U.S. Equity Markets dropped as investors began May pondering profit warnings tied to the Coronavirus and a ratcheting up of tension with China. The US Dollar rose as a risk-off mood prevailed. The S&P 500 Index fell almost 3%, leaving it a tad lower for the week, after sobering comments from Amazon.com Inc. and Apple Inc. about the pandemic’s impact. Exxon Mobil Corp. slumped after posting its first quarterly loss in at least 32 years. The US Dollar posted its first increase since last week. Equities also retreated in the U.K., one of the few open markets in Europe as other countries celebrated May Day, and the Pound gave back some of last week’s gains as Prime Minister Boris Johnson pledged a “comprehensive plan” to lift the country’s lockdown, with details due at the end of the week. While the S&P 500 posted its best month since 1987 in April — spurred by a slowdown in Coronavirus infections and $8 trillion in promised stimulus initiatives globally — earnings reports and economic data are serving a reminder of lasting pain. Amazon warned of a possible second-quarter loss, while Apple omitted an earnings forecast for the first time in more than a decade. Federal Reserve Bank of Dallas President Robert Kaplan warned of a “severe” contraction from the effects of Coronavirus. Yesterday, U.S. stocks kicked off the week on a positive note, rallying late in the session to close higher after California sounded a note of optimism in its fight against the virus. Crude oil gained for a fourth consecutive day. The S&P 500 ended green after a last-hour push after the state with the biggest economy reported the fewest virus-related deaths in three weeks and signalled some businesses may reopen as soon as Friday. Stocks were lower during much of the session after tensions escalated between the Trump administration and China, and economic data disappointed. Energy, information technology and utilities were the biggest gainers in the S&P 500, led by Exxon Mobil Corp. and Chevron Corp. U.S. airlines were hit hard after Warren Buffett said over the weekend that Berkshire Hathaway Inc. had exited the sector. Apple Inc. led the Nasdaq Composite Index higher before a big week of earnings. In Europe, the Stoxx Europe 600 slumped, with all 19 industry sectors in the red. West Texas oil futures pushed higher after fluctuating earlier in the day. The US Dollar strengthened against most major peers.
To mark my 2050th issue of TraderNoble Daily Commentary I am offering a special 2 year rate of Euro 2750 for my Platinum Service which includes 1 to 4 updated emails throughout the trading day To demonstrate this value, a monthly subscription over the same period would cost 4440 euro in total This offer represents a 38% discount and is open to both new and existing members. If anyone is interested in this offer can you please email me on firstname.lastname@example.org for details
For anyone following my Platinum Service it made 305 points yesterday on the first trading session for May, having made 4773 points in May, an incredible 9264 points in March, 2223 points in February, 2142 points in January, 818 points in December, 780 points in November, 1649 points in October, 1620 points in September and 2387 points in August Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1600 points
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Global stocks had begun the week lower for a third straight session, a streak not seen in almost two months, as U.S.-China discord flared again and President Donald Trump prodded the nation to reopen for business. Investors are weighing fears of a second wave of infections and a steady stream of bad economic data against efforts by many countries to start easing lockdown restrictions. Earnings roll on this week, with firms including Walt Disney Co., BMW, and Air France-KLM scheduled to report.
In other Coronavirus news, Italy began to reopen its economy after two months, but the Premier’s plan was criticised for being too cautious. Russia reported more than 10,000 new infections for a second day. New Zealand had no new cases for the first time since March and Hong Kong may soon reopen cinemas and gyms.
The S&P 500 Index rose 0.4% to close at 2842, having fallen 2.8% on Friday.
The Nasdaq Composite Index rose 1.2% after declining 3.2% on Friday.
The U.K.’s FTSE 100 Index dropped 2.3% on Friday before closing 0.5% higher yesterday.
The MSCI All-Country World Index fell 2.4% on Friday and closed 0.7% lower yesterday.
Here is a summary of the main Changes in F.X. Markets:
The Bloomberg Dollar Spot Index rose 0.2%.
The Euro dipped 0.8% to $1.0900.
The British Pound declined 0.5% to $1.2444.
The Japanese Yen strengthened 0.2% to 106.70 per dollar.
The yield on 10-year Treasuries gained two basis points to 0.63%.
Germany’s 10-Year Yield rose two basis points to -0.56%.
Britain’s 10-year yield declined two basis points to 0.23%.
West Texas Intermediate crude climbed 7.2% to $21.21 a barrel.
Gold rose 0.2% to $1,704.10 an ounce.
This morning on the Economic Front we have UK Markit Services PMI at 9.30 am. This is followed at 10.00 am by Euro-Zone PPI and Economic Growth Forecasts. At 1.30 pm we have the latest U.S. Trade Balance. Finally, at 2.45 pm we have Markit Services PMI and ISM Non-Manufacturing PMI at 3.00 pm.
June S&P 500
There are so many Government ‘’Stimulus’’ programmes underway to deal with this recession, it is hard to keep track. The Federal Reserve has at lease 10 Asset Purchase Programmes going, including purchases of corporate debt, Treasury debt, municipal bonds, commercial paper, mortgages and more. Many of these are being done in a ‘’Special-Purpose Vehicle’’ using $425 billion given to the Fed by the Treasury as a kind of Fed Bailout. Regardless of the legal structure, the Fed is on its way to printing $5 trillion of new money (on top of the $5 trillion it has already printed) to keep the lights turned on at the banks. On the Fiscal size, Congress has authorised another $600 billion last week. A new ‘’Bill’’ for $1.5 trillion of added spending is now being debated. Added together, that is $5 trillion of deficit spending for this year and possibly more next year. Many true small firms have been unable to access the Paycheck Protection Programme because the bigger firms who do not need the money have depleted the funds available. Last Thursday morning the S&P was trading at a new rebound high of 2964 before falling almost 200 Handles to yesterday morning’s 2770 low print. Of course, given all of the Fed’s actions to date they cannot let the market crash again. So what did they do but announce they were buying ETFs starting later this week. This has led to a surge in the market with the S&P now trading at 2860 this morning. Last Friday after the S&P hit my 2820 buy level we saw a brief rally to 2830 before having a small sell-off into the close. I said on Friday that I wanted to be flat over the weekend and I covered this position at 2822. Yesterday I emailed my Platinum Members to buy the S&P again at 2775 before frustratingly this buy level just missed before rallying hard into the close, helped by the surge in Oil. Today I will look to buy the S&P on any dip lower to 2805/2825 with a 2789 stop. The S&P has initial resistance from 2882/2897 where I will be a seller with a tight 2909 stop.
The Euro hit a high of 1.1019 on Friday before selling off to my 1.0905 buy level yesterday afternoon. I am still long and today I will add to this position at 1.0855 with a now lower 1.0815 stop. I will lower my T/P level to 1.0935 and if any of the above levels are hit I will be back with a new update for my Platinum Members.
June Dollar Index
This morning the Dollar is trading higher and I have gone short in small size at 99.60. I will now lower my stop on this position to 100.05.
The DAX got hit hard when the market re-opened yesterday trading to a low of 10410 before bouncing with the S&P to trade at 10665 this morning. An incredible 40 million workers have been furloughed in Europe which gives you an idea of the virus crisis and it will take many months for any sort of normality to resume. The DAX has strong resistance from 10850/11000 where I will be a seller with a 11090 stop. My only interest in buying the DAX is from 10350/10480 with a 10265 stop.
The UK changed yesterday’s May Day holiday to this Friday. My FTSE plan worked well with the market hitting my 5660 buy level early Monday morning before rallying to my 5745 T/P level and I am still flat. This morning the FTSE is trading higher at 5830. We have resistance from 5890/5970 where I will be a seller with a 6035 stop.
Dow Rolling Contract
Yesterday the Dow opened with a strong negative Tick of -1325 and a large Gap lower. The opening was the low of the day at 23,361, before the market spent the rest of the day trading sideways to higher before a late surge. This morning the Dow is trading at 24,000 as I go to press helped by the strong rebound in Oil and the new ETF buying programme by the Fed. I said on Friday that the market was ‘’broken’’ and we no longer have a stock market that trades freely. If the Dow can build value above 23950 then we will challenge last Thursday’s highs at 24900 before we see another more sustainable sell-off. Today I will be a buyer from 23520/23720 with a 23395 stop. I will be a small seller from 24290/24490 with a 24650 tight stop.
I was lucky on Friday as the NASDAQ did trade higher to my 8870 T/P level on my 8800 long position before falling 300 points early yesterday morning. The Fed announcement that it was buying ETFs turned the market around and we are back trading at 8900 this morning. The NASDAQ has strong resistance from 9100/9250 where I will be a seller with a 9325 tight stop.
Having got stopped out of my short Bund position at 174.45 on Thursday it is frustrating to see the Bund trading lower at 173.70 this morning. Today I will be a small seller from 174.25/174.65 with a 175.05 stop. I still do not want to be long the Bund at this time.
Gold Rolling Contract
I am still flat Gold and today I will raise my buy level to 1646/1660 with a 1638 stop.
Silver Rolling Contract
No Change as my only interest in buying Silver is on a dip lower to 13.95/14.35 with the same 13.55 stop.