Fears of a breakdown in Stimulus talks weighed on U.S. Equity Markets, which finished the day lower, led by the NASDAQ 100 which closed with a hefty loss of 2.15%. Late Tuesday, Treasury Secretary Steven Mnuchin proposed a Coronavirus Stimulus Bill to Speaker of the House Nancy Pelosi worth $916 billion. This plan was shot down by Pelosi and Senate Minority Leader Chuck Schumer as it did not include a Federal boost for Unemployment benefits. The bipartisan proposal had been seen as a good step in the right direction, so these developments raised fears that there could be a prolonged breakdown in negotiations. Now, all eyes turn to today’s FDA advisory committee, which is expected to announce its decision on Pfizer and BioNTech’s emergency use authorisation for their COVID-19 vaccine. After approval in the EU and Canada, expectations are high that the vaccine will win approval in the U.S. as well. Ahead of today’s ECB Meeting, European Indices closed higher. British Prime Minister Boris Johnson meet with European Commission President Ursula von der Leyen in Brussels for post-Brexit trade talks last night as the year-end deadline quickly approaches. The French government said it would delay the removal of COVID-19 social-distancing restrictions if case numbers and hospitalisations don’t fall further. German Chancellor Angela Merkel warned the country could impose more restrictions ahead of the Christmas season. AstraZeneca and Oxford University’s COVID-19 vaccine candidate was proven effective in trial results published in The Lancet, but it said more analysis is necessary for people age 55 and older. Elsewhere, Oil closed flat after EIA data showed U.S. Inventories increased by the second-largest amount on record, while Gold got hit hard, closing lower by 1.86% on profit-taking and Dollar strength.
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The S&P 500 closed 0.79% lower at a price of 3672.
The Dow Jones Industrial Average closed 105 points lower for a 0.35% loss at a price of 30,069.
The NASDAQ 100 closed 2.15% lower at a price of 12,364.
The Stoxx Europe 600 Index closed 0.3% higher.
The MSCI Asia Pacific Index rose 0.3%.
This morning the Nikkei closed 0.23% lower at a price of 26,756.
The Bloomberg Dollar Spot Index rose 0.4%.
The Euro closed 0.4% lower at $1.2080.
The British pound fell 0.3% to close at $1.3325.
The Japanese yen closed 0.3% lower at 104.45 per dollar.
Germany’s 10-year yield closed one basis point lower at -0.61%.
Britain’s 10-year yield closed one basis point lower at 0.25%.
US 10 Year Treasury closed one basis point lower at 0.92%.
West Texas Intermediate crude closed flat at $44.28 a barrel.
Gold closed 1.86% lower at $1,829.20 an ounce.
This morning on the Economic Front we had UK Industrial Production which fell 5.5% versus -6.5% expected. The UK also released its Trade Balance which came in worse than expected at £-12bn while the October Monthly GDP rose 0.4% as expected. At 12.45 pm we have the ECB Rate Decision and latest Stimulus Announcement. This is followed by the Press Conference from ECB President Lagarde at 1.30 pm. At the same time, we have U.S Weekly Jobless Claims and CPI.
December S&P 500
The S&P just missed my 3715 sell level by one Point before selling off to my 3666 buy level. As I wanted to be flat overnight, I emailed my Platinum Members to exit any long position for a small gain at 3673. I expect to see plenty of volatility today with the approval of the COVID 19 Vaccine from the FDA and the Stimulus announcement from the ECB. The S&P has strong support from 3632/3647 where I will be an aggressive buyer with a 3619 ‘’Closing Stop’’. I will now lower my sell level to 3690/3705 with a 3719 stop which is just above yesterday’s all-time Globex high. I am watching the VIX closely as a break and close over 23 is a buy signal and this will lead to some profit-taking in the S&P. Yesterday the VIX closed higher by 7.69% at 22.27.
The Euro had a small sell-off over the past 24 hours which is no surprise given how overbought the Euro is at this time. I will continue to be a buyer on any dip lower to 1.1990/1.2040 with the same tight 1.1965 stop. I will now lower my sell level to 1.2150/1.2200 with a lower 1.2255 stop
March Dollar Index
The Dollar fell shy of my initial 90.30 buy level before spending the rest of the session trading higher. I will now raise my buy level to 90.10/90.60 with a higher 89.75 stop. Given how oversold the Dollar is trading I still do not want to be short the Dollar at this time.
Despite the aggressive fall in the NASDAQ yesterday the DAX held in as the market is expecting a large Stimulus announcement at today’s ECB Meeting. So much of this news is priced into the market and as a result I will now lower my DAX buy level to 13090/13170 with a lower 13015 stop. Remember a break and close below the key 13000/13100 support zone is bearish.
The FTSE had a late sell-off on more Brexit jitters and I used this move lower to exit my latest 6580 short position at my revised 6562 T/P level and I am now flat. The FTSE is severely overbought with strong resistance from 6630/6690 where I will again be a seller with a 6735 ‘’Closing Stop’’. I still do not want to be long the FTSE at this time.
Dow Rolling Contract
I have mentioned the words ‘’Mania and Sentiment’’ over the past two weeks in relation to the U.S. Indices. The record IPO Market in 2020 has certainly fuelled the Mania over the past nine months. Yesterday we saw DoorDash issue shares, with the stock almost doubling on the first day of post IPO trading. Online news stories note that the first-day ‘’Pop’’ made the company larger than both Kraft Heinz and Ford Motor. DoorDash raised $3.37 billion in the IPO even though the company has never made a profit in its entire existence. Moreover the company is in the cutthroat competitive setting with the likes of Grubhub and Uber Eats fighting for every Dollar in a razor thin margin environment. The performance of this share will be worth keeping an eye on over the coming months. Yesterday the Dow traded lower to my 29980 buy level before rallying to my revised 30040 T/P level and I am now flat. The Dow has strong support from 29680/29850 where I will again be a buyer with a 29545 stop. If I am taken long I will have a T/P level at 29970.
My NASDAQ plan did not work well as the market got slammed for 300 points in yesterday’s session. This move lower had me long at an average rate of 12505 before getting stopped out at 12395 and I am still flat. This morning the NASDAQ is trading lower at 12320. We have resistance from 12380/12460 where I will be a seller with a 12545 tight stop. I am watching the 12200 support area closely as a break and close before here will see the bears taking short-term control.
The BUND is trading at a new price high with the yield now at an incredible -61 basis points. Ahead of the ECB Meeting I will now raise my sell level to 178.55/179.05 with a higher 179.45 stop. If I am taken short I will have a T/P level at 178.10.
Gold Rolling Contract
Gold got hit for $40 yesterday, putting me long at a price of 18.20. As I did not want to hold this position overnight, I exited at my 1825 revised T/P level and I am still flat. This morning Gold is trading slightly higher at 1832. We have strong support from 1795/1810 where I will be a buyer with a 1783 stop.
Silver Rolling Contract
I was lucky yesterday as shortly after I posted the market traded higher to my 24.40 T/P level on my 24.20 latest long position before following the price of Gold lower. This morning Silver is trading at 23.85 as I go to press. We have support from 22.80/23.40 where I will be a buyer with a 22.35 stop. If I am taken long I will have a T/P level at 23.75.