U.S. Equity Markets rallied after the Federal Reserve and five other leading central banks performed a coordinated attempt to boost liquidity in global financial systems by increasing the frequency of “Dollar Swap” programmes from weekly to daily. The Dow led yesterday’s move higher with a gain of 1.20%. The Federal Home Loan Banks system reportedly issued close to $304 billion in debt last week, as regional banks rushed to tap sources of liquidity following major bank failures like Silicon Valley Bank and Credit Suisse. Despite the turmoil, the Federal Reserve is expected to raise interest rates at its next monetary policy meeting on Wednesday – and also signal that it is close to the end of the rate-hike cycle, just like the ECB signalled when it raised rates last Thursday. JP Morgan Chase (JPM) CEO Jamie Dimon is heading talks with other major banking firms about new efforts to support and stabilise First Republic Bank. Within the S&P 500 Index, all 11 sectors finished higher. European Markets closed higher. German PPI growth for February continued to fall year over year, albeit declining less rapidly. This could prompt the central bank to move forward with stronger rate increases. ECB President Christine Lagarde said that price stability and financial stability are not mutually exclusive and that the central bank could achieve both objectives simultaneously. UBS is set to acquire Credit Suisse by the end of the year, rescuing the failing bank in a deal that was overseen with government support. Investors are anticipating further rate hikes later this week from the Bank of England (“BOE”), despite the ongoing crisis in the financial sector following the rescue of Credit Suisse. In Asia, banks left the benchmark lending prime rates unchanged after the central bank lowered reserve ratio requirements late last week. Reserve Bank of Australia Assistant Governor Christopher Kent said the country’s banks are “unquestionably strong” following concerns about global financial-market stability. Chinese President Xi Jinping travelled to Moscow for a three-day visit with Russian President Vladimir Putin, potentially stoking political tensions with the U.S. and European Union. Elsewhere, Oil rose 1.21% while Gold fell 0.3% after a volatile session which saw Gold break $2000 before meeting some strong selling.
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For anyone following my Platinum Service it made 901 points yesterday and is now ahead by 5027 points for March after finishing February with a gain of 3164 points, after closing January with a gain of 4687 points, while finishing December with a gain of 2054 points. November ended with a gain of 4789 points, while finishing October with a record gain of 9619 points, making 6660 points in September, after closing August with a gain of 2228 points, having made 2660 points in July, following a gain of 3371 points in June. The Service made 3651 points in May, after making 762 points in April, following a gain of 5883 points in March. The Platinum Service made an impressive 5324 points in February, after ending January with a gain of 3878 points, more than making up for December’s 932 points loss. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1600 points. I have a YouTube Channel which contains recent interviews I have given This can be viewed by clicking HERE Please subscribe to this for new interview notification
The S&P 500 closed 0.89% higher at a price of 3951
The Dow Jones Industrial Average closed 382 points higher for a 1.20% gain at a price of 32,244.
The NASDAQ 100 closed 0.34% higher at a price of 12,562.
The Stoxx Europe 600 Index closed 0.98% higher.
Yesterday, the MSCI Asia Pacific rose 0.71%.
Yesterday, the Nikkei closed 1.42% lower at a price of 26,945.
The Bloomberg Dollar Spot Index closed 0.50% lower.
The Euro closed 0.4% higher at $1.0720.
The British Pound closed 0.8% higher at 1.2275.
The Japanese Yen rose 0.2% closing at $131.45.
Germany’s 10-year yield closed 2 basis points higher at 2.13%.
Britain’s 10-year yield closed 3 basis points higher at 3.31%.
U.S.10 Year Treasury closed 7 basis points higher at 3.48%.
West Texas Intermediate crude closed 1.21% higher at $67.55 a barrel.
Gold closed 0.30% lower at $1977.10 an ounce.
This morning on the Economic Front we have U.K. Public Sector Net Borrowing for February at 7.00 am. Next, we have German ZEW Survey at 10.00 am. At the same time we have Euro-Zone Construction Output and ZEW Survey, followed by a speech from ECB President Lagarde at 12.30 pm. Finally, we have U.S. Existing Home Sales at 2.00 pm.
Cash S&P 500
At this stage everyone knows the big news event from Sunday night. Credit Suisse went under getting bought by UBS with the Swiss National Bank offering a staggering $100bn in liquidity and another $9bn in guarantees thrown in for good measure by the Swiss Government making this another bailout that of course is not called a bailout. But it is. Shareholders got no vote while at the same time got wiped out along with Bond holders. The mechanics do not matter, what matters is Switzerland’s second largest bank is no more. This is the fourth bank on both sides of the Atlantic to fail in two weeks. Six central banks announcing coordinated action ahead of the Futures open on Sunday night adding to the panic. Thousands will lose their jobs but the Central Banks are only interested in providing liquidity or QE as I prefer to call it. Rate hikes are a thing of the past as they pump liquidity into the system to try and bring volatility under control. This will be achieved in the short-term and then we will see. There is very chance that the S&P now rallies to 4100/4200 if we can negotiate tomorrow’s FOMC Meeting and Powell press conference. All I have heard of since the October lows is not to fight the Fed that will drive equity markets lower. However, the opposite has happened and for one reason only ‘’Liquidity’’. Every single time bank reserves increase the S&P rallies. With the Fed’s balance sheet now increasing it is obvious that the market will rally over the coming weeks. Yesterday my S&P plan worked well as the market traded the whole of my buy range for a 3880 average long position before rallying to my 3912 T/P level and I am now flat. Today, I will again be a buyer from 3905/3925 with a 3889 ‘’Closing Stop’’. With the S&P closing over its 200 Day Moving Average (3936) the Fed achieved its goal. Ahead of tomorrow I am reluctant to chase the market preferring to leave my buy level as above. If I am taken long I will have a T/P level at 3951.
I am glad I stuck to my long 106.70 Euro position as the market finally rose to my 1.0720 T/P level and I am now flat. The Euro has support from 1.0580/1.0660 where I will again be an aggressive buyer with a 1.0515 ‘’Closing Stop’’. I still do not want to be short the Euro at this time.
June Dollar Index
I am still flat the Dollar. I will now lower my sell level to 103.95/104.65 with a lower 105.15 ‘’Closing Stop’’.
My DAX plan worked well. The market traded the whole of my sell range for a 14630 average long position before rallying to my 14760 T/P level and I am now flat. Given the backdrop I will continue to be a buyer of dips across all equity markets. The DAX has support from 14680/14780 where I will be a buyer with a 14595 ‘’Closing Stop’’.
The volatility in the FTSE has hit year-to date highs over the past week. With the FTSE trading outside its Daily Bollinger Band, history tells us that this scenario does not last long. Yesterday the FTSE had a nice 220 point rally off its morning 7200 low print, helping me to exit my 7350 average long position at my 7410 T/P level and I am now flat. Today, I will again be a buyer from 7270/7350 with a 7175 ‘’Closing Stop’’.
Dow Rolling Contract
My Dow plan worked well. The idea of buying dips aggressively has paid nice dividends for all of March so far. Yesterday the Dow hit my 31600 buy level before rallying to my 31870 T/P level and I am now flat. The Dow made an afternoon high at 32280 before having a small sell-off into the close. Despite the aggressiveness of yesterday’s rally off the lows the Bank Index only closed higher by 0.75%. As I have said over the past week ‘’there is never one cockroach’’. In my opinion there are several banks in trouble on both sides of the Atlantic. This means that Central Banks will continue to pump liquidity into the system. If you go back to 2019 we had no earnings, the stock market rose 30% on QE. What the Fed have done is effectively QE despite them saying otherwise. The Dow has support from 31700/31950 where I will be a small buyer with a 31495 ‘’Closing Stop’’. I still do not want to be short the Dow at this time.
Cash NASDAQ 100
I am still flat as the NDX just missed my 12350 initial buy level before rallying over 200 points. Ahead of the FOMC tomorrow, I will not chase the NDX higher continuing to being a buy on any dip lower to 12220/12370 with the same 11975 wider ‘’Closing Stop’’. I still do not want to be short the NDX at this time.
My Bund plan worked well as the market traded the whole of my sell range for a 139.55 average short position. The Bund made a high at 140.25 before falling 230 points. This move lower enabled me to cover this position at my revised 138.84 T/P level and I am now flat. Today, I will again be a seller from 139.60/140.40 with the same 141.05 ‘’Closing Stop’’. I still do not want to be long the Bund at this time.
Gold Rolling Contract
Incredibly unlucky as Gold hit a morning high at 2009 missing my 2010 initial sell level before falling $50. I am still flat. Gold has support from 1915/1930 where I will be a buyer with a 1899 ‘’Closing Stop’’. We have resistance from 2010/2030 where I will continue to be a small seller with a 2041 ‘’Closing Stop’’.
Silver Rolling Contract
No Change. Despite Gold trading in a wide range yesterday, Silver was sedate in comparison. I am happy with the price action as the market tries to build on Friday’s 5% gain. My patience is finally starting to pay off with my long 23.10 Silver position from last month. This morning, Silver is trading unchanged at 22.60 as I go to press. I will leave my stop on this position to 21.45. I will continue with my strategy of no T/P level. If this view changes I will be back with a new update for my Platinum Members.