U.S. Equity Markets closed lower on Friday following a volatile trading session to end what was an extraordinary week in Financial Markets. The Small Cap Russell 2000 again led the downside closing lower by 2.56%. On Thursday Treasury Secretary Janet Yellen told Congress that regulators must re-examine current banking rules and supervision to ensure that they are appropriate moving forward. This past week saw banks seek a record amount of emergency funding following the collapse of SVB and others, with more than $150 billion borrowed from the Fed’s lending facility. Former Treasury Secretary Lawrence Summers said that the central bank should not be swayed from its original tightening game plan to combat high inflation amid the recent panic in the banking sector. Following the uncertainty in the space, the Federal Reserve’s Discount Window has seen borrowing hit an all-time high. Money-market funds have seen the largest inflows since 2020. University of Michigan’s Consumer Expectations Survey for March showed inflation worries continue to subside. But now, recession fears are beginning to take its place. Factory Output increased for a second straight month, which provided the manufacturing sector some relief, even if temporary. Within the S&P 500 Index, all 11 sectors finished lower. European Markets got hit hard on Friday reversing Thursday’s move higher. On Thursday the ECB was the first major central bank to set monetary policy since banking volatility emerged following SVB’s collapse and remained committed to its tightening policy, raising rates by 50-basis points. ECB Vice President de Guindos told Finance Ministers that some European Union banks could be vulnerable to financial strain due to rising interest rates. ECB President Christine Lagarde said that it is impossible to determine the future of rate paths in response to the removal of forward guidance. Following the removal of forward guidance from the ECB, combined with the recent turmoil in the banking sector, analysts are increasingly convinced that the central bank’s tightening policy may come to an end sooner than later. Finally, the Bank of England’s Consumer Inflation Expectations’ for February fell according to the central bank’s latest survey and ahead of this week’s monetary policy decision. In Asia, Japan lifted export controls on key materials used to produce semiconductors from South Korea as the two nations continue to repair relations. The Treasurer of Australia, Jim Chalmers, said that the administration is closely monitoring the global financial markets. Despite interventions by U.S. and Swiss officials, vulnerability and uncertainty remain. The People’s Bank of China cut the amount of cash that banks must hold as reserves – or the reserve ratio – to help ensure ample liquidity and promote a faster economic recovery. Elsewhere Oil fell a further 3.19% for a total loss on the week of 13% while Gold surged, closing 3.03% higher. Just before the Futures Markets opened last night UBS agreed to buy Credit Suisse for $3.3bn. On top of the the Fed announced coordinated swap lines to ease the banking crisis ”The network of swap lines among these central banks serve as an important liquidity backstop to ease strains in global funding markets, thereby helping to mitigate the effects of such strains on the supply of credit to households and businesses” S&P Futures are trading 25 Handles higher as I go to press.
To mark my 2750th issue of TraderNoble Daily Commentary I am offering a special 2-Year Rate of Euro 2750 for my Platinum Service which includes 1 to 4 updated emails throughout the trading day to demonstrate this value, a monthly subscription over the same period would cost 4440 euro in total This offer represents a 38% discount and is open to both new and existing members. If anyone is interested in this offer can you please email me on bryan@tradernoble.com for details
For anyone following my Platinum Service it made 790 points last Thursday/Friday and is now ahead by 4126 points for March after finishing February with a gain of 3164 points, after closing January with a gain of 4687 points, while finishing December with a gain of 2054 points. November ended with a gain of 4789 points, while finishing October with a record gain of 9619 points, making 6660 points in September, after closing August with a gain of 2228 points, having made 2660 points in July, following a gain of 3371 points in June. The Service made 3651 points in May, after making 762 points in April, following a gain of 5883 points in March. The Platinum Service made an impressive 5324 points in February, after ending January with a gain of 3878 points, more than making up for December’s 932 points loss. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1600 points. I have a YouTube Channel which contains recent interviews I have given This can be viewed by clicking HERE Please subscribe to this for new interview notification
Equities
The S&P 500 closed 1.10% lower at a price of 3916
The Dow Jones Industrial Average closed 384 points lower for a 1.19% loss at a price of 31,861.
The NASDAQ 100 closed 0.49% lower at a price of 12,519.
The Stoxx Europe 600 Index closed 1.21% lower.
Last Friday, the MSCI Asia Pacific rose 0.71%.
Last Friday, the Nikkei closed 1.20% higher at a price of 27,333.
Currencies
The Bloomberg Dollar Spot Index closed 0.80% lower.
The Euro closed 0.8% higher at $1.0675.
The British Pound closed 1.1% higher at 1.2176.
The Japanese Yen rose 1.2% closing at $131.81.
Bonds
Germany’s 10-year yield closed 7 basis points lower at 2.11%.
Britain’s 10-year yield closed 4 basis points lower at 3.28%.
U.S.10 Year Treasury closed 5 basis points lower at 3.41%.
Commodities
West Texas Intermediate crude closed 3.19% lower at $66.17 a barrel.
Gold closed 3.03% higher at $1981.10 an ounce.
This morning on the Economic Front we have German PPI at 7.00 am, followed by Euro-Zone Trade Balance at 10.00 am. We have no data of note due from the U.S. this afternoon. Finally, we have another speech from ECB President Lagarde at 2.00 pm.
Cash S&P 500
On Thursday the ECB raised rates by 50-basis points with the only apparent reason in my opinion was they wanted to save face and were scared not to for fear of panicking markets under the cover of the Swiss National Bank Rescuing Credit Suisse. In her press conference after ECB President Lagarde basically suspended guidance which tells me that they are done with raising rates. With Bund Yields closing at 2.10% for an 80 point fall in a week, the market is voting with its feet that the next major move is lower. Thursday was the first time in history that a major Central Bank raised rates in the middle of a banking crisis. Both Lagarde and Yellen know that in light of the banking problems that lending conditions across-the board will tighten dramatically which in itself will dramatically slow inflation going forward. Markets reversed some of Thursday’s gains on Friday as the Fed faces once of its most crucial FOMC Meetings on Wednesday. There is no doubt the Fed messed up not knowing about the three banks that they have already rescued by pumping billions of Dollars into these banks last week. Given how oversold the markets are I cannot be short as I still expect a big rally into the end of April/beginning of May before the market will give a proper sell set-up. The fact is the market remains vastly oversold and any sense that the worst is over with liquidity having been injected then the S&P can fly to the upside. On Thursday my S&P plan worked well as post the ECB Rate hike the market traded lower to my 3865-buy level before rallying to my 3891 T/P level with a 3965 high print. Subsequently, the S&P made a low at 3900 on Friday before having a small 16-Handle rally into the close. Today, I will be a buyer from 3870/3890 with a wider 3849 ‘’Closing Stop’’.
EUR/USD
No Change. The Euro had a nice rally on Friday despite the fall in Equity Markets. I am still long at 1.0670 with a now lower 1.0720 T/P level. I will now raise my stop on this position to 1.0595. If any of the above levels are hit, I will be back with an update for my Platinum Members.
June Dollar Index
My latest 104.20 short position worked well as the Dollar sold off on Friday to my revised 103.90 T/P level and I am now flat. Today, I will again be a seller from 104.40/105.00 with a higher 105.55 ‘’Closing Stop’’.
Cash DAX
On Thursday my DAX plan worked well with the market trading lower to my 14700 buy level before rallying to my 14810 T/P level and I am now flat. This morning, the DAX is trading unchanged at 14850. We have support from 14580/14680 where I will again be a buyer with a 14495 ‘’Closing Stop’’.
Cash FTSE
Incredible two-way volatility since Thursday’s Daily Commentary. After the FTSE hit my 7350 buy level, we rallied to my 7430 T/P level. On Friday the FTSE hit a morning high above 7500 before falling 200 points after European Banks again came under pressure. This move lower has me long the FTSE again at an average rate of 7350. I will have a T/P level at 7410 on this position while my ‘’Closing Stop’’ will be at 7265.
Dow Rolling Contract
My Dow plan worked well. The idea of buying dips aggressively has paid nice dividends for all of March so far. On Thursday, the Dow hit my 31600 buy level before rallying to my 31870 T/P level and I am still flat. With all 11 S&P sectors closing negative on Friday, the McClellan Oscillator closed at an oversold reading of -223. The Dow is trading at 31980 as I go to press. We have strong support from 31400/31650 where I will again be a buyer with the same 31145 ‘’Closing Stop’’.
Cash NASDAQ 100
Lower Bond yields helped the NDX to outperform the other major American Indexes las week. The NDX ended the week 7% higher from its Monday lows. This is the positive divergence that I have been talking about and you have to wonder why stock markets could not make new lows in spite of the banking crisis that forced the Fed to intervene and save three banks so far. With the 50-Day Moving Average (12029) trading above the 200-DAY Moving Average (11904) any sell-off in the NASDAQ will see aggressive buying. I am still flat. I will now raise my buy level to 12200/12350 with a wider 11975 ‘’Closing Stop’’.
June BUND
I was lucky with my latest 136.20 short Bund position. On Thursday I emailed my Platinum Members to exit any short position at a price of 135.80. On Friday, the Bund surged closing 230 points higher at 138.10. I have never seen such an aggressive move higher in the Bund in the space of a week. As I mentioned in the S&P commentary above the ECB are finished with rate hikes as the Market is now pricing in rate cuts following the ‘’Save Face’’ rate hike from Lagarde and co on Thursday. The Bund is severely overbought. We have further resistance from 139.10/140.00 where I will be a strong seller with a wider 141.05 ‘’Closing Stop’’.
Gold Rolling Contract
Gold has rallied the best part of $200 in the past two weeks. This is an enormous move as thankfully we had no sell level in Gold. Gold is now severely overbought. We have resistance from 2010/2030 where I will be a small seller with a 2041 ‘’Closing Stop’’. I no longer want to be long Gold at this time.
Silver Rolling Contract
My patience is finally starting to pay off with my long 23.10 Silver position from last month. On Friday, Silver surged almost 5%, trading at a price of 22.60 as I go to press. I will now raise my stop on this position to 21.45. I will continue with my strategy of no T/P level. If this view changes I will be back with a new update for my Platinum Members.
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