U.S. Equity Markets sold off sharply yesterday afternoon, finishing the day lower, led by the NASDAQ which ended the session with a loss of 2.63%. This move lower saw the VIX surge, closing higher by 17.80% at 19.66. Markets were mixed for most of the day ahead of economic data later this week – Retail Sales and Inflation for April. President Joe Biden will also meet with Congressional leaders later this week to discuss an infrastructure compromise. Ahead of the meeting, Senate Minority Leader Mitch McConnell (R-KY) said that any approved infrastructure plan should not cost more than $800 billion. McConnell said that this price tag would cover what many people consider to be “actual” infrastructure investments. Reopening optimism continued to boost value and cyclical names, leading to outperformance for the Dow Jones Industrial Average. On the other hand, the rotation out of tech weighed on the tech-heavy Nasdaq Index. This rotation accelerated throughout the day, dragging the Nasdaq and S&P 500 sharply lower. European Markets again closed weak despite strong Economic Data. Sentix’s Euro-Zone Economic Sentiment surged in May, hitting its highest level since March 2018, as expectations for future activity continue to rebound. Italy’s Foreign Minister Luigi Di Maio said the country may start lifting COVID-19 quarantine restrictions for foreign travellers beginning in mid-May. European Central Bank Governing Council Member Olli Rehn said it should adopt a Federal Reserve-like approach to inflation, allowing it to overshoot the current 2% target for some time. This could have sparked concerns that inflation was going to pick up in the near term. In Asia, Global growth optimism rose on speculation. Disappointing U.S. employment data means central bank support will remain in place and as European countries voiced support for removing social-distancing restrictions. Taiwan’s export data for April were stronger than expected, rising versus March, experiencing its fastest growth since 2010, as demand for semiconductors continued to accelerate. National Australia Bank’s business confidence and conditions indexes for April hit new highs as companies were increasingly optimistic about demand, employment, and profitability. Elsewhere, Bitcoin fell over 7% on little news while Oil reversed earlier gains to close lower by 0.11%.
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The S&P 500 closed 1.04% lower at a price of 4188.
The Dow Jones Industrial Average closed 35 points lower for a 0.10% loss at a price of 34,742.
The NASDAQ 100 closed 2.63% lower at a price of 13,359.
The Stoxx Europe 600 Index closed 0.3% lower.
Yesterday, the MSCI Asia Pacific Index fell 0.2%.
Yesterday, the Nikkei closed 0.55% higher at a price of 29,518.
The Bloomberg Dollar Spot Index closed 0.3% higher
The Euro closed 0.3% lower at $1.2130.
The British Pound closed 1.1% higher at 1.4125.
The Japanese Yen rose 0.1%, closing at $108.75.
Germany’s 10-year yield closed one basis points higher at -0.20%.
Britain’s 10-year yield closed two basis points higher at 0.79%.
US 10 Year Treasury closed three basis points higher at 1.60%.
West Texas Intermediate crude closed 0.11% lower at $65.59 a barrel.
Gold closed 0.15% higher at $1,836.10 an ounce.
This morning on the Economic Front we have German Wholesale Prices at 7.00 am. This is followed by the Euro-Zone and German ZEW Survey at 10.00 am. At 11.00 am we have the NFIB Business Optimism Index and the JOLTS Job Openings at 3.00 pm. Finally, we have speeches from Fed Members Williams and Brainard at 3.30 pm and 5.00 pm respectively.
June S&P 500
This challenging market does not get any easier with the NASDAQ falling 400 points from its morning high, the Dow rallying almost 300 points to a new all-time high while the S&P is stuck between the two Indexes before getting slammed into the close. Personally, these last six weeks have been really tough to trade. Just when it looks like we will finally have a meaningful correction, the Fed steps in any buys the market. However, the extent of yesterday’s late sell-off is a worry especially as I am now long at an average price of 4188. Last Tuesday’s 4140 low print is now key support as a break and close below here will finally see and acceleration to the downside. I will leave my stop at a ‘’Closing Price’’ of 4169. I will be a strong buyer again from 4128/4143 with a 4115 stop. I will now lower my T/P level on my long position to 4195 and if any of the above levels are executed I will be back with a new update for my Platinum Members.
I am still flat as I continue to be a small buyer on any further dip to 1.2050/1.2090 with a lower 1.1995 stop. I will now lower my sell level to 1.2180/1.2220 with a 1.2255 stop.
June Dollar Index
No Change. I am still long at an average rate of 90.35 with the same 90.60 T/P level. I will also leave my stop unchanged at 89.75.
The DAX opened on its highs, traded sideways for most of the session before falling 200 points into the New York close. I a still flat and I will now lower my sell level to 15410/15480 with a lower 15555 stop. I still do not want to be long the DAX at this time.
The FTSE just missed my 7175 sell level before getting hit hard after Sterling bounced 1%. I will now lower my sell level to 7100/7150 with a 7205 lower stop. The FTSE has short-term support from 6910/6960 where I will be a small buyer with a 6865 stop.
Dow Rolling Contract
One of the most incredible negative divergences between the NASDAQ and the Dow occurred yesterday on a day that the VIX exploded by 17.80%. The Dow made a new all-time high at 35090 before falling 400 points in the last two hours of trading. This move higher saw my second 34940 sell level executed for a 34850 average short position before the market hit my 34800 revised T/P level before the close and I am still flat. The RSI peaked at 74, before falling slight to close at a still overbought 69.50. The Dow has strong support from 34250/34410 and I will now lower my buy level to this area with a 34125 tight ‘’Closing Stop’’. The Dow has resistance from 34970/35120 where I will again be a seller with a 35225 ‘’Closing Stop’’.
Thankfully, we had no buy level in the NASDAQ yesterday as the market got hammered by 400 points to close with a loss of 2.63% and I am still flat. The lower close saw the NASDAQ break below its 50 Day Moving Average (13360) but only by a few points. Today’s session will be key as to whether we see some follow through or to the buy the dippers turn up again. The NASDAQ has strong support from 13170/13090 where I will be an aggressive buyer with a 12975 ‘’Closing Stop’’. Given how close we are to long-term support I do not want to be short the market at this time.
No Change. I am still a buyer from 169.30/169.70 with the same 168.85 stop.
Gold Rolling Contract
No Change. My only interest in buying Gold is still on a further dip lower to 1788/1802 with the same 1779 stop.
Silver Rolling Contract
Earlier this morning Silver sold off to my 27.10 before having a small bounce and I have now exited this long position here at 27.28 and I am now flat. I will now look to buy the market again from 26.00/26.60 with a lower 25.55 stop. If I am taken long I will have a T/P level at 26.90.