U.S. stocks advanced to an all-time high after the Federal Reserve cut Interest Rates as expected and signalled it was unlikely to move in either direction any time soon as inflation remains muted. Treasuries extended gains and the US Dollar erased an advance. The S&P 500 turned higher when Chairman Jerome Powell said rate hikes won’t occur as long as inflation remains persistently cool. That fuelled a rally in Treasuries and sent the US Dollar lower. Prior to the comment, risk assets were under pressure after hawks saw a change in the policy statement’s language — removing “act as appropriate” — as signalling officials will not make any further cuts this year. After the close of trading, Apple, Starbucks and Facebook advanced after posting results. Twitter fell after saying it won’t accept political advertisements.
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Equities had spent most of the day treading water as investors digested the latest batch of earnings and trade headlines. Shares fell to session lows when Chile cancelled next month’s APEC meeting where the U.S. and China intended to sign a partial trade pact. Johnson & Johnson led gains in the Dow Jones Industrial Average. Yum Brands, C.H. Robinson and Molson Coors slumped after reporting results. General Electric jumped after raising its forecast while Mattel soared after a sales beat. Data showed the U.S. economy rose 1.9% in the Third Quarter and a report on private hiring showed solid gains, with both data sets topping estimates. Earnings also set the tone in Europe, where the Stoxx 600 added 0.1%. Total’ profit beat analyst estimates and cash flow held firm, Airbus cut its full-year delivery target and Volkswagen lowered its outlook for vehicle deliveries. Deutsche Bank saw earnings from trading debt securities and currencies drop 13%, Credit Suisse Group posted better-than-expected profit and Standard Chartered generated 19% more revenue in Europe and the Americas. PSA Group and Fiat Chrysler Automobiles rose after saying they’re in talks about a tie-up.
The S&P 500 Index rose 0.3% to close at 3046.
The Dow Jones Industrial Average added 0.4% and the Nasdaq 100 climbed 0.4%.
The Stoxx Europe 600 Index rose 0.1%.
The MSCI Asia Pacific Index declined 0.2%.
The MSCI Emerging Market Index fell 0.2%.
Here is a summary of the main Changes in F.X. Markets:
The Bloomberg Dollar Spot Index fell 0.1%.
The Euro rose 0.2% to $1.1137.
The Japanese Yen added 0.1% to 108.79 per dollar.
The Pound strengthened after U.K. Prime Minister Boris Johnson won backing in Parliament for a December 12 election, closing 0.2% higher at $1.2900
The yield on 10-year Treasuries lost five basis points to 1.78%.
The two-year yield slipped two basis points to 1.62%.
Germany’s 10-year yield was flat at -0.35%.
Gold Futures increased 0.2% to $1,494.10 an ounce.
West Texas Intermediate crude declined 1.4% to $54.77 a barrel.
This morning on the Economic Front we have German Retail Sales at 7.00 am, followed by Euro-Zone GDP, Unemployment and CPI at 10.00 am. At 12.30 pm we have U.S. Personal Income/Spending and Weekly Jobless Claims, Finally, at 2.45 pm we have the Chicago Purchasing Mangers’ Survey.
December S&P 500
My S&P plan worked well with the market spiking lower to my 3025 buy level shortly after the U.S Market opened before rallying to my 3032 T/P level with a 3052 high print. Despite the Dow rallying 0.4% yesterday we are still trading below the July 16 high of 26398 as the negative divergence persists. A break and close over the July high in the Dow will negate this divergence and lead to a further rally in the US Stock Market. Today I will raise my sell level to 3062/3075 with a higher 3083 stop. The S&P has strong support from 3025/3035 and I will be a buyer on any dip to this area with a tight 3017 stop.
The Euro continues to strengthen as expected which is no surprise given the recent fall in U.S Interest Rates. The fall in the Dollar was enhanced after a dovish sounding message from Fed Chair Powell in his press conference. Today I will raise my buy level to 1.1080/1.1120 with a tight 1.1045 stop.
December Dollar Index
The Dollar just missed my 97.85 sell level with a 97.75 high print and I am still flat. Today I will lower my sell level to 97.70/98.10 with a lower 98.45 stop.
My DAX plan worked well with the market falling to my 12820 buy level before rallying to my 12855 T/P level and I am now flat. The stronger Euro stopped the DAX from rallying further. Today I will again look to buy the DAX on any dip lower to 12780/12840 with a 12725 stop.
The FTSE just missed my 7245 buy level with a 7251 low print and I am still flat. The confirmation of the UK Election on December 12 helped the FTSE to play catchup with the U.S. Indices, closing higher at 7330. Today I will raise my buy level to 7240/7290 with a 7195 stop.
Dow Rolling Contract
The Dow had a nice rally into the close by rallying 115 points to finish at 27186. Earlier the Dow just missed my initial 26940 buy level with a low of 26994 and I am still flat. Today I will now raise my buy level to 26870/27070 with a 26795 tight stop. Despite the negative divergence I still do not want to be short the market at this time. Helping the U.S Indices to rally was the 7% fall in the VIX which closed at 12.32.
My NASDAQ plan also worked well with the market trading lower to my 8020 buy level before rallying to my 8050 T/P level and I am now flat. The NASDAQ is trading higher at 8120 as I go to press. The NASDAQ has strong resistance from 8260/8310 and I will be an aggressive seller on any rally to this area with a 8355 tight stop.
Frustratingly the Bund just missed my 170.65 buy level with a 170.78 low print before rallying to close at 171.30. Today I will raise my buy level to 170.60/171.00 with a 170.25 stop.
Gold Rolling Contract
No Change as I am still a buyer on any dip lower to 1465/1477 with a 1458 stop.
Silver Rolling Contract
I am still flat Silver as the market again traded in a narrow range. I will now raise my buy level to 17.30/17.70 with a 16.95 stop. If I am taken long I will have a T/P level at 17.95.