U.S Indices closed higher as vaccine optimism gathers pace. Moderna announced that it has received another $472 million from the U.S Government’s Biomedical Advanced Research and Development Authority to support the development of the company’s COVID-19 vaccine candidate. The U.S Government has now awarded $6 billion in funding to companies developing vaccines. Meanwhile, Republicans and Democrats will continue to negotiate to get a deal done as soon as possible. European Markets declines as Spain saw Coronavirus infections reach the highest-daily rate since May, causing the U.K and Norway to quarantine travellers from the country. Italy’s Government warned the recently passed EU Recovery Fund would not come quick enough to prevent a liquidity crisis in the autumn, while ECB Vice President de Guindos said most European Banks were strong enough to cover the losses from the virus. Setbacks in the global fight against COVID-19 will probably push the FOMC to say Interest Rates will stay low for longer in tomorrow’s Central Bank Meeting. High Frequency economic indicators are pointing to a slowdown and this will be reflected in the Fed’s continued dovish stance. Elsewhere, Gold jumped to a new all-time record while the US Dollar fell for a sixth consecutive trading session.
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For anyone following my Platinum Service it made 129 points yesterday and is now ahead by 2709 points for July, having made 2580 points in June, 2456 points in May, 4773 points in April, an incredible 9264 points in March, 2223 points in February and 2142 points in January. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1600 points
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The S&P 500 rose 0.75%, to close at a price of 3239.
The Dow Jones closed 115 points higher for a 0.43% gain to close at 26,584.
The NASDAQ 100 rose 1.82%, closing at a price of 10,674.
The Stoxx Europe 600 Index fell 0.3%.
The MSCI Asia Pacific Index increased 0.8%.
This morning the Nikkei closed 0.26% lower at 22,657.
Here is a Summary of the main Changes in F.X. Markets:
The Bloomberg Dollar Spot Index sank 0.9%.
The Euro climbed 0.8% to $1.1746.
The Japanese Yen appreciated 0.7% to 105.40 per dollar.
The yield on 10-year Treasuries increased two basis points to 0.61%.
Germany’s 10-year yield dipped four basis points to -0.49%.
Britain’s 10-year yield fell four basis points to 0.11%.
The Bloomberg Commodity Index rose 0.5%.
West Texas Intermediate crude climbed 0.8% to $41.62 a barrel.
Gold strengthened 1.9% to $1,938.65 an ounce.
This morning on the Economic Front we have the UK CBI Distributive Trades Survey at 11.00 am. This is followed at 2.00 pm by the S&P Case-Shiller Home Price Index. Finally, at 3.00 pm we have Consumer Confidence and the Richmond Fed Manufacturing Index.
September S&P 500
This week sees 189 S&P 500 Index companies report earnings where the hurdle to beat remains low. Rising earnings and dividend estimates make the S&P an increasingly attractive investment especially with the 10-Year treasuries only having a yield of 0.58%. Given the level of stimulus across the globe it is extremely difficult to be short stocks despite the massive unemployment that prevails as the Central Banks have now become the largest Hedge Fund Managers. So far, 128 S&P 500 companies have reported earnings. Roughly 81% have reported positive surprises while 71% have reported positive revenue surprises, with both of these numbers above the five-Year average. This data will continue to support the S&P as long as we do not break and close below 3150. Yesterday the S&P rallied shortly after I posted and I am still flat with the market closing last Thursday’s ‘’Open Gap’’ as expected. I am still flat and I will now raise my sell level slightly to 3260/3275 with a 3289 stop which is just above last week’s rebound high. The S&P has initial support from 3218/3223 where I will be a buyer with a higher 3204 stop.
The Euro made a high at 1.1781 yesterday and in the process stopped me out of my 1.1675 short position at 1.1745. This morning the Euro is opening lower at 1.1725 which is no surprise given the DSI is in single digits after the Euro rallied over 10% off its March 23, low of 1.0635. The Euro has strong support from 1.1535/1.1575 where I will be an aggressive buyer with a 1.1490 stop. Given how overbought the Euro is trading I will continue to be a seller from 1.1775/1.1825 with a 1.1865 stop.
September Dollar Index
My Dollar plan worked well with the market trading lower to my 93.50 buy level before rallying this morning to my revised 93.80 T/P level and I am now flat. I will look to buy the Dollar again from 93.10/93.50 with a 92.75 stop. Given how oversold the Dollar is trading I still do not want to be short the market at this time.
The DAX just missed my 10760 buy level before rallying to trade at 12900 this morning. I will now raise my buy level to 12700/12820 with a 12615 stop.
Just as I posted yesterday morning the FTSE sold off to my 6055 buy level. We traded around this level for the following 15 minutes before the market rallied to my 6082 revised T/P level and I am now flat. The FTSE continues to underperform the other major Indices. Despite this underperformance I would not go short and today I will again look to buy the market from 6030/6070 with a 5985 stop.
Dow Rolling Contract
The Dow continues to hold the key 200 Day Moving Average which comes in at 26235 this morning. Frustratingly the Dow again just missed yesterday’s initial 26360 buy level before finally rallying into the close. I will now raise my buy level slightly to 26220/26440 with a higher 26085 stop. The Dow has resistance from 27150/27350 where I will be a small seller with a 27525 stop.
Normal service resumed for the NASDAQ as the market again outperformed both the Dow and S&P, closing almost 2% higher. Overnight the NASDAQ made a high at 10756 and this move higher saw my 10720 sell level get hit. Subsequently I emailed my Platinum Members at 7.00 am to exit any short position at my revised 10690 T/P level and I am now flat. Today I will be a small seller from 10790/10890 with a 10965 tight stop. I will now raise my buy level to 10500/10600 with a wider 10495 stop.
Late yesterday the Bund traded higher to my 176.75 sell level. As I wanted to be flat overnight, I covered this position at 176.60. This morning the Bund is trading at 176.70. We have strong resistance from 177.05/177.45 where I will be a seller with a 177.81 stop. If I am taken short, I will have a T/P level at 176.70.
Gold Rolling Contract
Gold closed at a new all-time high last night at 1938, eclipsing the 2011 previous high of 1911. Gold bullish sentiment is at extreme levels and any time in the past that we have seen such a high DSI reading the market has reversed and sold off. The weak Dollar has propelled Gold to new highs. Overnight, my Gold plan worked well with the market hitting my 1968 sell level with a 1977 high print before thankfully selling off to my 1951 T/P level and I am now flat. Today I will again look to sell Gold from 1972/1990 with a 2002 stop.
Silver Rolling Contract
My Silver plan did not work well with the market spiking to a new recovery high above 26 overnight. This move higher stopped me out of my 24.10 short position at my revised 24.85 stop and I am now flat. Given the fact that the Daily Sentiment reading for Silver is well above 90%, I will continue to be a seller on rallies. Today, my sell level will be from 25.40/26.00 with a 26.55 stop.