U.S. stocks rose amid solid bank earnings and a major deal in the energy sector, while Treasuries fell as Chinese data bolstered optimism in the global economy.The S&P 500 gained for a third straight week as it punched through the key 2,900 level for the first time in six months. JPMorgan Chase & Co. surged on a strong first-quarter report, while Walt Disney Co. jumped to a record after it announced a new streaming service, sinking Netflix Inc.’s shares.Anadarko Petroleum Corp. soared along with shares in its competitors after Chevron agreed to buy the energy producer. Chevron slumped. Health-insurer stocks slid for a second day as policy makers in Washington spared over proposals that threatened to disrupt their businesses, weighing on the Nasdaq Indexes. The 10-year Treasury yield pushed to the highest level in nearly a month, while the US Dollar gave back Thursday’s gains after China’s trade and lending signalled that the world’s second-largest economy is on more stable footing.
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For anyone following my Platinum Service it 60 points on Friday and is now ahead by 412 points for April, having made 1027 points in March, 1013 points in February, 1671 points in January, 2803 points in December, 1541 points in November and 2094 points in October. 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 rally in equities since late December had been struggling for momentum over the last week amid renewed trade tensions and reports of slowing global growth. Earnings and Chinese data Friday helped to ease some of those concerns. Traders will now be looking to companies to provide the next kicker as the reporting season in the U.S. gathers pace. The Dow made a new closing high for 2019 by rising 269 points to close at 26404 for a 1.03% gain. Meanwhile both the S&P and NASDAQ closed up 0.66% and 0.41% respectively. Volatility has subsided from a late-March surge, as recent economic data have eased fears of a recession in the U.S. The Federal Reserve has stuck to its script that it’s on hold, and this week’s Fed speakers are unlikely to stray far from a message that’s comforted markets. But that confidence depends to a large extent on other global growth engines not failing and turning a cyclical U.S. slowdown into something worse. Yesterday we had the following tweet from President Trump who said ‘’if the Fed had done its job properly which it has not, the stock market would have been up 5000 to 10,000 additional points, and GDP would have been well over 4% instead of 3% with no inflation. Quantitative tightening was a killer, should have done the exact opposite’’.
Volatility has fallen to a five year low as measured by the JP Morgan G7 FX Volatility Index. This implies that currency moves should be more persistent in the coming months as low volatility always precedes higher volatility and a ‘’ Surprise Event’’ to get markets moving again. On Friday the Euro rose 0.4% to close at $1.1296. Elsewhere, the Pound fell after Prime Minister Theresa May accepted the European Union’s offer to push the Brexit deadline out to October. Cable closed at $1.3070, while the Japanese Yen fell 0.4% to 112.09 per dollar on low volume.
The yield on 10-year Treasuries rose six basis points to 2.55 percent, as rising equity markets alleviated some of the growth concerns in the Western World. Just like in the currency markets volatility until Friday has been a extreme low levels and this low volatility will remain unless we see any change in the potential growth or inflation backdrop, whether that’s the U.S. or in the global market.The lock-step movement of German and U.S. benchmark yields is evidence of how closely tied their economic fortunes are right now. An updraft in the German 10-year yield Friday helped lift the U.S. counterpart to a three-week high of 2.57 percent. This strong correlation will continue because their economic trajectories are so interlinked at the moment. For this holiday-shortened week all eyes will be on Wednesday’s European Consumer Price Index data. There is potential for a pickup that could bring an ECB rate hike back in play around year-end and prompt a knee-jerk jump in yields. Meanwhile in Europe both Germany and Britain’s 10 year Yield rose six basis points to close at 0.055% and 1.212% respectively.
West Texas Intermediate crude rose 0.4 percent to $63.86 a barrel while both Gold and Silver again weakened to close at $1292 and $14.90 respectively, where they sit this morning. This morning on the Economic Front we have no data of note from either the UK or the Euro-Zone. At 1.30 pm we have the New York Empire State Manufacturing Index. Finally at 9.00 pm we have the Net Long-Term TIC Flows. Meanwhile the Fed’s Evans is speaking this evening at 6.00 pm.
June S&P 500
There is no sign of the US Equity rally ending any-time soon with the market again closing for new highs for 2019 as the market looks to test its all-time high at 2943 from last October. Friday’s move higher saw the S&P hit my 2910 sell level before having a small sell-off to my revised 2904 T/P level and I am now flat. I still have a target level in the S&P at 3100 which if happens will be similar to the Japanese equity market in 1989 when the Nikkei reached a peak of 39000. This was between its 3rd and 4th deviation before the Nikkei fell 50% 12 months later. Today I will now move my buy level higher to 2892/2905 with a wider 2882 stop. The S&P will have resistance from 2935/2945 and I will be a seller in this area with a tight 2952 stop.
Unfortunately the low in the Euro on Friday was 1.1249 which was just above my 1.1240 buy level before the market rallied as expected above 1.13 and I am still flat. Today I will move my buy level higher to 1.1220/1.1260 with a 1.1180 stop. I still do not want to be short the Euro at this time.
June Dollar Index
With FX Volatility at a five year low it explains the lack of movement in the US Dollar over the past three months. I am still flat and today I will leave my 96.95/97.45 sell level unchanged with the same 97.35 stop.
I am still flat the DAX and today I will now move my buy level higher to 11880/11950 with a 11825 stop. Remember if the DAX can break the key 12250/12400 resistance area then I am looking for a re-test of the 13400 all-time high.
I am still flat the FTSE. As I expect Cable to rally over the coming weeks I will leave my 7415/7465 sell level unchanged in the FTSE with a 7495 stop.
Dow Rolling Contract
Thankfully we had no sell level in the Dow on Friday with the market closing at new highs for the year at 26400. Today I will now move my buy level higher to 26210/26340 with a wider 26080 stop. My target level for the Dow off my buy range is 26520, 26650, 26800 and eventually a move higher to 28000 over the coming months.
I am still flat the NASDAQ and today I will now move my sell level higher to 7700/7750 with a 7785 stop. I have to respect the huge move higher this year and I will now look to buy the market on any dip lower to 7560/7610 with a 7515 stop.
Unfortunately the BUND has missed my sell levels over the past two weeks which is frustrating with the market falling over 100 points on Friday and I am still flat. Today I will now move my sell level lower to 164.95/165.35 with a 165.65 stop. I still do not want to be long the Bund at this time.
Gold Rolling Contract
No Change as I am still a buyer on any dip lower to 1268/1276 with the same 1261 stop.
Silver Rolling Contract
I am still long Silver at 15.05 with the same 15.15 T/P level. I will continue to look to add to this position at 14.70 with a 14.50 stop. If any of the above levels are hit I will be back with a new update for my Platinum Members.