U.S Equity Markets closed higher for the fifth trading session out of the last six, led by the NASDAQ 100 which surged to close with a gain of 3.09%. Over the weekend, Republicans and Democrats voiced displeasure with the White House’s new $1.8 trillion Coronavirus-Stimulus offer, showing how difficult an agreement will be before the election. The presidential race remained in headlines. Former Vice President Joe Biden remained ahead in national polls, and Wall Street continued to get behind the idea that a Biden win means more fiscal stimulus. Now, eyes turn to this afternoon, when earnings season formally kicks off. While analysts still expect earnings to fall on a year-over-year basis, they have raised their expectations throughout the Quarter. This indicates that things are not as bad as previously thought for many companies. Delta Air Lines (DAL), Johnson & Johnson (JNJ), and JPMorgan Chase (JPM) are the main companies reporting today. Meanwhile European Indices also closed higher. The French government said it would like a post-Brexit Trade Agreement outline reached by the end of this month, without striking a deal for the sake of compromise. The European Union’s chief Brexit negotiator Michel Barnier will continue talks with his British counterpart David Frost today, as the two sides remain committed to finding a trade deal. The British government announced a three-tier system of Coronavirus restriction measures, focusing on local efforts, in an attempt to avoid another national-economic lockdown. The EU is also reportedly drawing up a list of restrictions against 20 large technology companies, aimed at limiting their power. Elsewhere, Oil fell 2.64%, as U.S. producers resumed production after Hurricane Delta, while Gold close unchanged as the Dollar rose.
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The S&P 500 closed 1.64% higher at a price of 3534.
The Dow Jones Industrial Average closed 250 points higher for a 0.88% gain at a price of 28,837.
The NASDAQ 100 closed 3.09% higher at a price of 12,088.
The Stoxx Europe 600 Index closed 0.8% higher.
The MSCI Asia Pacific Index rose 0.2%%.
This morning the Nikkei closed 0.18% higher at a price of 23,601.
The Bloomberg Dollar Spot Index closed 0.1% higher.
The Euro closed 0.2% lower at $1.1808.
The British Pound closed 0.1% higher at $1.3052.
The Japanese Yen closed 0.1% higher at 105.35 per dollar.
The yield on 10-year Treasuries closed one basis point lower at 0.77%.
Germany’s 10-year yield closed one basis point lower at -0.55%.
Britain’s 10-year yield closed unchanged at 0.27%.
The Bloomberg Commodity Index closed 0.1% lower.
West Texas Intermediate closed 2.64% lower at $39.43 a barrel.
Gold closed unchanged at $1924 an ounce.
This morning on the Economic Front we already had the release of German September Final CPI which came in as expected at -0.2%. UK Jobless For September was also released printing 28K versus 73K last month. At 10.00 am we have the German and Euro-Zone ZEW Survey. This is followed at 11.00 am by the U.S NFIB Business Optimism Index. Finally, at 1.30 pm we have U.S CPI.
December S&P 500
The S&P has now rallied over 200 Handles since last Tuesday’s Downside Key Day Reversal as yet again all shorts including me got slammed. This is one of the largest moves in points terms in just four trading sessions as yet again the S&P gapped higher at the ‘’Open’’ to leave its fourth consecutive ‘’Open Gap’’. Shortly after I posted yesterday morning the S&P hit my 3490 sell level before selling off to my 3485 revised T/P level. Unfortunately, I emailed my Platinum Members to go short again at an average price of 3502 before being stopped out of this trade at 3525 and I am still flat. The NASDAQ has led the market higher by rallying over 13% in the last two weeks as we wait for Apple’s introduction of its latest iPhone this afternoon. Yet internally the Market struggled with the McClellan Oscillator only closing six points higher at +174 while the VIX also closed higher on the day. Today, I will again be a seller of the S&P from 3530/3545 with a 3561 stop. The S&P has initial support from 3467/3482 where I will be a small buyer with a 3455 tight stop.
It is surprising that the Dollar closed higher yesterday despite the large gains made in the U.S Indices and may be a warning sign that stocks are topping. I am still flat the Euro and today I will lower my buy level to 1.1700/1.1740 with a lower 1.1665 stop. I will also lower my sell level to 1.1845/1.1885 with a 1.1931 stop.
December Dollar Index
No Change as I am still long from last Friday at 93.10 with the same 93.40 T/P level. I will continue to add to this trade on any dip lower to 92.70 with the same 92.35 stop. If any of the above levels are hit I will be back with a new update for my Platinum Members.
The DAX just missed my 13010 buy level with a 13050 low print and I am still flat. I am not going to chase the market higher and I will now lower my buy level to 12930/12990 with the same 12865 stop.
The continued strength in Sterling is weighing on the FTSE with the market selling off to a low of 5937, just missing my initial 5930 buy level and I am still flat. This morning the FTSE is opening lower at 5970. I am not going to chase the market higher and today I will lower my buy level to 5870/5915 with the same 5835 tight stop.
Dow Rolling Contract
Having lost points in short both the S&P and NASDAQ, I waited to sell the Dow which I did at a price of 28900. The market is selling off as I go to press and I have now exited this trade here at 28730. Today, I will again be a seller from 28900/29100 with a 29255 stop.
My NASDAQ plan did not work well at all yesterday as shortly after I posted, the market rallied to my second sell level at 11835 for a 11785 average position before stopping me out of this trade at 11905, Subsequently I emailed my Platinum Members to go short again at 11981 before again being stopped near the high of the day at 12105 and I am still flat. The NASDAQ has now rallied over 13% in two weeks and is severely overbought as the market looks to make new all-time highs. Given how overbought the NASDAQ is I will again be a seller from 12130/12230 with a 12305 stop. If I am taken short I will have a T/P level at 12040.
No Change as I am still a buyer from 174.05/174.45 with the same 173.75 stop.
Gold Rolling Contract
Overnight, Gold traded lower to my 1910 buy level before rallying to my 1915 revised T/P level and I am still flat. Gold has support from 1883/1895 where I will be a small buyer with a 1871 stop.
Silver Rolling Contract
My Silver plan worked well with the market trading lower to my 24.80 buy level before rallying to my 25.15 T/P level and I am still flat. Today I will be a buyer from 23.80/24.30 with a 23.25 stop.