U.S. Equity Markets ended the week higher, as traders looked past Trade jitters and weak economic data. Treasuries fell. Oil jumped. The S&P 500 erased losses, but still posted its worst week since March 20 — just before the gauge started a torrid rally. Sorrento Therapeutics soared 158% amid Coronavirus antibody development claims. J.C. Penney surged 21% after saying it made an almost $17 million interest payment due May 7. Earlier Friday, stocks slumped as Retail Sales and Factory Output registered their steepest declines on record. Meanwhile, the U.S. moved to curtail Huawei Technologies’ chip supply, spurring a rout in semiconductor companies. The Federal Reserve issued a stark warning Friday that stock and other asset prices could suffer “significant declines” should the Coronavirus pandemic deepen, with the commercial real estate market being among the hardest-hit industries. Mounting tension between the world’s two largest economies has investors concerned of an even deeper global recession. The cost of the Coronavirus pandemic could reach as much as $8.8 trillion, according to the Asian Development Bank. Overnight, Oil rose above $30 a barrel for the first time in two months as producers in the U.S. and elsewhere continued to cut activity, helping to rebalance a market that was thrown into disarray by Coronavirus lockdowns. Futures in New York climbed around 5% after almost doubling in a run of three weekly advances. The number of drilling rigs in the U.S. fell for a ninth week to levels not seen in more than a decade, while stockpiles at the key storage hub in Cushing, Oklahoma, shrank for the first time since late February. Iraq said it planned to halt output from one of its oil fields due to protests.
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The S&P 500 Index climbed 0.4%, closing on the high of the day at 2863.
The Dow Jones Industrial Average closed 0.25% higher at 23,685.
The NASDAQ 100 rose 0.65% to close at 9152.
The Stoxx Europe 600 Index advanced 0.5%.
The MSCI Asia Pacific Index advanced 0.2%.
Here is a summary of the main Changes in F.X Markets:
The Bloomberg Dollar Spot Index increased 0.3%.
The Euro climbed 0.1% to $1.0818.
The Japanese Yen was little changed at 107.20 per dollar.
The yield on 10-year Treasuries climbed one basis point to 0.63%.
Germany’s 10-year yield climbed one basis point to -0.53%.
Britain’s 10-year yield increased three basis points to 0.231%.
The Bloomberg Commodity Index advanced 0.6%.
West Texas Intermediate crude increased 7.4% to $29.61 a barrel.
Gold climbed 0.7% to $1,753.30 an ounce.
This morning on the Economic Front we have no data of note from either the UK or the Euro-Zone. The only U.S data of note is the NAHB Housing Market Index at 3.00 pm.
June S&P 500
The S&P had a nasty sell-off a few hours after I posted to hit a low at 2809 before spending the rest of the session trading higher to close at 2856 for the June Contract. This morning the S&P has surged again to a morning high so far at 2888. After the S&P hit my average buy level at 2828, I emailed my Platinum Members to exit any long position at my revised 2835 T/P level and I am still flat. The S&P is now trading over 125 Handles higher than Thursday’s 2759.75 low print as yet again anyone trying to stay short the S&P is not allowed as the Fed continues to support the market. The Fed understands history like the rest of us and are doing everything in their power to prevent the March 23 low from being tested. I was looking at a 14 Decade Log-Scale Chart yesterday, going back to 1880 for the Dow. The latest Monthly Average of Daily-Closes is 95% above trend. This chart is telling me how overvalued the Dow is trading at this stage and to be a buyer here for the Long-Term is very risky. Incredibly that in order to get back to its long-term average we need to trade 50% below the average. The exception to this was in 2008 when the Dow sold off to its long-term average and bounced viciously off this trendline. This combined with the Buffet Indicator, that compares stock prices to GDP, plus the fact that the P/E is very high, continues to be a big worry. The 200-Day Moving Average comes in at 2998. I still believe that the S&P will put in a major top somewhere between current prices and 2998 before Phase 3 begins. The 2964 high from April 30 continues to be the rebound high. The S&P has short-term resistance from 2905/2925 where I will be a seller with a 2937 tight stop. The S&P has short-term support from 2845/2862 where I will be a buyer with a 2834 stop.
No Change as I am still a buyer on any dip lower to 1.0720/1.0770 with the same 1.0675 stop. I am not going to chase the Euro lower and I will leave my 1.0880/1.0930 sell level unchanged with the same 1.0965 tight stop.
June Dollar Index
I am still flat and today I will raise my buy level to 99.60/100.00 with a higher 99.25 stop.
The DAX just missed my 10300 buy level before rallying over 350 points to sit at 10720 this morning. The DAX has strong resistance from 10900/11050 where I will be a seller with a 11125 stop. I will also raise my buy level to 10320/10470 with a 10255 stop.
The FTSE also fell shy of my 5740 buy level before rallying to trade at 5900 as I go to press. I am still flat and I will now raise my sell level to 5970/6040 with a 6105 wider stop.
Dow Rolling Contract
My Dow plan worked well with the market trading lower to my 23350 buy level. Unfortunately, I covered this position too early at 23440. Which is frustrating with the Dow trading over 500 points higher at 23950 this morning, where I have gone short in small size. I will add to this short position at 24200 with a higher a 24325 stop. I will now raise my T/P level on this position to 23820 and if any of the above levels are hit I will be back with an update for my Platinum Members.
My NASDAQ plan worked well with the market trading the whole of my buy range for a 8960 average long position before rallying to my revised 9015 T/P level and I am still flat. This morning the NASDAQ is trading at 9200. We have strong resistance from 9280/9400 where I will be a seller with a 9505 stop.
After the Bund traded higher to my 174.20 sell level I had too many ‘’Open’’ positions at that time and I covered this position too early at 174.08 and I am still flat. Subsequently the Bund sold off to sit at 173.70 this morning which hopefully gave you a better exit level than me. Today I will continue to be buyer on any dip lower to 172.80/173.20 with the same 172.35 stop. My only interest in selling the Bund is from 174.25/174.65 with a 175.05 stop.
Gold Rolling Contract
Gold just missed my 1715 buy level before rallying to new highs for the year at 1764 this morning. I will now raise my buy level to 1715/1730 with a 1706 tight stop.
Silver Rolling Contract
After rallying 8% on Thursday, Silver has rallied a further 7% to sit at 17.40 this morning. Frustratingly Silver just missed my 16.20 buy level with a 16.25 low print as the ‘’breakout’’ continues. I will now raise my buy level to 16.45/17.05 with a higher 15.95 stop.
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