U.S. Equity Markets slumped on Friday to cap the worst week for stocks since the Global Financial Crisis amid dire warnings about the economic effects of the Coronavirus pandemic and as governments stepped up efforts to keep people at home. The S&P 500 Index tumbled to its lowest level in three years, ending the week down 15% as the European Union said the recession this year may be as bad as 2009, and Goldman Sachs warned the U.S. economy may shrink 24% on an annualised basis in the second quarter. Oil sank as governments around the world imposed restrictions on movement to slow the disease’s spread, bringing its weekly decline to 29%. The 10-year Treasury yield fell back below 1%. The US Dollar was little changed after vaulting more than 8% in the previous eight sessions as the Federal Reserve coordinated action with global central banks to beef up dollar liquidity swap line arrangements. Gold edged higher. Investors are weighing a faster pace of Coronavirus infections against flickers of optimism that have followed extraordinary government actions to protect the global economy, from plans for stimulus and cash handouts to nationalising companies. Hedge funds, stock exchanges, banks and even brick-and-mortar businesses in the U.S. are lobbying Washington policy makers not to shut markets. Still, the World Health Organization said that the pace of infections is speeding up. Cases doubled to 200,000 in the 12 days through Thursday, but just one day later the tally already was almost halfway to 300,000. U.S. stock trading volumes surged to about 60% above the average in the midst of a phenomenon known as Quadruple Witching caused by expiring Options and Futures Contracts.
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For anyone following my Platinum Service it made 715 points on Friday and is now ahead by 7537 points for March, having made 2223 points in February, 2142 points in January, 818 points in December, 780 points in November, 1649 points in October, 1620 points in September and 2387 points in August Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1600 points
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Overnight, U.S. and European equity futures tumbled along with Asian stocks after a surge in the global death toll from the Coronavirus and a failure by Congress to agree on an aid plan. S&P 500 futures dropped 5% and hit limit down early on, though came off their lows as the session progressed. European contracts retreated as leaders scrambled to enforce more restrictions on people’s movements. Stocks in Australia, South Korea and Hong Kong also slumped, while India tumbled more than 10%.
The S&P 500 Index fell 4.4%, closing at 2304.
The Dow Jones Industrial Average closed 4.55% lower for a 913 point decline, at 19,173.
The Nasdaq Composite slid 3.8%.
The Stoxx Europe 600 Index rose 1.8%.
The MSCI Asia Pacific Index surged 2.5%.
Here is a summary of the main Changes in F.X. Markets:
The Bloomberg Dollar Spot Index rose 0.1%.
The Euro weakened 0.3% to $1.0665.
The British Pound climbed 0.8% to $1.1574.
The Japanese Yen slipped 0.5% to 111.23 per dollar.
The yield on 10-year Treasuries dropped 23 basis points to 0.91%.
Germany’s 10-year yield fell 13 basis points to -0.33%.
Britain’s 10-year yield decreased 16 basis points to 0.55%.
Gold gained 0.9% to $1,484.98 an ounce.
West Texas Intermediate crude fell 11% to $22.43 a barrel.
This morning on the Economic Front we have the G20 Meeting by video conference starting at 11.00 am. At 12.30 pm we have the Chicago Fed National Activity Index. Finally, at 3.00 pm we have the Euro-Zone Consumer Confidence.
June S&P 500
Just when we think that volatility was slowing, Friday brought the Quadruple Witching Expiration for the March Futures Contracts and Options. The S&P had a wild ride since I posted on Friday morning, trading to a high above 2500 after I posted before hitting its 5% limit down breaker shortly after re-opening last night, hitting a new low so far at 2173. The S&P moved slightly higher after the European Markets opened and is currently trading at 2205 as I go to press. Despite the S&P closing 4.5% lower on Friday, the VIX fell 8%, closing at 66.04. This is encouraging. On top of this the McClellan Oscillator fell 20 points, closing at -155. This is the lowest close for the MO in a couple of weeks. The S&P has hit my 2100/2180 target zone. While we may fall further, in my opinion most of this initial decline is at or close to an end before we will see a decent rebound. Looking at past crashes, the S&P has rallied between 50/80% from whatever initial low is put in before selling off again to make a new low. On Friday my S&P plan worked well with the market trading the whole of my buy range for a 2395 average long position before rallying to my 2425 revised T/P level. Subsequently I emailed my Platinum Members to buy the S&P again at 2370 before thankfully exiting this position at 2378 and I am now flat. The level of Central Bank intervention is unprecedented and will have a positive affect in the long-run. Today I will be a buyer from 2140/2180 with a 2105 stop. If I am taken long I will have a T/P level at 2225.
The Euro traded lower to my 1.0710 buy level. I am still long and I will now lower my T/P level to 1.0750. I will raise my stop to 1.0635 and if any of the above levels are hit I will be back with a new update for my Platinum Members.
June Dollar Index
My Dollar plan did not work well as after the Dollar hit my 102.05 average sell level I was stopped out of this position at 102.75 and I am now flat. This morning the Dollar is trading higher at 103.35. We have strong resistance from 103.75/104.25 where I will be a seller with a 104.60 stop.
Very late on Friday the DAX traded lower to my 8740 buy level. As I wanted to be flat over the weekend I emailed my Platinum Members to exit any long position for a breakeven and I am still flat. This morning the DAX is trading much lower at 8490 which is nearly 10% below the high made shortly after I posted on Friday. The DAX has support from 8200/8350 where I will be a buyer with a 8095 wider stop. Given how oversold the DAX is trading I still do not want to be short the market at this time.
Thankfully we stayed flat the FTSE over the weekend with the market also trading 10% below last Friday’s high. The FTSE has strong support from 4780/4880 where I will be a buyer with a 4725 tight stop.
Dow Rolling Contract
The Dow declined another 4.55% on Friday, bringing the Weekly fall to 17.3%. My Dow plan worked well on Friday with the market hitting my aggressive 20200 buy level before rallying to my 20375 T/P level. Subsequently I emailed my Platinum Members to buy the Dow again at 19800 before the market again rallied to my 19950 T/P level and I am now flat. The Dow got slammed into the close, falling 1800 points from its morning 21000 morning high. This sell-off continued after the Futures Market re-opened last night to hit a new low for the year at 18,170. This level is deep in my 17500/19000 target area. Today I will be a buyer from 17600/18200 with a 16995 wider stop. My initial target on any long position is 20500 and possibly 21600. Remember a break and close over the key 21600 resistance area is bullish for 24000. If I am taken long at my price range I will have a T/P level at 19350.
After the NASDAQ traded lower to my 7300 buy level I emailed my Platinum Members to exit any long position at my revised 7380 T/P level and I am still flat. Thankfully I left the NASDAQ alone for the rest of the day as the market got absolutely slammed and is current trading at 6750 as I go to press. The NASDAQ has strong support from 6450/6580 where I will be a buyer with a 6380 stop.
The BUND just missed my buy level on Friday before rallying to trade 200 points higher at 171.00 this morning. I am still flat and I will now raise my buy level to 169.50/170.20 with a higher 168.95 stop.
Gold Rolling Contract
Please see Friday’s commentary. I am going to stay flat until the volatility settles back to normal levels.
Silver Rolling Contract
No Change as I am still a small buyer from 11.70/12.10 with the same 11.35 stop.