The Department of Labour reported last Friday that the Employment data for March indicated companies added 916,000 jobs (versus the 647,000 expectation), while the unemployment rate fell to 6.0%. Yesterday both the S&P and Dow closed at yet another new all-time high with the S&P ending yesterday’s session with a gain of 1.44%. Meanwhile the NASDAQ 100 closed higher by 2.02%. U.S. Equity Markets gained on follow through from Friday’s strong economic data. Economic data out yesterday was also positive. ISM Non-Manufacturing data rose to a record high in March, on strength in new orders, employment, and pricing. There were a few headlines on President Joe Biden’s infrastructure plan. Republican Senator Roy Blunt proposed a $615 billion package, focusing only on physical infrastructure upgrades (roads/bridges/broadband). This comes as Biden’s energy secretary said that the White House was prepared to go over Republicans’ heads and use budget reconciliation to push the bill through. European Markets were closed for the Easter Holidays. There were a few headlines out of the continent. French Finance Minister Bruno Le Maire lowered the country’s economic growth forecast from 6% to 5% due to ongoing coronavirus social-distancing restrictions. Iran said it won’t hold talks with the U.S. later this week about resurrecting the 2015 nuclear accord unless the White House lifts all sanctions introduced by former President Donald Trump. Elsewhere, Oil closed 4.85% lower on demand fears, after India’s crude imports dropped off after a spike in COVID-19 cases. While Gold and Bitcoin closed flat.
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For anyone following my Platinum Service it lost 585 points yesterday, on the first trading session for April having ended March with an impressive gain of 3769 points, having made 3286 points in February, 2077 points in January, 2273 points in December, 2025 points in November, 2779 points in October, 3042 points in September and 2383 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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The S&P 500 closed 1.44% higher at a price of 4077.
The Dow Jones Industrial Average closed 374 points higher for a 1.13% gain at a price of 33,527.
The NASDAQ 100 closed 2.02% higher at a price of 13,598.
The Stoxx Europe 600 Index closed 0.4% lower.
Yesterday, the MSCI Asia Pacific Index rose 0.3%.
Yesterday, the Nikkei closed 0.80% higher at a price of 30,089.
The Bloomberg Dollar Spot Index closed 0.7% lower.
The Euro closed 0.8% higher at $1.1810.
The British Pound closed 1.3% higher at $1.3905.
The Japanese Yen closed 0.4% higher at 110.26 per dollar.
Germany’s 10-year yield closed three basis points lower at -0.32%.
Britain’s 10-year yield closed five basis points lower at 0.80%.
US 10 Year Treasury closed two basis points lower at 1.72%.
West Texas Intermediate crude closed 4.85% lower at $58.65 a barrel.
Gold closed 1.05% higher at $1,727.80 an ounce.
This morning on the Economic Front we have Euro-Zone Sentix Investor Confidence and Unemployment at 9.30 am. The only other data of note on either side of the Atlantic is the JOLTS Job Openings at 3.00 pm.
June S&P 500
The relentless move higher in the S&P shows no sign of stopping despite a number of concerns flagged by me over the past month. Adding to my list is the S&P 500 Price-to-Sales Ratio which is now at an all-time extreme of 2.98. The prior record was 2.36 on March 31,2000. In other words, S&P investors are now paying nearly $3 for shares that generate $1 in annual sales, 26% more than at the March 2000 top. That month started a Bear Market in which the S&P 500 and NASDAQ declined 51% and 78%, respectively. A comparison of stock market capitalisations to U.S. GDP is another measure that is cited by value-minded investors. In fact, it is sometimes called the Buffet Indicator, due to its affiliation with Warren Buffet, who as we know is generally regarded as the embodiment of value investing. As of March 31, the ratio jumped to a new record of 1.95. Thus, the broadest measure of U.S Stocks is valued at almost twice U.S. annual GDP. This is a dangerous market to be long without a tight stop. Every signal that I follow is flashing a ‘’Warning Sign’’ which have signalled market corrections in the past, and as a result has to be taken seriously. On top of this the Daily Sentiment Indicator closed with a reading of 88% bulls. Not a good start to the month as I was stopped out of Thursday’ 3999 average short position near the close yesterday at 4060 and I am now flat. The S&P has now rallied over 220 Handles in 10 Days, proving yet again how seriously overvalued this market is. The S&P has strong resistance from 4082/4100, where I will again be a seller with a 4115 ‘’Closing Stop’’. I no longer want to be long the S&P at this time.
Frustratingly, the Euro just missed my buy level before rallying 100 points and I am still flat. I will now raise my buy level to 1.1725/1.1775 with a 1.1675 stop. If I am taken long I will have a T/P level at 1.1820.
June Dollar Index
Late yesterday, the Dollar sold off to my 92.55 buy level. I am still long with a now higher 92.18 stop. I will lower my T/P level to 92.90 and if any of the above levels are hit I will be back with a new update for my Platinum Members.
Thankfully we had no sell level in the DAX with the market trading over 350 points higher from where I marked prices last Thursday. The DAX is severely overbought and resistance from 15440/15530 where I will be a small seller with a 15605 stop. I no longer want to be long the DAX at this time.
I am still flat as the market never came close to Thursday’s buy level. Even though the FTSE is lagging the rally of the rest of Europe, the market is still trading 110 points higher from where I marked prices last week. The FTSE has resistance from 6805/6855 where I will be a small seller with a 6903 stop.
Dow Rolling Contract
The Dow is now trading 550 points higher from where I marked prices on Thursday as yet again anyone shorting this market is slammed. Whereas the Advance/Decline Ratio closed 3:82:1 on Thursday, the ratio closed at 1:67:1 yesterday, suggesting the early burst of enthusiasm dissipated by the end of yesterday’s session. In addition, total market volume of less than 11 billion shares traded makes yesterday the slowest trading day of the year-to-date. The Dow needs to break and close below 32980 for momentum to shift downwards. The Dow has support from 32850/33050 where I will be a small buyer with a 32725 ‘’Closing Stop’’. In Friday’s Grey Market the Dow rallied to my 33350 sell level before falling to a low of 33265 shortly after the Futures Markets re-opened on Sunday night, enabling me to cover this position at my revised 33315 T/P level and I am still flat. The Dow has further resistance from 33660/33830 where I will again be a seller with a 34005 ‘’Closing Stop’’.
The NASDAQ has exploded to the upside since my commentary on Thursday when the market was trading at a price of 12950. This morning we are trading at 13600 as thankfully we had no sell level in this market and are still flat. The NASDAQ has resistance from 13750/13850 where I will be a seller with a 13925 ‘’Closing and tight Stop’’.
I am still flat the Bund as the market trades higher from where I was stopped out last week (170.88) as yet again the ECB have bought the market. The Bund has support from 170.80/171.30 where I will be a buyer with a 170.35 stop.
Gold Rolling Contract
I am still flat and I will now raise my buy level to 1680/1695 with a higher 1669 stop.
Silver Rolling Contract
I am still flat. I will now raise my buy level to 23.60/24.20 with a higher 23.05 stop. If I am taken long I will have a T/P level at 24.55.