U.S. Equity Markets were mixed for most of Friday as investors digested stimulus headlines and economic data, before a late rally saw the Indices close at new all-time highs, led by the NASDAQ 100 which ended the week with a gain of 1.28%. Job market data was an area for concern. Non-Farm Payrolls fell versus November, versus the expectation for a slight increase. This followed the decline in ADP Employment data earlier in the week, while the Unemployment rate stayed steady at 6.7%. On the stimulus front, news of a two-pronged approach from President-elect Joe Biden made headlines. The first bill would include $2,000 stimulus cheques and funding for vaccine distribution and local governments. Biden’s second act would include $2 trillion in infrastructure, according to a report from Axios. This week, markets will get another catalyst as earnings season kicks off with reports from the big banks. European Markets ended the week higher. German Industrial Production data for November were stronger than expected, and October’s data were revised higher, in a sign Europe’s largest economy continues to do well despite Coronavirus restrictions. French Manufacturing and Industrial Production data for November were better than expected, implying recent lockdowns may not have been as economically damaging as anticipated. The U.S. indefinitely suspended tariffs on French goods, instead favouring unilateral talks on a “digital” tax, in a signal its relationship with Europe may be about to improve. Elsewhere, Oil closed 3.29% higher on follow-through from Saudi Arabia’s production cut announcement earlier in the week, while Gold got slammed, closing 3.47% lower, with a strong dollar adding to the downward pressure.
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The S&P 500 closed 0.16% higher at a price of 3809.
The Dow Jones Industrial Average closed 56 points higher for a 0.18% gain at a price of 31097.
The NASDAQ 100 closed 1.28% higher at a price of 13105.
The Stoxx Europe 600 Index closed 0.7% higher.
The MSCI Asia Pacific Index rose 0.2%.
This morning the Nikkei is closed, having ended last week at a two-year high of 28,139.
The Bloomberg Dollar Spot Index closed 0.4% higher.
The Euro closed 0.5% lower at $1.2215.
The British Pound closed 0.3% lower at $1.3528.
The Japanese Yen closed 0.2% lower at 104.18 per dollar.
Germany’s 10-year yield closed two basis points lower at -0.53%.
Britain’s 10-year yield closed one basis points higher at 0.29%.
US 10 Year Treasury closed one basis points higher at 1.10%.
West Texas Intermediate crude closed 3.29% higher at $51.57 a barrel.
Gold closed 3.47% lower at $1,842.20 an ounce.
Today we have no Economic data of note on either side of the Atlantic. However, at 5.00 pm we have a speech from Fed Member Bostic.
March S&P 500
Despite the VIX closing 3.62% lower at a price of 21.56, we saw plenty of two- way price action on Friday. The S&P made a low at 3775 before surging almost 50 Handles into the close. This initial move lower enabled me to cover my latest 3788 average short position at my 3785 T/P level and I am still flat. Political concerns see the S&P on the defensive this morning with the market trading at 3792 as I go to press. The S&P has strong support from 3748/3765 where I will be an aggressive buyer with a 3733 stop. We have strong resistance from 3827/3847 where I will be a seller with a 3861 ‘’Closing Stop’’.
Last Wednesday’s 1.2350 high could well represent a significant landmark. Sentiment is at 10 year highs and there is no doubt the Euro is severely overbought. The ECB do not want the Euro to appreciate further as no Central Bank wants a strong currency at this time. The Euro has short-term support from 1.2080/1.2130. I will now lower my buy level to this area with a 1.2035 stop. I will also lower my sell level to 1.2280/1.2330 with a lower 1.2375 tight stop.
March Dollar Index
The Daily Sentiment Index is one of the best technical signals for trading most contracts. Anytime we see a DSI reading in single digits, we always see a subsequent rally in the Dollar. My Dollar plan worked well on Friday with the Dollar trading lower to my 89.70 buy level before rallying to my 90.15 T/P level and I am now flat. Today, I will again be a buyer on any dip lower to 89.50/90.00 with a 88.95 wider stop.
This morning the DAX opened in my buy range, allowing me to buy the market at a price of 13940. We have seen a small rally and I have now exited this long position here at 13980 and I am now flat. The DAX has support from 13780/13850 where I will again be a buyer with a 13695 stop. I still do not want to be short the DAX at this time.
No Change as I am still a buyer on any dip lower to 6730/6770 with the same 6685 stop. If I am taken long I will have a T/P level at 6805.
Dow Rolling Contract
My Dow plan worked well with the market trading lower to my 30880 buy level before rallying 250 points into the close. This move higher hit my 30975 revised T/P level and I am now flat. As long as the Dow does not break and close below 30350 I will continue to buy the dip. The Dow has short-term support from 30500/30720 where I will be a buyer with a wider 30325 ‘’Closing Stop’’. I will now lower my sell level to 31320/31500 with a lower and tight 31635 stop.
I am still flat as the NASDAQ never came close to Friday’s buy range. I will now raise my buy level to 12840/12920 with a higher 12765 stop. I still do not want to be short the NASDAQ at this time.
After falling over 150 points early last week, the BUND traded in a narrow range on Friday. I will continue to be a small seller from 177.85/178.25 with a tight 178.55 stop. I will now raise my buy level to 176.40/176.90 with a higher 175.95 stop.
Gold Rolling Contract
My Gold plan did not work well with the market trading over 8% lower since trading above 1950 last Wednesday. After Gold hit my 1860 average buy level I was stopped out of this trade at 1849 and I am still flat. Overnight Gold hit a low of 1810 before bouncing. Gold has critical support from 1800/1815 which most hold as a break below 1800 opens up the possibility of a strong move lower to 1650 over the coming weeks. I will be an aggressive buyer from 1800/1815 with a 1789 stop. If I am taken long I will have a T/P level at 1827.
Silver Rolling Contract
Thankfully Silver rallied to my 26.55 T/P level on my 26.30 latest long position shortly after I posted on Friday before the market got hit hard, trading at 24.95 this morning. Silver has support from 23.70/24.30 where I will be an aggressive buyer with a 23.25 stop. If I am taken long I will have a T/P level at 24.75.