U.S. Equities closed at new records amid optimism over China trade relations and a fresh wave of merger and acquisition activity. The US Dollar strengthened. The S&P 500, Dow Jones Industrial Average and Nasdaq Composite Indexes reached all-time highs after China said over the weekend that it will tighten intellectual property rules, a move aimed at boosting the chances of a trade deal between the two largest economies. Tech shares led the gains. Charles Schwab Corp. agreed to buy TD Ameritrade Holding Corp., while LVMH purchased U.S. jeweller Tiffany & Co. Trade momentum rose in September for the first time in four months, according to the CPB’s World Trade Monitor. The latest three-month figures offer a little upbeat news about global commerce at a time when the end-game for a “phase one” U.S.-China deal remains murky. Elsewhere, China was planning a record sale of sovereign bonds in dollars, with a potential $6 billion offering, according to people familiar with the discussions. West Texas-grade Oil Futures drifted higher. Bitcoin dropped as much as 11% before paring the decline.
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While doubts about the rally remain and haven investments such as bonds seem well-supported, stocks globally are approaching a third month of gains. The S&P 500 Index is building on an advance from Friday, when President Donald Trump said he was “very close” to a trade pact with Chinese President Xi Jinping, even as Treasuries hold on to most of their two-week surge. The Stoxx Europe 600 Index advanced, with all 19 industry sectors closing in the green. Equities climbed across Asia, led by those in Hong Kong, where local elections brought a landslide victory to pro-democracy candidates.
The S&P 500 Index advanced 0.7% to close at a new record high of 3133.
The Dow Jones Industrial Average also closed 0.7% higher at 28,059, the highest on record.
The NASDAQ Composite Index surged 1.3% to 8,632, the highest on record with the largest jump in more than six weeks.
The Stoxx Europe 600 Index climbed 0.4%.
The MSCI Asia Pacific Index increased 0.7%.
Here is a summary of the main Changes in F.X. Markets:
The Bloomberg Dollar Spot Index was little changed.
The Euro fell 0.1% to $1.1011.
The British Pound jumped 0.5% to $1.2902, the first advance in a week.
The Japanese Yen fell 0.3% to 108.94 per dollar, the weakest in almost two weeks.
The yield on 10-year Treasuries dipped one basis point to 1.76%.
Germany’s 10-year yield climbed one basis point to -0.35%.
Britain’s 10-year yield fell one basis points to 0.69%, the lowest in more than three weeks.
West Texas Intermediate crude advanced 0.4% to $58.00 a barrel.
Gold slipped 0.5% to $1,454.95 an ounce.
This morning on the Economic Front we already had the release of German GFK Consumer Confidence for December which came in at 9.7 versus 9.6 expected. The ECB’S Mersch, De Guindos and Lane are all speaking between 8.15 am and 9.15 am. At 1.30 pm we have the U.S. Trade Balance and Wholesale Inventories, followed at 3.00 pm by Consumer Confidence, New Home Sales and the Richmond Fed Manufacturing Index. Finally, at 6.00 pm we have a speech by the Fed’s Brainard.
December S&P 500
The S&P rallied to a new high yesterday, both intra-day and close. The S&P 600 Small Cap Index closed higher by 2.4% for a new 13- month extreme as Breath finally turned positive with the McClellan Oscillator closing at +6. This move higher saw the S&P hit my 3130 sell level before rallying further to my second sell level at 3142 overnight for a 3136 average short-position. This morning I emailed my Platinum Members to exit this short position at 3133 and I am now flat. Measures of sentiment and momentum, such as the Put/Call ratio and the percentage of new highs relative to the total of highs and lows, continue to indicate a late trend advance. The VIX closed at 11.87, which is the lowest close since October 3, 2018. This was the day the S&P made a new high before falling almost 20% into its December 26 low print at 2230. The S&P has strong resistance from 3145/3158 and I will be a seller in this area with a 3165 tight stop. I will also move my buy level higher to 3105/3115 with a 3096 stop.
I am still long the Euro at 1.1020 from late Friday. I will now lower my T/P level on this position to 1.1025. Meanwhile I will continue to add to this trade at 1.0980 with the same 1.0945 stop. If any of the above levels are hit I will be back with a new update for my Platinum Members.
December Dollar index
As I did not want to have more than two-open positions overnight I emailed my platinum Members just before the New York close to exit any 98.25 short position at 98.20 and I am still flat. The Dollar has strong resistance from 98.50/98.90 and I will be a seller in this area with a 99.35 stop.
The DAX is struggling to follow the US Indices higher and I am still flat. Today I will leave my 13070/13140 buy level unchanged with the same 12995 wider stop.
The FTSE is overbought after surging over the past three sessions and I am still flat. I am not going to chase this market higher and I will also leave my 7275/7315 buy level unchanged with the same 7240 stop. The FTSE has strong resistance from 7440/7480 and I will be a seller on any rally to this area with a 7515 tight stop.
Dow Rolling Contract
My Dow plan worked well as the market trading higher overnight to my 28120 sell level with a print of 28170 before selling off to my revised 28070 T/P level and I am now flat. Today I will again look to sell the Dow on any further rally to 28210/28350 with a 28430 stop. The Dow has short-term support at last Wednesday’s 27685 low and I will now look to buy the market from 27700/27850 with a 27610 stop.
I am still flat the NASDAQ which surged to close at new all-time highs yesterday. The NASDAQ is also overbought with resistance from 8410/8470 where I will be a small seller with a 8510 stop.
The BUND traded in a narrow range yesterday and I am still flat. I will leave my 170.20/170.60 buy range unchanged with the same 169.83 stop.
Gold Rolling Contract
Gold continues to trade heavy and I am still flat. Today I will lower my buy level slightly to 1435/1443 with a 1428 stop.
Silver Rolling Contract
No Change as I am still a buyer on any dip lower to 16.35/16.75 with the same 15.95 stop. If I am taken long I will have a T/P level at 16.95.