U.S. Equity Markets fell to start the day, before rallying throughout Friday, finishing the day mixed, as the Dow closed lower while the Russell 2000 closed with a gain of 1.28%. Comments from National Institute of Allergy and Infectious Diseases Director Dr. Anthony Fauci spooked markets in the morning. Fauci said that it was likely that the Coronavirus vaccines would be less effective against strains seen in the U.K. and South Africa. However, he added that the vaccines would still be effective enough to warrant everyone getting inoculated. And he said that U.S. case numbers appeared to be plateauing. On a positive note, economic data were strong. Existing Home Sales rose unexpectedly, wrapping up the best year for the metric since 2006. And January IHS Markit flash manufacturing PMI rose to a new all-time high. These are both good signs of a strengthening economy. European Markets continue to struggle. Germany suggested the European Union impose strict travel bans on visitors from countries where highly contagious coronavirus variants have proliferated. British Prime Minister Boris Johnson said it was too early to say when the country’s lockdowns will end. Markit Euro Zone’s preliminary manufacturing Purchasing Managers’ Index (“PMI”) data for January were weaker than expected, suggesting economic activity may be slowing. European Central Bank President Christine Lagarde said it was monitoring recent strength in the Euro, implying the central bank was prepared to intervene in currency markets. Elsewhere, Oil closed 1.86% lower on demand concerns as COVID-19 cases picked up once again, while Gold declined 0.65% on U.S Dollar strength.
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The S&P 500 closed 0.30% lower at a price of 3841.
The Dow Jones Industrial Average closed 179 points lower for a 0.57% loss at a price of 30,997.
The NASDAQ 100 closed 0.29% lower at a price of 13366.
The Stoxx Europe 600 Index closed 0.5% lower.
The MSCI Asia Pacific Index fell 0.3%.
Last Friday the Nikkei closed 0.44% lower at a price of 28,631.
The Bloomberg Dollar Spot Index closed 0.1% higher.
The Euro closed 0.1% higher at $1.2175.
The British Pound closed 0.5% lower at $1.3663.
The Japanese Yen closed 0.2% lower at 103.78 per dollar.
Germany’s 10-year yield closed two basis points lower at -0.51%.
Britain’s 10-year yield closed three basis points lower at 0.30%.
US 10 Year Treasury closed two basis points lower at 1.08%.
West Texas Intermediate crude closed 1.86% lower at $51.98 a barrel.
Gold closed 0.65% lower at $1,848.20 an ounce.
This morning on the Economic Front we have German IFO Survey at 9.00 am. This is followed by the Chicago Fed National Activity Index at 1.30 pm. Finally, at 3.30 pm we have the Dallas Fed Manufacturing Business Index.
March S&P 500
Yet again we saw dips bought by traders. My S&P plan worked well with the S&P trading the whole of my buy range for a 3821 average long position before rallying to my 3829 revised T/P level with a 3841 rebound high. Unless the S&P breaks and closes below 3800 I will continue to be a buyer. Today my buy level will be from 3812/3827 with a 3798 ‘’Closing Stop’’. My only interest in selling the S&P is on a further rally to 3865/3880 with a 3891 stop.
I am still flat and I will now raise my buy level to 1.2090/1.2130 with a higher 1.2045 stop. I still do not want to be short the Euro at this time.
March Dollar Index
I am still long the Dollar from last week at a price of 90.20. I will continue to add to this trade at 89.70 while leaving my stop unchanged at 89.35. I will now lower my T/P level to 90.40.
My DAX plan worked well with the market trading lower to my 13760 buy level before rallying to my 13830 T/P level and I am still flat. Today I will again be a buyer from 13680/13750 with a wider 13595 stop.
After the FTSE traded lower to my 6630 buy level we saw a small rally. As I wanted to be flat over the weekend I covered this position at my 6648 revised T/P level. Apart from the 300 point rally at the beginning of January, the FTSE has struggled to move higher and has spent the rest of the month trading sideways/lower. The FTSE has short-term support from 6560/6610 where I will be a buyer with a 6515 stop. If I am taken long I will have a T/P level at 6645.
Dow Rolling Contract
After the Dow traded lower to my 30920 buy level we rallied back above 31000, enabling me to cover this position at my 30990 T/P level and I am still flat. The Dow continues to underperform both the NASDAQ and S&P as it did before the market crashed in February 2020. However as long as the Dow can hold key support from 30650/30830, I will continue to be a buyer of dips. Today I will again be a buyer in this area with a 30495 tight stop. My only interest in selling the Dow is still from 31370/31520 with the same 31635 ‘’Closing Stop’’.
Given how overbought the NASDAQ is trading, I will continue to be a seller of rallies. Despite Friday’s small sell-off I will not chase the market lower and I will now narrow my sell level to 13460/13540 with the same 13625 stop. If I am taken short I will have a T/P level at 13395.
The BUND traded higher to my 177.20 T/P level on my latest 176.90 long position and I am now flat. The ECB will do everything in their considerable power to prevent Bond Yields from rising. Today, I will again be a buyer from 176.55/176.95 with a 176.15 stop.
Gold Rolling Contract
My Gold plan worked well with the market trading lower to my 1835 buy level before rallying to my 1844 revised T/P level and I am still flat. So far the key 1810 support area is holding for Gold. Today, I will again be a buyer from 1812/1826 with a 1799 stop.
Silver Rolling Contract
My Silver plan worked well with the market trading lower to my 25.15 buy level before a late rally saw my 25.45 T/P level get executed. Silver has short-term support from 24.60/25.10 where I will be a buyer with a tight 24.15 stop.