U.S. Equity Markets rose in the morning before selling off into the close, finishing the day lower, led by Dow closing with a loss of 0.72%. Markets rose in the early afternoon on positive headlines about COVID-19 treatments. Merck (MRK) officially filed for an emergency use authorisation for its COVID-19 treatment pill. And AstraZeneca (AZN) said that its COVID-19 treatment decreased the risk of severe cases and death by as much as 50%. On China, U.S. Trade Representative Katherine Tai held a call with Chinese Vice Premier Liu He, with both sides agreeing that they should strengthen bilateral cooperation. Later in the day, markets sold off on little news. Investors are still looking ahead to earnings season, with the bulk of quarterly reports beginning tomorrow. European Markets closed lower. There were mixed comments on inflation from central banks. European Central Bank Governing Council member Francois Villeroy de Galhau said he expects inflation to drop below 2% by the end of next year. Bank of England Governor Andrew Bailey said he is concerned that inflation may continue to run above the Central Bank’s target range. Iran’s Oil Minister Javad Owji said the country plans to sell oil and gas in return for goods or investment in its oil industry. In Asia, Japan’s Prime Minister Fumio Kishida said he is not interested in changing the tax rate for dividends and capital gains, easing investor fears. China’s President Xi Jinping called for the reunification of Taiwan with the mainland, saying accomplishing this peacefully is in the best interests of the island’s people. The Bank of Korea is expected to leave interest rates unchanged when updating monetary policy on Tuesday, but it is expected to announce a hike in November. Australia’s largest city, Sydney, ended a 107-day COVID-19 lockdown, allowing fully vaccinated residents to visit retail stores and restaurants once more. Elsewhere, Oil rose 1.40% on reports that OPEC’s production was still below its target, implying lower supply, while Bitcoin surged over 6% on little news.
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The S&P 500 closed 0.69% lower at a price of 4361.
The Dow Jones Industrial Average closed 250 points lower for a 0.72% loss at a price of 34,496.
The NASDAQ 100 closed 0.72% lower at a price of 14,713.
The Stoxx Europe 600 Index closed 0.6% lower.
Yesterday, the MSCI Asia Pacific Index rose 0.6%.
Yesterday, the Nikkei closed 1.60% higher at a price of 28,498.
The Bloomberg Dollar Spot Index closed 0.3% higher.
The Euro closed 0.1% lower at $1.1553.
The British Pound closed 0.2% lower at 1.3595.
The Japanese Yen fell 0.8%, closing at $113.30.
Germany’s 10-year yield closed four points higher at -0.11%.
Britain’s 10-year yield closed four basis points higher at 1.20%.
US 10 Year Treasury closed two basis points higher at 1.61%.
West Texas Intermediate crude closed 1.40% higher at $80.99 a barrel.
Gold closed 0.08% lower at $1,752.10 an ounce.
This morning on the Economic Front we have German Wholesale Prices at 7.00 am and U.K. Unemployment and Average Earnings at 9.30 am. This is followed by the Euro-Zone and German ZEW Survey at 10.00 am. Finally, we have the U.S. NFIB Business Optimism Index at 11.00 am and the JOLTS Job Openings at 3.00 pm.
December S&P 500
An incredibly volatile trading session resulting in the VIX closing 6.55% higher. The S&P rallied 50 Handles shortly after I posted early yesterday morning before reversing this move lower into the close after sellers emerged at the 50-Day Moving Average. This move lower saw the whole of my buy range filled for a now 4339 average long position. We continue to see buying and selling in the S&P as the probabilities shift in a market that broken trends but has not produced through on the downside in a major way yet. Fact is both the ECB and Fed keep printing record amounts which in my view is keeping the downside in markets in check for now while all the talk about tapering is just ‘’talk’’. Inflation surprises keep accelerating and growth is collapsing as a result. Meanwhile the Central Banks keep printing into an inflationary environment which is just madness. I will now lower my T/P level on this long position to 4348 while leaving my 4321 ”Closing Stop” unchanged.. We have support below here from 4290/4305 where I will again be a buyer with a 4295 ‘’Closing Stop’’. If I am taken long a second time I will have a T/P level at 4322.
No Change. I am still long at a price of 1.1590 with the same 1.1525 stop and T/P level at 1.1615.
December Dollar Index
I am still flat and given the weakness in the Japanese Yen, I will now raise my Dollar sell level to 94.65/95.05 with a higher 95.37 stop. If I am taken short I will have a T/P level at 94.40.
The DAX continues to trade heavy and I am still flat. Today, I will again lower my buy level to 14830/14910 with a tight 14765 stop.
The FTSE again traded in a narrow range and I am still flat. The FTSE has strong support from 6930/6980 where I will be a buyer with a 6875 stop. I still do not want to be short the FTSE at this time.
Dow Rolling Contract
The Dow tried to rally above Thursday’s 34975 high print before selling off 500 points from its afternoon high into the close. Unfortunately, after the Dow hit my 34950 sell level, I covered this position way too early at a price of 34875 and I am still flat. I will now lower my Dow buy level to 34080/34230 with a lower 34955 ‘’Closing Stop’’.
Just like the Dow above I chickened out of a nice NASDAQ short position, by covering my 14890 short position at 14867 and I am still flat. As I go to press the NASDAQ is trading 200 points lower at 14680. We have strong support from 14460/14540 where I will be a buyer with a 14375 ‘’Closing Stop’’.
My Bund plan worked well with the market trading lower to my 168.60 buy level before rallying to my 168.81 revised T/P level and I am now flat. Bund yields have rise over 50 basis points over the past few weeks which will make the ECB extremely uncomfortable given the amount of bonds that they own. The Bund is oversold, has strong support from 167.70/168.20 where I will be a buyer with a 167.25 stop. If I am taken long I will have a T/P level at 168.55.
Gold Rolling Contract
No Change. I am still a buyer from 1716/1733 with the same 1703 stop.
Silver Rolling Contract
I am still flat and today I will lower my buy level to 21.55/22.15 with a lower 20.95 stop.