U.S. Equity Markets fell on concern over global trade risks and disappointing Factory data. The US Dollar and Treasuries declined. The S&P 500 Index slumped on renewed concern the U.S. will slap fresh tariffs on Chinese goods and after President Donald Trump reinstated levies on steel and aluminium from Argentina and Brazil. The risk-off mood spread to Europe, where shares got dragged to the biggest drop in two months. The greenback slid against most major peers, while Treasury 10-year yields had the largest increase in more than three weeks. The latest developments on trade overshadowed hope that the world’s two biggest economies were close to signing the first part of a trade deal. Meantime, an unexpected decline in U.S. manufacturing showed the sector lacked momentum in an environment of corporate investment cutbacks, subdued global demand and a still-simmering trade war. The American manufacturing miss countered signs of recovery in China and Europe. It also revived concern about the U.S. economy and could reignite bets on further Federal Reserve easing, as yesterday afternoon President Trump again called on the Fed to loosen Monetary Policy. Elsewhere, oil rebounded from the biggest weekly loss since October on speculation OPEC+ could defy expectations by deepening production cuts.
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For anyone following my Platinum Service it ended the first session of December flat, having made 780 points in November, 1649 points in October, 1620 points in September, 2387 points in August, 1153 points in July, 1346 points in June,1722 points in May, 955 points in April and 1027 points in March. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1600 points
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There is a narrative problem in the manufacturing space and the narrative problem obviously stems from trade. Until you actually can sign this deal, I think that manufacturing will remain under pressure. Traders also monitored the latest on retail after Black Friday hit a record $7.4 billion in U.S. online sales. American shoppers are on track to spend an estimated $9.4 billion on Cyber Monday — a record — boosting an already robust holiday shopping season. Yet a gauge of retailers in the S&P 500 dropped on Monday, joining broader market losses.
The S&P 500 slid 0.9% to 3,114, the largest decrease in almost eight weeks.
The Dow Jones Industrial Average fell 268 points to close at a price of 27,783.
The Stoxx Europe 600 Index sank 1.6%.
The MSCI Asia Pacific Index jumped 0.7%.
Here is a summary of the main Changes in F.X.Markets:
The Bloomberg Dollar Spot Index fell 0.3%.
The Euro climbed 0.6% to $1.1083.
The Japanese Yen rose 0.5% to 108.95 per dollar.
The yield on 10-year Treasuries climbed five basis points to 1.82%.
Germany’s 10-year yield rose eight basis points to -0.28%.
Britain’s 10-year yield jumped four basis points to 0.739%.
The Bloomberg Commodity Index was little changed.
West Texas Intermediate crude rose 1.4% to $55.96 a barrel.
Gold decreased 0.2% to $1,460.10 an ounce.
This morning on the Economic Front we have UK Markit Construction at 9.30 am and this is followed at 10.00 am by Euro-Zone PPI. At 2.45 pm we have the ISM New York Business Conditions Index, Finally, at 5.30 pm we have a speech from ECB Member Coeure.
December S&P 500
Trading can be a game of small margins, which certainly was the case for me yesterday as both the Dow and S&P just missed my sell levels while the Euro also fell short of my buy level. After the S&P fell 47 Handles I emailed my Platinum Members to buy the market at a price of 3110 before the market rallied to my 3115.50 T/P level and I am still flat. It only takes one session to erase a weeks’ gains with yesterday’s session posting a significant Downside Key Day Reversal. If the S&P does not regain yesterday morning’s 3157 high by Friday, then we will have a Key Week Reversal and this will be important. Having been bullish for most of the past five years I turned bearish after the first week of trading in November when the McClellan Oscillator turned negative to produce six registered Hindenburg Omen’s on the clock. Yesterday the MO closed at -91 while the VIX which closed below 12 for three days last week exploded by 18% to close at 14.91 last night. On a closing basis this was the largest single day percentage rise in over three months. The S&P has strong resistance from 3124/3137 and I will be a seller in this area with a 3146 tight stop. The S&P has support at the November 20 low of 3090 and I will be a small buyer from 3085/3095 with a 3078 stop.
I am still flat the Euro and today I will now raise my buy level to 1.1010/1.1050 with a higher 1.0975 stop.
December Dollar Index
The Dollar closed 0.3% lower as the market fell shy of my 98.40 sell level and I am still flat. Today I will lower my sell level to 98.05/98.45 with a 98.80 tight stop.
Similar to the U.S Indices the DAX also recorded a significant Key Day Reversal falling over 350 points from it’s early morning high of 13,330. My DAX plan did not work well as after I bought the market at an average price of 13100 I was quickly stopped out of this position at 13025 and I am still flat. The break and close below the previous support at 13120 should mean that the 13105/13165 area should act as strong resistance. Today I will be a seller in this area with a 13215 stop.
My FTSE plan worked well with the market trading higher to my 7400 sell level shortly after I posted before getting hit hard and is trading at 7275 this morning. This initial move lower saw the market hit my 7375 T/P level and I am still flat. With Sterling again strong it is difficult to see much of a rally in the UK Equity Markets. Today I will be a small seller from 7320/7365 with a 7405 stop.
Dow Rolling Contract
The Dow made a high of 28200 shortly after I posted yesterday morning before falling over 400 points to close at 27,783 as the market recorded a significant Downside Key Day Reversal. If Friday’s Non-Farm Payrolls are weak then there is every chance that we will have at least a temporary high in the market recorded yesterday. The Dow has resistance from 27910/28060 and I will be a small seller on any rally to this area with a 28150 stop. One comfort for the Bears is the fact that the Fear & Greed Index closed at 74 last night which is just below the Extreme Fear reading of 75 so there is plenty of room on the downside from here if the market continues to sell-off. If the Dow can break and close below the November 20 low of 27685 then there is every chance that we can close the ‘’open Gap’’ at 27,347 from November 1.
Unfortunately the NASDAQ fell short of my 8475 second sell level before getting slammed as the market quickly hit my 8405 T/P level on my 8415 initial short position from last week and I am still flat. Today I will be a seller from 8355/8395 with an 8425 stop. I still do not want to be long the market at this time.
My latest 170.40 long Bund position did not work well with the market quickly stopping me out of this position at 169.95 just after I posted yesterday morning and I am still flat. The Bund has support from 169.10/169.50 and I will be a buyer in this area with a 168.75 stop.
Gold Rolling Contract
The boring sideways action in Gold continues. The worry for Gold bulls was the fact that Gold could not rally despite the near 1% fall in the US equity markets. Today I will leave my 1440/1448 buy level unchanged with the same 1432 stop.
Silver Rolling Contract
Silver traded lower to my 16.90 buy level. I am still long and I will now lower my T/P level on this position to 17.05. I will also raise my stop to 16.65 and if any of the above levels are hit I will be back with a new update for my Platinum Members.