pacific Index fell 0.1%.
This morning the Nikkei closed 2.82% lower at 21,710.
The Bloomberg Dollar Spot Index decreased 0.2%.
The Euro increased 0.4% to $1.1841.
The Japanese Yen appreciated 0.1% to 104.80 per dollar.
The yield on 10-year Treasuries declined four basis points to 0.54%.
Germany’s 10-year yield sank four basis points to -0.54%.
Britain’s 10-year yield fell three basis points to 0.088%.
The Bloomberg Commodity Index dipped 1.1%.
West Texas Intermediate crude declined 2.8% to $40.13 a barrel.
Gold weakened 0.8% to $1,954.24 an ounce.
This morning on the Economic Front we already had the release of German Retail Sales for June which fell 1.6% versus -3.0% expected. French GDP was also released falling 13.8% versus -15.2% expected. At 10.00 am we have Euro-Zone GDP and CPI. This is followed at 1.30 pm by U.S Personal Income/Spending. Finally, we have the Chicago Purchasing Managers Index at 2.45 pm and the University of Michigan Consumer Sentiment at 3.00 pm.
September S&P 500
Incredible two-way volatility over the past 24 hours with the S&P trading to a low of 3195 before having a strong rally into the close. This rally continued after the close following earnings results from Apple, Amazon, Google and Facebook, with the S&P hitting an overnight high of 3273.75. Weak Equity Markets in Asia sees the S&P trading lower at 3250 as I go to press. With regards to the US Indices, I prefer only to be stopped out if we close below my stop unless I state otherwise. So many times the S&P will hit my stop only to turn around and rally aggressively as we saw again yesterday. After the S&P traded the whole of my buy range for a 3217 average long position I emailed my Platinum Members to stay long and I eventually cut this position too early at 3225 and I am now flat. Just as I cut this position the S&P rallied 12 Handles after the Democrats and Republicans rejected President Trump’s tweet to delay the November Election. As long as the S&P does not close below 3150 this market will continue to be a buy on dips. The Fed have the S&P’s back and will not let the market fall. Today I will be a buyer from 3212/3227 with a 3199 closing stop. I will be an aggressive buyer on any dip lower to 3148/3168 with a 3135 stop. I am looking for the S&P to trade into the 3280/3310 area, have a retracement from here and then rally to new all-time highs. I will now tighten my sell range to 3295/3310 with a 3322 stop. If I am taken long I will have a T/P level at 3237. If I am taken long a second time I will have a T/P level at 3193. If I am taken short I will have a T/P level at 3281.
The Euro closed at a new two-year high last night. Yesterday, I was lucky as after the Euro hit my initial 1.1800 sell level, I emailed my Platinum Members to exit any short position at 1.1780 and I am still flat. Even though the Euro is severely overbought, I have to respect the price action. As a result, I will now raise my buy level to 1.1780/1.1830 with a 1.1725 stop. I no longer want to be short the Euro at this time.
September Dollar Index
My Dollar plan did not work well. I was unlucky as the Dollar missed my 93.65 T/P level with a 93.64 high print before the Dollar sold off to my 92.90 second buy level for a 93.15 average long position. Overnight I was stopped out of this trade at 92.55 and I am now flat. As I am away next week I am going to stay flat the Dollar until my return.
German GDP data was released just as I posted yesterday morning causing the DAX to fall 300 points. By the time you got to read my commentary the DAX was already below yesterday’s buy range. Unfortunately, I did buy the DAX myself at an average rate of 12400 before getting stopped out of this trade in the afternoon at 12295 and I am still flat. The fact that the DAX closed below 12400 is a worry. Despite the huge rally in the S&P and NASDAQ from yesterday’s lows the DAX is weak, trading at 12390 this morning. The DAX has strong resistance from 12550/12700 where I will be a small seller with a 12805 stop. The next support level for the DAX is from 11900/12050 where I will be a buyer with a 11805 stop.
After the FTSE traded the whole of my buy range for a 6025 average long position I was stopped out of this trade at 5965 and I am still flat. The FTSE is heavy and is trading at my stop this morning despite the huge rally in US Indices. The FTSE is severely oversold and I cannot bring myself to going short given the enormous Central Bank stimulus across the globe. The FTSE has support from 5850/5910 where I will be a buyer with a 5795 stop.
Dow Rolling Contract
My Dow plan worked well as after the market traded lower to my average 26250 buy level I covered this position at my revised 26330 T/P level and I am still flat. Yet again the Dow tested both its 50 and 200 Day Moving Averages before having a strong rally of these key support levels. Today I will again look to buy the Dow on any dip lower to 25950/26200 with a 25795 stop. I will continue to be an aggressive seller from 27050/27300 with the same 27450 stop. If I am taken long, I will have a T/P level at 26340. If I am taken short, I will have a T/P level at 26880.
An incredible trading session for the NASDAQ yesterday. After the market hit my 10560 average buy level the market rallied to my 10900 sell range with a 10937 high print. I covered my long position at 10620 and this morning I emailed my Platinum Members to exit any short position at 10850 and I am still flat. Today I will be an aggressive buyer on any dip lower to 10550/10650 with a 10445 stop. The NASDAQ has resistance from 11200/11300 where I will be a small seller with a 11405 wider stop.
The Bund hit my sell range after the Equity Markets tanked. I am short at 177.60 and I will add to this trade at 178.20 with a higher 178.55 stop. I will now raise my T/P level on this position to 177.35.
Gold Rolling Contract
Given how weak the Dollar is trading, it seems to be only a matter of time before the key $2000 level in Gold is broken. I am still flat and I will now raise my buy level to 1919/1935 with a wider 1899 stop. I no longer want to be short Gold at this time.
Silver Rolling Contract
Silver fell shy of my 22.60 buy level before turning around and is now trading higher at 24.20. I will now raise my buy level to 22.60/23.20 with a 21.95 wider stop.