U.S. Equity Markets broke their losing streak on vaccine optimism, finishing higher, led by the Dow rallying to a new all-time high with a gain of 1.35%. Vaccine optimism was the main driver for yesterday’s gains. Ahead of an advisory committee review, an analysis by U.S. Food and Drug Administration (“FDA”) staff confirmed that the benefits of Johnson & Johnson’s (JNJ) COVID-19 vaccine outweigh the risks. This will increase supply of available vaccines, likely accelerating the pace of vaccinations. And that should help the economy return to normal. In another testimony before Congress, Federal Reserve Chair Jerome Powell reiterated that the Fed will not pull support from the economy anytime soon. The House of Representatives is set to vote on stimulus tomorrow, and is expected to pass the $1.9 trillion support package. Some members of Congress are now talking up an infrastructure bill, with a potential price tag as high as $3 trillion. European Markets rallied. Germany’s final Fourth-Quarter Gross Domestic Product data were stronger than the preliminary reading, implying the regional economy is in better shape than expected. French business confidence data for February were weaker than expected, falling versus January, as the Services Sector outlook deteriorated once more. Spain’s Prime Minister unveiled a new $13.4 billion stimulus package, with funds for small businesses and the self-employed. European Union coronavirus vaccinations rose to 27.9 million yesterday, with a daily average of 778,000 doses administered over the last week. Elsewhere, Oil closed 2.58% higher, continuing its recent rally while Bitcoin rose 2.73% on news that Square (SQ) and MicroStrategy (MSTR) have added to their bitcoin holdings.
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The S&P 500 closed 1.14% higher at a price of 3925.
The Dow Jones Industrial Average closed 425 points higher for a 1.35% gain at a price of 31,962.
The NASDAQ 100 closed 0.81%higher at a price of 13,302.
The Stoxx Europe 600 Index closed 0.6% higher.
The MSCI Asia Pacific Index fell 0.2%.
This morning the Nikkei closed 1.67% higher at a price of 30,168.
The Bloomberg Dollar Spot Index closed 0.3% lower.
The Euro closed 0.1% higher at $1.2172.
The British Pound closed 0.1% higher at $1.4131.
The Japanese Yen closed 0.5% lower at 106.05 per dollar.
Germany’s 10-year yield closed three basis points higher at -0.30%.
Britain’s 10-year yield closed one basis points higher at 0.73%.
US 10 Year Treasury closed six basis points higher at 1.39%.
West Texas Intermediate crude closed 2.58% higher at $62.42 a barrel.
Gold closed 0.23% lower at $1,799.80 an ounce.
This morning on the Economic Front we already had the release of German March GFK Consumer Confidence which fell 12.9 versus -14.0 expected. At 9.00 am we have Euro-Zone Money Supply, followed at 10.00 am by Business Climate, Economic Sentiment Indicator and Consumer Confidence. Next, we have Weekly Jobless Claims, GDP, Durable Goods Orders and Personal Income/Spending at 1.30 pm. This is followed by Pending Home Sales at 3.00 pm and the Kansas City Fed Manufacturing Activity Index at 4.00 pm. Finally, we have speeches from Fed Members Quarles and Williams at 4.10 pm and 8.00 pm respectively.
March S&P 500
Thankfully we had no sell level in the S&P yesterday as the market just missed my initial 3854 buy level with a 3856 low print before surging 60 Handles into the close. There is no doubt the importance of the 50 -Day Moving Average as the market has now rallied 120 Handles after testing this level on Tuesday afternoon. With the Dow closing at new all-time highs, it is only a matter of time before the S&P breaks it’s February high of 3965. Today, I will move my buy level higher to 3898/3913 with a wider 3885 ‘’Closing Stop’’. I still do not want to be short the S&P at this time.
My Euro plan worked well even though the market continues to trade in a narrow range. I bought the Euro at 1.2135 before we rallied to my 1.2165 T/P level and I am now flat. Today, I will again look to buy the Euro from 1.2125/1.2165 with a higher 1.2078 stop.
March Dollar Index
The Dollar rallied to my 90.30 sell level before trading lower to my 90.10 revised T/P level and I am still flat. So far the Dollar is holding the key 89.50/90.00 support level but seems to me that it is only a matter of time before we break this key area. Today, I will be a seller from 90.25/90.65 with a lower 91.05 stop.
Just like the S&P above, the DAX also missed my 13810 buy level by a few points before rallying to trade at 14040 this morning as yet again the key 13800 support level holds on a closing basis. I will now raise my buy level to 13810/13890 with a 13745 stop. If I am taken long I will have a T/P level at 13945.
I am still flat as the FTSE trades higher which is no surprise given the pace of its vaccine roll-out. I will now raise my buy level to 6570/6620 with a higher 6528 stop. I still do not want to be short the FTSE at this time.
Dow Rolling Contract
The Dow made allow at 31420 yesterday afternoon before reversing to rally 600 points and I am still flat. This latest bullish break-out has a target above 33300. I will now raise my buy level to 31670/31870 with a 31495 ‘’Closing Stop’’. If I am taken long I will have a T/P level at 32050.
My NASDAQ plan worked well with the market trading lower to my 13010 buy level before rallying to my 13090 T/P level and I am now flat. Overnight the NASDAQ rallied to a high at 13350 before selling off to sit at 13235 as I go to press. The NASDAQ has strong support from 13190/13090 where I will again be a buyer with a 12995 ‘’Closing Stop’’. I still do not want to be short the NASDAQ at this time despite this week’s aggressive sell-off.
The Bund traded lower to my 173.80 buy level before rallying to my 174.15 revised T/P level and I am now flat. With 10 -Year Treasuries trading higher at 1.41% this morning it is only a matter of time before we see Central Banks intervene in the Bond Markets as they cannot afford yields to rise given the level of Global Debt. 1.44% is huge resistance and pivot for 10-Year Treasuries and I would expect this level to hold for now. The Bund has support from 173.00/173.40 where I will be a buyer with a 172.55 stop.
Gold Rolling Contract
My Gold plan worked well with the market trading lower to my 1788 buy level before rallying to my 1795 T/P level and I am still flat. With the Dollar weaker this morning, it is only a matter of time before we see Gold trade higher. Gold has support from 1763/1778 where I will be a buyer with a 1749 stop.
Silver Rolling Contract
After Silver traded lower to my 27.30 buy level we rallied to my 27.65 T/P level and I am now flat. Silver has support from 26.80/27.40 where I will again be a buyer with a 26.35 stop.