U.S Equity Markets closed lower on Friday in a volatile trading session. One of the main drivers was a “Quadruple Witching,” where contracts for market index futures, single stock futures, market index options, and stock options all expire. This is a recipe for high market volatility and volume under any circumstances. Both the NASDAQ 100 and S&P closed below their respective 50-Day Moving Averages. Elsewhere, the headlines around Chinese technology continued. The Trump administration announced it would ban Chinese social media sites TikTok and WeChat beginning on Sunday. But it gave TikTok a reprieve. It said the company would have until November 12 to resolve its ownership issues to comply with U.S. security concerns. In terms of economic data, Consumer Confidence rose in September, with just 16% of respondents having said they anticipate a worsening economy over the next year. European Central Bank Governing Council member Pablo Hernandez de Cos said that he cannot rule out the need for additional stimulus measures from the central bank. German Producer Price Index data for August was in line with expectations but fell versus July. This signalled that demand for raw materials remains uneven. UK Retail Sales data for August were above expectations, rising versus the prior month, and indicating consumer demand in the U.K. continues to rebound. Meanwhile the Euro closed higher, while Gold rose on Dollar weakness.
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For anyone following my Platinum Service it made 80 points last Friday and is now ahead by 1696 points for September, having made 2383 points in August, 3128 points in July, 2580 points in June, 2456 points in May, 4773 points in April, an incredible 9264 points in March, 2223 points in February and 2142 points in January. 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 S&P 500 closed 1.12% lower at a price of 3319.
The Dow Jones Industrial Average closed 244 points lower for a 0.88% loss at a price of 27,657.
The NASDAQ 100 closed 1.3% lower at a price of 10,936.
The Stoxx Europe 600 Index closed 0.3% lower.
The MSCI Asia Pacific Index fell 0.7%%.
This morning the Nikkei was closed.
The Bloomberg Dollar Spot Index again closed 0.2% lower.
The Euro closed 0.2% higher at $1.1840.
The British Pound closed flat at $1.2952.
The Japanese Yen closed 0.3% higher at 104.32 per dollar.
The yield on 10-year Treasuries closed one basis point higher at 0.69%.
Germany’s 10-year yield closed unchanged at -0.49%.
Britain’s 10-year yield closed unchanged at 0.18%.
The Bloomberg Commodity Index rose 0.3%.
West Texas Intermediate closed 0.17% lower at $40.98 a barrel.
Gold closed unchanged at $1949.10 an ounce.
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 Chicago Fed National Activity Index, followed by a virtual speech from Fed Chairman Powell at 3.00 pm. Finally, The Fed’s Brainard is due to speak at 5.00 pm.
December S&P 500
In a repeat of the June Expiration, which saw that contract expire at he high of the day, the same happened on Friday with the September Contract expiring at a price of 3367 before spending the rest of the day on the defensive, ahead of a small rally into the close. Total Market Volume spiked to 14 Billion Shares traded across the main Indices, the highest daily volume since June. The S&P closed below its 50 Day Moving Average (3332 in the December Contract) for the first time since the end of May. After the S&P hit my initial buy level at 3325, I emailed my Platinum Members to exit and long position at 3331 and I am still flat. Today, I will be a small seller from 3325/3337 with a 3349 tight stop. The S&P has strong support at 3280 and I will be a buyer from 3268/3282 with a 3259 stop. I will also be an aggressive buyer on any dip lower to 3230/3230 with a 3215 stop.
The Euro continue to trade above its 50 Day MA (1.1745), in narrow trading. The next meaningful move will either be a break and close above the September 1 high at 1.2011 or a break and close below the 50 Day MA. I am still flat the Euro and this morning I will now raise my buy level to 1.1750/1.1790 with a wide 1.1695 stop. The Euro has short-term resistance from 1.1920/1.1970 where I will be a seller with a 1.2015 stop.
December Dollar Index
No Change as I am still a buyer from 92.10/92.60 with the same 91.65 stop.
Late on Friday the DAX traded lower to my 13040 initial buy level. As I wanted to be flat over the weekend, I covered this position at my 13060 revised T/P level. As I mentioned on Friday that the DAX needs to break and close below 12800/12900 for me to turn bearish. Today, I will be a small buyer from 12750/12830 with a 12695 stop. Given how close we are to the 12800 support level, I still do not want to be short the DAX at this time.
Just like the DAX above, the FTSE also hit my 5950 buy level before rallying to my revised 5972 T/P level and I am still flat. This morning the FTSE is opening lower at 5916. We have strong support from 5780/5830 where I will be a buyer with a 5745 stop. If I am taken long I will have a T/P level at 5972.
Dow Rolling Contract
While both the NASDAQ and S&P closed below their respective 50-Day MA’s, the Dow held its 50 Day MA (27.472), closing at 27,657 on Friday. Unless something dramatic happens, it is likely that we will test this key support when the US Indices open this afternoon. With Fed Chair Powell speaking at 3.00 pm he will probably talk the Equity Markets higher. Today, I will be a buyer from 27150/27350 with a wider 26985 stop. I still do not want to be short the Dow at this time.
It may not suit everyone, given the risk involved but I prefer to have my ‘Stop’’ in US Indices on a closing basis only unless I state otherwise. I am fed up being stopped out of an equity position during the day before the market reverses into the close. This happened on Friday as after the NASDAQ hit my 10900 average buy level I was stopped near the low of the day at 10775. Subsequently the NASDAQ rallied into the close, with a rebound high at 10950 and I am still flat. The NASDAQ has strong support from 10630/10800 where I will again be a buyer with a 10495 stop.
As you can see from my closing Bond Yield prices above, both the US Treasury and German Bund have not moved for most of the month as the boring price action in Bond Markets shows no sign of ending. I am not going to chase the Bund higher and I will leave my 173.10/173.50 buy level unchanged with the same 172.75 stop.
Gold Rolling Contract
No Change as I am still a small buyer from 1921/1933 with the same 1908 stop.
Silver Rolling Contract
My Silver plan worked well with the market trading lower to my 26.65 buy level before rallying to my 26.88 revised T/P level and I am still flat. Today, I will be a buyer from 25.90/26.40 with a 25.45 tight stop.