Equity Markets on both sides of the Atlantic were buoyed by comments from Secretary of State Mike Pomeo who said that China’s Chief Diplomat, Yang Jiechi, reassured him the country would honour its Phase One Trade Commitments during a meeting in Hawaii. I have cautioned all week not to be short the S&P ahead of the June Expiration on Friday at 2.35 pm. The June S&P Futures Contract soared after I posted to settle an incredible 22 Handles above the Cash Equivalent at the time at a price of 3177. Remember it was only last Monday that the June Contract was trading at 2935. Positive negotiations on the Euro-Zone’s 750 billion rescue package helped boost European stocks despite the negative impact from German Payments firm Wirecard AG which led to the resignation of Chief Executive Markus Braun over a missing Euro 1.9 billion in cash. ECB President Lagarde warned the Euro-Zone’s leaders they faced market risks if they could not agree on a unified recovery fund. Adding to the positive feel was the better than expected UK Retail Sales data. However, by mid-afternoon, US Indices turned negative after increasing COVID-19 Cases were reported in Arizona, California, Texas and Florida in what turned out to be a wild trading session. The increased rate of infections led Apple to close a number of their stores over the weekend, to protect their employees. Overnight the S&P Futures reversed a 1% slide on low volume in Asia after the Australia State of Victoria announced that it was tightening restrictions due to increased cases. Elsewhere, Treasuries, Gold and Crude closed higher.
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The S&P 500 closed 0.6% lower at 3097 after hitting an inta-day high at 3177 in the June Contract.
The Dow Jones Industrial Average fell 208 points for a 0.80% loss to close at 25871.
The NASDAQ 100 closed unchanged at 10008.
Stoxx Europe 600 Index closed with a gain of 0.6%.
The FTSE 100 closed 1.1% higher.
This morning the Nikkei closed 0.18% lower at 22,437.
Here is a summary of the main Changes in F.X. Markets:
The Euro decreased 0.2% to $1.1180.
The Japanese Yen closed 0.1% higher at 106.86.
The British Pound fell 0.8% to 1.2355 per Dollar.
The yield on 10-year Treasuries fell two basis points to 0.68%.
Germany’s 10-year yield declined one basis point to -0.42%.
Britain’s 10-year yield closed unchanged at 0.24%.
West Texas Intermediate crude rose 1.9% to $39.57 a barrel.
Gold closed 1.2% higher at $1742.
This morning on the Economic Front we have UK CBI Industrial Trends Survey at 11.00 am and this is followed by a speech from Bundesbank President Weidmann at 1.00 pm. At 1.30 pm we have the Chicago Fed National Activity Index and this is followed at 3.00 pm by U.S Existing Home Sales and Euro-Zone Consumer Confidence, Finally, at 3.15 pm we have a speech from ECB Member De Guindos.
September S&P 500
I have cautioned all week against being short the S&P ahead of the June Expiration. The June Contract rallied an incredible 30 Handles in the five minutes before its 2.35 pm expiry to settle at a price of 3177. Subsequently the S&P spent the rest of the session trading lower to close at 3075 in the September Contract. Overnight the Futures again opened weak to hit a low at 3029 before turning around in Asia to hit a high so far of 3081.50. On Friday, the S&P just missed my 3155 sell level with a 3144 high print before having an aggressive sell-off to trade the whole of my buy range for a 3087 average long position. As I wanted to be flat over the weekend, I covered this position at my revised 3092 T/P level. The S&P has strong support at 3019 which is the 200 Day Moving Average. Today I will be an aggressive buyer from 3025/3045 with a 3010 stop. I will now lower my sell level to 3110/3125 with a 3138 tight stop.
My Euro plan worked well with the market trading lower to my 1.1190 buy level before rallying to my 1.1220 T/P level and I am still flat. The Euro has near-term support from 1.1125/1.1165 where I will be a buyer with a 1.1079 stop. I will now lower my sell level to 1.1340/1.1390 with a lower 1.1425 stop.
September Dollar Index
Shortly after I posted the Dollar sold off to my 97.15 T/P level on my latest 97.40 short position and I am still flat. Today, The Dollar is opening higher at 97.50. We have resistance from 97.90/98.40 where I will be a strong seller with a 98.75 stop. Remember the 200 Day MA is at a price of 98.30 and will offer strong resistance.
After the DAX traded the whole of my buy range for a 12200 average long position I emailed my Platinum Members to exit any long position for a breakeven and I am still flat. This morning the DAX is trading lower at 12140 but well off its earlier low at 12080. The DAX has strong support from 11950/12050 where I will be buyer with a 11875 stop.
Overnight the FTSE traded lower to my 6140 buy level before rallying to my 6195 T/P level and I am still flat. Today I will again look to buy the market from 6080/6140 with a 6035 tight stop. Given the weakness of Sterling I still do not want to be short the market at this time.
Dow Rolling Contract
An incredibly volatile trading session on Friday. Traders are torn between selling the market given the awful economic backdrop and afraid to be short given the increasing Fed support. As we can see from the overnight action that the Dow has already rallied over 400 points from its Asian low at 25335. On Friday, my Dow plan worked well with the market trading lower to my 25850 average buy level before rallying 200 points and this move higher enabled me to cover this position at my revised 25905 T/P level and I am still flat. The Dow has trendline support around the 25500 area and this level must hold on a closing basis or we could see a more meaningful sell-off. Worryingly the VIX closed 6.6% higher at 35.12 on Friday. Today, I will be a small buyer from 25300/25550 with a 25165 tight stop. If I am taken long I will have a T/P level at 25725. The Dow has short-term resistance from 26160/26350 where I will be a seller with a 26475 stop. If I am taken short I will have a T/P level at 26005.
Shortly after I posted on Friday the NASDAQ traded lower to my 10040 T/P level on my 10070 short position and I am still flat. The NASDAQ came close to making yet another all-time high before selling off into the close. This morning the NASDAQ is trading at 9970. We have resistance from 10070/10170 where I will be a seller with a 10250 tight stop. The NASDAQ has strong support from 9740/9850 where I will be a buyer with a 9655 tight stop.
I am still flat the Bund and today I will again raise my buy level slightly to 174.75/175.15 with a higher 174.40 stop.
Gold Rolling Contract
Gold rallied to close at its highest level since May 20. I am still flat and I will now raise my buy level to 1702/1712 with a higher 1691 stop.
Silver Rolling Contract
Silver continues to trade heavy and I am still flat. I will now raise my buy level to 16.90/17.30 with a higher 16.45 stop.