U.S. Equities Markets weathered a late-Friday plunge to post their best week in over 10 years, buoyed by an unprecedented stimulus package meant to blunt the economic impact of the Coronavirus pandemic. Treasuries gained and oil slipped. The S&P 500 Index climbed 10% this week, its biggest gain since March 2009, on the strength of a record three-day rally. But that rally sputtered Friday, and the benchmark plunged just minutes before the close, illustrating how tenuous any gains can be, even with a $2 trillion spending deal heading to the president’s desk for his signature. The S&P remains 25% below its February record, and the CBOE Volatility Index had its 10th straight close above 60. It averaged 18.7 in the past year. The Dow Jones Industrial Average had its best week since 1938, even as all but two of its 30 members declined Friday. Treasuries gained after the Federal Reserve said it would reduce the pace of its purchases next week. That announcement may have contributed to the stock market’s late-day swoon. Investors had piled back into the battered U.S. Equity Market last week on speculation that the massive relief bill would offset some of the pandemic’s impact on businesses and households. A debate has ensued over whether that furious rally represented unwarranted optimism or the start of a long-term upswing. What remains clear is that the virus has ground the American economy to a near total halt, with new Jobless Claims spiking above 3 million as large areas of the country remain virtually locked down to slow the spread of the infection. A measure of U.S. Consumer Confidence fell the most since 2008. West Texas crude declined, setting up a fifth straight week of losses. The US Dollar had its worst five-day skid since 2009. The Stoxx Europe 600 Index was led lower by banks and real estate shares after the region’s leaders struggled to agree on a concrete strategy to contain the fallout of the pandemic. Asian equities mostly rose, though shares in Australia slumped. The Pound gained even as U.K. Prime Minister Boris Johnson said he had tested positive for Coronavirus. The recent revival of risk appetite looks sure to be tested by the continuing spread of the infection and the crippling effect of business closures. Tokyo is now seeing a surge in cases, while global deaths from the pandemic surpassed 24,000. The Reserve Bank of India on Friday became the latest Central Bank to step up emergency action to cushion the economic impact.
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For anyone following my Platinum Service it made 305 points on Friday and is now ahead by 8854 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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The S&P 500 Index decreased 3.4%, closing at a price of 2541.
The Dow Jones Industrial Average fell 915 points for a 4.06% decline to close at 21,636.
The Stoxx Europe 600 Index dropped 3.3%.
The MSCI Asia Pacific Index rose 1.9%.
Here is a summary of the main Changes in F.X. Markets:
The Bloomberg Dollar Spot Index fell 0.6%.
The Euro gained 0.9% to $1.1127.
The British Pound increased 2.1% to $1.2461.
The Japanese Yen gained 1.6% to 107.87 per dollar.
The yield on 10-year Treasuries declined 17 basis points to 0.67%.
Germany’s 10-year yield dipped 11 basis points to -0.474%.
Britain’s 10-year yield fell three basis points to 0.367%.
Gold decreased 0.6% to $1,622.33 an ounce.
West Texas Intermediate crude decreased 4.4% to $21.59 a barrel.
This morning on the Economic Front we have UK Mortgage Approvals, Net Lending to Individuals and Monet Supply at 9.30 am. This is followed at 10.00 am by Euro-Zone Economic Sentiment Indicator, Business and Consumer Confidence. At 1.00 pm we have German CPI. Finally, we have U.S. Pending Home Sales at 3.00pm and the Dallas Fed Manufacturing Business Index at 3.30 pm.
June S&P 500
If the Bear Market rally that started at Monday’s 2170 low does not hold the key 2310/2350 on a closing basis then we can safely say that the Phase 2 rally ended at last Thursday’s 2620 closing high, where the market closed at top tick. On Friday the S&P gaped lower before a late rally failed with 30 minutes left at the 2598 high. Subsequently the S&P got slammed into the close and again on the re-open of the Futures Market last night. The S&P hit a low of 2446 shortly after the re-open before spending the rest of the night trading higher. My S&P plan worked well with the market trading the whole of my buy range for a 2536 average long position before rallying to my revised 2546 T/P level and I am now flat. The S&P has initial support from 2440/2470 where I will be a buyer with a tight 2414 stop. I will be an aggressive buyer from 2310/2350 with a 2275 stop. I am still looking for a move higher to 2680/2720 and possibly 2750/2790 before Phase 2 ends.
The Euro surged in the last hour of trading on Friday, trading the whole of my sell range for a now 1.1090 average short position. I will now lower my stop on this position to 1.1145. I will also raise my T/P level to 1.1055 and if any of the above levels are hit I will be back with a new update for my Platinum Members.
June Dollar Index
The late sell-off saw the Dollar trade the whole of my buy range for a 98.85 average long position. The Dollar is rallying as I go to press and I have now cut this position here at 99.05 and I am now flat. Today I will be a buyer from 97.90/98.50 with a 97.45 stop.
The DAX which opened 0.7% higher has fallen 200 points in the last 30 minutes. The DAX has strong support from 9180/9340 where I will be a buyer with a 9095 stop. On Friday after the DAX hit my 9600 buy level I emailed my Platinum Members to exit any long position at 9645 and I am now flat. Ahead of Month and Quarter End tomorrow, I do not want to be short the DAX at this time.
The surge in Sterling saw the FTSE trade weak for most of Friday’s session. After the FTSE hit my initial 5470 buy level I emailed my Platinum Members to exit any long position for a small loss at 5455 as I did not like the price action and I am now flat. The FTSE has support from 5200/5280 where I will again look to buy the market with a 5125 tight stop.
Dow Rolling Contract
The good part about Friday’s trading was no matter where you bought any of my US Indices you would have seen all three Indexes move higher after a weak start. The Dow rallied 900 points off its afternoon low before getting slammed in the last 30 minutes of trading. For the record I bought the Dow at 21990 before exiting this trade at my revised 22020 T/P level and I am still flat. As long as the Dow does not break and close below 19500, I expect to see the market rally to 23000/23500 and possibly as high as 24500/25000 before Phase 2 ends. The Dow has support from 20750/21100 where I will be a buyer with a 20585 stop. Below here we have strong support from 19300/19750 where I will be an aggressive buyer with a 19125 stop.
After the NASDAQ hit my 7660 buy level I covered this position at my revised 7695 T/P level and I am now flat. Subsequently the NASDAQ rallied to a rebound high at 7760 before selling off into the close and again overnight to a low so far at 7370. The NASDAQ has support from 7350/7430 where I will be a buyer with a 7285 stop.
An incredible rally in the Bund with the market now trading 400 points higher at 173.44 from where I marked prices last Thursday morning. The BUND has strong resistance from 174.15/174.75 where I will be a small seller with a 175.15 stop.
Gold Rolling Contract
The constraint in the Gold Market that is causing the wide spread between Futures and Spot prices may be starting to ease. Traders are rolling April Contracts into June and the London Bullion Market Association said on Friday that ‘’they are actively engaged with logistics companies to overcome travel constraints and ensure physical movement of metal via chartered or cargo flights’’. I am still flat Gold and for now I will continue to stay on the sidelines until normal volatility returns.
Silver Rolling Contract
This morning Silver has traded lower to my 13.80 buy level. I am still long and I will now lower my T/P level on this position to 14.15. Meanwhile I will raise my stop to 13.35.