US Equity Markets rose to all-time highs and Treasuries edged lower after an American official hinted that the U.S. and China are close to locking down a partial trade deal. The US Dollar declined. The S&P 500 reached another record and gained for the sixth week in a row, the longest streak in two years, after White House economic adviser Larry Kudlow said late Thursday negotiations between the two countries were nearing the final stages. Both the Dow Jones Industrial Average, which past 28,000 for the first time, and the NASDAQ Composite also hit all-time highs. Health care companies as well as trade-sensitive tech shares led the advance. Applied Materials Inc. surged after the maker of chip equipment boosted its sales forecast. The benchmark 10-year Treasury yield rose for the first time in a week, while the US Dollar dropped for a second day following a mixed bag of Retail Sales figures and weak factory numbers. The Japanese Yen fell along with Gold.
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Concerns about the chances of the U.S. and China completing a phase-one pact had propelled Treasuries earlier last week, and acted as a headwind to a stock rally that keeps taking American gauges to record highs. The S&P 500 closed slightly higher on Thursday, though a mixed bag of global economic data has also given investors plenty to think about. Elsewhere, European, Emerging-market and Asian stocks gained.
The S&P 500 Index rose 0.8% to close at a new record high at 3120.
The Dow Jones rose 220 points to also close at a new record high at 28,004.
The Stoxx Europe 600 Index climbed 0.4%.
The MSCI Asia Pacific Index gained 0.6%.
The MSCI Emerging Market Index rose 0.7%.
Here is a summary of the main Changes in F.X. Markets:
The Bloomberg Dollar Spot Index dipped 0.2%.
The Euro gained 0.3% to $1.1054.
The British Pound rose 0.2% to $1.2904.
The onshore Yuan increased 0.3% to 7.0043 per dollar.
The Japanese Yen dipped 0.2% to 108.68 per dollar.
The yield on 10-year Treasuries gained one basis point to 1.83%.
Germany’s 10-year yield increased one basis point to -0.34%.
Britain’s 10-year yield advanced two basis points to 0.725%.
Japan’s 10-year yield decreased less than one basis point to -0.068%.
West Texas Intermediate crude rose 1.6% at $57.70 a barrel.
Gold fell 0.3% to $1,468.40 an ounce.
This morning on the Economic Front we have the Bundesbank Monthly Report at 11.00 am. The only other data of note due today is the U.S. NAHB Housing Market Index at 3.00 pm and the Net Long-Term TIC Flows at 9.00 pm.
December S&P 500
When you are struggling like me to get a handle on why US Indices are rallying to new highs especially as Economic data is weak you tend to do more research. Yesterday I was reading all about the latest shipping data which again points to a slowing U.S economy. The October Crass Freight Index fell 5.9% Y/O/Y which is the 11th straight month of Y/O/Y declines. Cass Freight repeated what they have said for the past five months that ‘’ the shipments index has gone from warning of a potential slowdown to signalling an economic contraction. Moreover, several key modes, and key segments of modes, are suffering material increases in the rates of decline, signalling the contraction is getting worse’’. To continue, ‘’The weakness in spot market pricing for many transportation services, especially trucking, along with recent airfreight and railroad volume trends, heightens our concerns about the economy’’. In my opinion the Trade war looks as if it has reached a ‘’point of no return’’ from an economic perspective as the rates of decline are accelerating. Yet the S&P continues to make new highs with the Large Speculators again increasing their short VIX position to a new record short over 200,000 Futures Contracts. This helped the VIX to close 7% lower at 12.05. However the McClellan Oscillator is still negative closing at -13 on Friday. Overnight the S&P rallied to my second sell level at 3120 for a now average short position of 3113.50. I am still short and I will now raise my stop on this position to 3132. If I am stopped out of this position I will again look to sell the S&P from 3132/3145 with a 3158 stop. I will now raise my T/P level on this position to 3108 and if any of the above levels are hit I will be back with a new update for my Platinum Members. If my second sell level is triggered I will have a T/P level at 3118.
The recent weakness in the Dollar is finally signalling a possible slow-down in the U.S Economy. I am still flat the Euro and today I will raise my buy level to 1.0990/1.1030 with a 1.0945 stop. I no longer want to be short the Euro at this time.
December Dollar Index
I am still flat the Dollar and today I will go ahead and lower my sell level to 97.95/98.35 with a lower 98.65 stop.
It is interesting that the last three trading sessions have seen European Indices struggle to move higher, despite the record closes for the main U.S Indexes. I am still flat the DAX and today I will leave my 13325/13385 sell level unchanged with the same 13430 stop.
My FTSE plan worked well with the market trading lower to my 7260 buy level with a 7235 low print before rallying to my revised 7285 T/P level and I am now flat. With Cable trading higher at 1.2950 this morning the FTSE is also struggling to rally. Today I will again look to buy the market on any dip lower to 7200/7245 with a 7160 stop.
Dow Rolling Contract
The Dow traded the whole of my sell range for a now average short position at 28005. I cannot remember the last time that I am now short the three U.S Indices at the one time. I will now raise my T/P level on this position to 27950. I will leave my stop unchanged at 28195 and if any of the above levels are hit I will be back with a new update for my Platinum Members.
Overnight the NASDAQ traded higher to my 8360 sell level. I am still short with the same 8435 stop.
No Change as I am still a small buyer on any dip lower to 169.90/170.40 with the same 169.55 stop.
Gold Rolling Contract
Given the weakness in the US Dollar I will now tighten my Gold sell level to 1482/1490 with the same 1497 stop.
Silver Rolling Contract
No Change as I continue to be a buyer of Silver on any dip lower to 16.20/16.60 with the same 15.90 tight stop.