U.S. Equity Markets jumped with Election Day behind us, finishing the day higher, led by the NASDAQ 100 which closed with a huge 4.41% gain. Growth stocks were back in investors’ good graces. With control of both the House of Representatives and Senate likely unchanged after Tuesday’s election, investors are anticipating a divided Congress will get nothing done in terms of technology company regulation. In addition, they also anticipate tax hikes will be less likely. The election also boosted some mega-trends, with more states legalising recreational cannabis and sports betting. ADP Employment data missed estimates, potentially signalling a slower recovery in the job market. But it is worth noting that ADP data have not told the full story of job recovery in recent months. ISM’s Non-Manufacturing Index missed estimates, while Markit’s services PMI beat expectations. European Markets also closed higher after a volatile trading session. Trade negotiators from the European Union and Britain were said to have made little headway in resolving their differences to complete a post-Brexit trade agreement. Markit Euro-Zone’s Final Composite Purchasing Managers’ Index (“PMI”) data for October were stronger than the initial reading, rising back into expansion territory. The Netherlands extended COVID-19 restrictions, including a ban of public meetings, as the country looks to slow the spread of the virus. The German government has instructed health officials to prepare mass inoculation sites for a Coronavirus vaccine, which is expected in early 2021. Elsewhere, Oil closed 3.4% higher on a surprise drawdown in U.S. Crude Inventories, while fell 0.4% as a split Congress dampened the outlook for another large stimulus package. After the close it was announced that Joe Biden has won Michigan, after a much closer than expected election, looks on course to get the 270 Electoral votes necessary to be the next President.
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The S&P 500 closed 2.22% higher at a price of 3443.
The Dow Jones Industrial Average closed 367 points higher for a 1.47% gain at a price of 27,847.
The NASDAQ 100 closed 4.41% higher at a price of 11,777.
The Stoxx Europe 600 Index closed 1.4% higher.
The MSCI Asia Pacific Index fell 0.5%%.
Yesterday the Nikkei closed 1.72% higher at a price of 23,695.
The Bloomberg Dollar Spot Index closed 0.3% lower.
The Euro closed 0.2% higher at $1.1721.
The British Pound closed 0.7% lower at $1.2947.
The Japanese Yen closed unchanged at 104.51 per dollar.
The yield on 10-year Treasuries closed twelve basis points lower at 0.78%.
Germany’s 10-year yield closed two basis points lower at -0.64%.
Britain’s 10-year yield closed eight basis points lower at 0.21%.
The Bloomberg Commodity Index closed 1.2% higher.
West Texas Intermediate closed 4.1% higher at $39.20 a barrel.
Gold closed 0.5% lower at $1895 an ounce.
This morning on the Economic Front we have German Factory Orders at 7.00 am. This is followed by the Bank of England Monetary Policy Report at 8.00 am and UK Markit Construction PMI at 9.30 am. At 10.00 am we have Euro-Zone Retail Sales. Finally, we have U.S Weekly Jobless Claims, Non-Farm Productivity and Unit Labour Costs at 1.30 pm.
December S&P 500
Incredible two-way volatility since I posted 24 hours ago with the S&P trading lower to my 3320 buy level before rallying to my 3460 average sell level. An incredible turnaround in sentiment as last week’s sell-off was reversed. This move higher saw my 3336 T/P level filled while my 3446 revised T/P level was executed soon after I went short the S&P and I am now flat. The close over 3430 is bullish and today I will be a small buyer from 3398/3416 with a 3387 stop. The S&P has resistance from 3490/3510 where I will be a seller with a 3527 ‘’Closing Stop’’.
The Euro fell shy of my 1.1625 buy level by a few points before rallying over 100 points and I am still flat. I will now raise my buy level to 1.1625/1.1665 with a 1.1585 stop.
December Dollar Index.
The Dollar traded the whole of my buy range for a 93.40 average long position. I am still long with a now lower 93.71 T/P level. I will leave my 92.85 stop unchanged for now.
Shortly after the European Markets opened the DAX was trading in my buy range, enabling me to go long at a price of 11810. Subsequently the DAX surged to close at 12250, hitting my 11920 T/P level and I am now flat. The DAX has now rallied 900 points since last week’s low. Remember Central Banks will not allow a crash at this time in either Bond Yields or stocks. Just when the 10 Year Treasury looked like it was going to test 1%, we saw a huge 12 basis point fall in Yields, closing at 78 basis points. Today I will be a small buyer in the DAX from 112050/12130 with a tight 11975 stop.
My FTSE plan worked well with the market trading lower to my 5660 buy level before rallying to my 5735 T/P level and I am now flat. The FTSE is trading higher at 5840 as I go to press. Today, I will be a buyer from 5720/5770 with a tight 5685 stop. If I am taken long I will have a T/P level at 5815.
Dow Rolling Contract
Thankfully, I had a ‘’Closing Stop’’ at 28225 in my 27950 average short position, as the Dow made an intra-day high at 28300 before falling 450 points into close. As I wanted to be flat overnight I covered this short-position for a break-even. Despite the late sell-off, the close over 27750 is bullish. I will now be a small buyer from 27480/27680 with a 27355 stop. The Dow has resistance at 28300 and I will be a small seller from 28250/28450 with a 28625 stop.
The BUND opened at my 176.60 sell level before selling-off to my 176.10 T/P level and I am now flat. The BUND has resistance from 176.80/177.30 where I will again be a seller with a 177.71 stop. If I am taken short I will have a T/P level at 176.35.
Gold Rolling Contract
No Change as I am still a buyer from 1850/1865 with the same 1839 stop.
Silver Rolling Contract
My latest 23.50 long position worked well as the market finally rallied to my 23.95 T/P level and I am now flat. Today, I will again be a buyer from 22.80/23.40 with a 22.35 tight stop. If I am taken long I will have a T/P level at 23.85.