U.S. Equity Markets sank, bulging the Dow Jones Industrial Average’s loss in the Quarter to a level not seen since 1987 as the pandemic almost certainly plunged the American economy into recession. The blue-chip index tumbled 23% in the three months, closing the session with a 1.8% drop. The S&P 500 fared little better, even after a furious, weeklong 17% rally that halted Tuesday. The NASDAQ 100 fell least among major Indexes, as dip-buyers targeted the cash-rich tech megacaps that make up its core. The Russell 2000 plunged 31% in the Quarter, the most in data going back to 1979. There was almost nowhere to hide for Dow investors, as all but one of the 30 members ended lower for the year. Boeing plunged 54%, while Chevron and Exxon sank at least 39% after oil suffered its worst quarterly beatdown on record. Microsoft fared best, ending higher by 0.01%. Risk assets around the world tumbled in the period as governments instituted unprecedented shutdowns in large swaths of the global economy to combat the spread of the deadly Coronavirus. Massive government spending and monetary stimulus lifted U.S. stocks from a rout that reached 33%, but the hit to GDP is shaping up to be monumental, with Goldman Sachs now forecasting a 34% contraction in the Second Quarter before a sharp rebound.

As March ends, here are some of the major Quarterly moves:

  • The record bull market in U.S. stocks turned into a bear market on March 12, 11 years and three days after the last one ended.
  • Bloomberg’s Dollar Index surged 5%, most since 2016, even after tumbling more than 3% since March 23.
  • The CBOE Volatility Index averaged 57 in March, triple the mean in the prior decade.
  • European shares plunged more than 20% for the worst three months since 2002. Spain lost 30%.
  • West Texas oil lost 67%, the worst Quarter on record.
  • The 10-year Treasury yield hit 1.94% on Jan. 20. It fell to 0.31% by March 9 and is just above 0.67% now.
  • Gold topped $1,700 in early March before plunging $200 an ounce. It’s on track for a sixth Quarterly gain.
  • China’s Shanghai Composite lost 10%, while Tokyo’s Topix fell almost 20% in its worst three months since 2008.
  • Copper fell 23% and Nickel lost 19%, both most since 2011.
  • The Pound fell more than 6%, while the Yen was virtually flat versus the Dollar.
  • South Africa’s Rand had its worst quarter since 2001 and Mexico’s Peso fell the most since 1995.

Quarter two is starting weak. U.S. and European stock futures tumbled with Asian shares as investors took in worsening American Coronavirus figures and assessed the latest manufacturing data from China. Treasuries climbed. Futures on the S&P 500 Index slid more than 2.5% after President Donald Trump warned of a “painful” two weeks ahead, with the country grappling to get the outbreak under control and New York City’s death toll now topping 1,000. Stocks in Japan hit session lows in the final hour of trading, down about 4%. Hong Kong shares were also lower, with two of the city’s largest lenders, Standard Chartered Plc and HSBC Holdings Plc, suspending dividend payments because of the virus. Chinese shares outperformed as a private reading on the country’s manufacturing sector beat expectations, rebounding in March.

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 bryan@tradernoble.com for details

For anyone following my Platinum Service it made 340 points yesterday to finish March with a gain of 9264 points, having made 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

I have a YouTube Channel which contains recent interviews I have given This can be viewed by clicking HERE Please subscribe to this for new interview notification

 

Equities

Yesterday, investors focused on signs that Congress could deliver a fourth round of stimulus as the virus spreads deeper in the country. President Donald Trump is reportedly seeking a $2 trillion infrastructure package. Treasuries edged higher, while the Dollar fell and Crude pushed back above $20 a barrel. Investors are at a crossroads, questioning whether extraordinary stimulus by countries and central banks can counter further retrenchment of firms and consumers as the outbreak spreads.

New York City, which is emerging as the new epicentre of the pandemic, reported a 16% increase in deaths in six hours. Italy and the Netherlands are considering extending lockdowns, and Spain’s 849 deaths were the most in one day for the country.

In Europe, the Stoxx 600 rose and a measure of corporate-credit stress eased. Equities were mixed in Asia, where China had stronger-than-anticipated manufacturing data.

In China, the official purchasing managers’ index rose to 52.0 in March. That’s up from a record low of 35.7 in February and above the 50 mark which signals improving conditions. Still, the country’s bureau of statistics cautioned that the single-month data didn’t necessarily mean that economy has returned to normal level amid continuing Coronavirus concerns.

The S&P 500 Index fell 1.6%, closing at a price of 2585.

The Dow Jones Industrial Average fell 410 points to close at 21,917.

The Nasdaq 100 Index dropped 1%.

The Stoxx Europe 600 Index added 1.7%.

The MSCI Asia Pacific Index gained 0.3%.

Currencies

Here is a summary of the main Changes in F.X. Markets:

The Bloomberg Dollar Spot Index fell 0.2%.

The Euro declined 0.2% to $1.1026.

The British Pound was little changed at $1.2417.

The Japanese Yen gained 0.2% to 107.56 per dollar.

Bonds

The yield on 10-year Treasuries declined five basis points to 0.68%.

Germany’s 10-year yield climbed by two basis points to -0.47%.

Commodities

Gold sank 3.1% to $1,591.60 an ounce.

West Texas Intermediate crude increased 0.9% to $20.28 a barrel.

This morning on the Economic Front we already had the release of German Retail Sales for February which rose 1.2% versus 0.1% expected. We have German, Euro-Zone and UK Markit Manufacturing PMI at 8.55 am, 9.00 am and 9.30 and respectively. This is followed by U.S MBA Mortgage Applications and the ADP Employment Report at 12.00 pm and 1.15 pm respectively. At 2.45 pm we have U.S Manufacturing PMI. Finally, at 3.00 pm Construction Output and ISM Manufacturing PMI will be released.

June S&P 500

Bear Markets are notorious for surprises in both directions. Just when it looked like we would rally back above 2650 the market reversed course late afternoon, sliding to close at 2585 in the Cash. This sell-off continued after the Futures Market re-opened with the June Contract hitting a low so far at 2476 Overnight. As I mentioned at length in yesterday’s Commentary the Bull Market is now officially dead as the S&P has closed nearly 300 Handles below its 20-Month EMA of 2880. The 55-Month Moving Average is very important for long-term technicals. Yesterday this key support of 2540 held while it broke and closed below for the Dow. For the S&P it has held above this MA for the last 8 ½ years. I keep emphasising the importance of my Platinum Service as the updated emails are key. At 6.00 pm last night I emailed my Platinum Members to lower their S&P buy level to 2560. This was filled late in the session before the market rallied to my 2576 T/P level and I am now flat. As long as the S&P can hold the 2330/2380 support area in this oversold bounce phase then the S&P should work its way higher to my 2800/3000 resistance area over the coming weeks. With the S&P trading so far away from last night’s close I would expect some of this ‘’Open Gap’’ to be filled when the US Markets open this afternoon. Today I will be a buyer from 2450/2480 with a 2434 stop. As today is the start of a new month and Quarter I do not want to be short the S&P at this time.

EUR/USD

I am still flat the Euro. The market traded in a narrow range yesterday. The Euro has support from 1.0890/1.0940 where I will be a buyer with a 1.0845 stop.

June Dollar Index

Late yesterday the Dollar traded lower to my 99.10 buy level. I am still long and I will now raise my T/P level on this position to 99.60. I will also raise my stop on this position to 98.75.

June DAX

My DAX plan worked well with the market trading the whole of my buy level for a 9785 average long position before rallying to my revised 9825 T/P level with a rebound high over 9900. This morning the DAX is opening over 2% lower. The DAX has support from 9300/9450 where I will be a buyer with a 9235 stop.

June FTSE

The FTSE has opened over 200 points lower from last night’s close. The FTSE has struggled to get any upside momentum over the past week despite the US and European Indexes having strong rallies. I am still flat as the down Gap this morning in the FTSE is below yesterday’s buy range. The FTSE has support  from 5250/5340 where I will be a small buyer with a 5195 tight stop. If I am taken long I will have a T/P level at 5405.

Dow Rolling Contract

The Dow has been above its 55-Month Moving Average on a monthly closing basis for 8 ½ years. This level comes in at a price 22,562. Last night the Dow closed below here at 21,917. This suggests that when we see the end of phase 2 (Oversold Bounce) then we should see a test of the 200-Month Moving Average which is presently at 15,150. This is a worrying development and is why I have been saying that if the oversold bounce gets anywhere near the levels outlined yesterday then one should switch some or all of their pension into cash. My Dow plan worked well yesterday with the market trading lower to my 22170 buy level before rallying back above 22480. This move higher enabled me to cover this position at my revised 22250 T/P level and I am now flat. This morning the Dow is trading 700 points lower than last night’s closing price. The Dow has short-term support from 20700/20950 where I will be a buyer with a 20485 wider stop.

June NASDAQ

My NASDAQ plan worked well with the market trading lower to my 7800 buy level before rallying to a new recovery high at 8005. This move higher enabled me to cover this position at my revised 7860 T/P level and I am now flat. The NASDAQ has strong support from 7470/7550 where I will be a buyer with a 7395 stop.

June BUND

I am still flat the BUND. Today I will raise my sell level to 173.85/174.35 with a higher 174.75 stop.

Gold Rolling Contract

No Change as I am still on the sidelines until normal conditions return.

Silver Rolling Contract

I am still flat Silver as the market traded in a narrow range yesterday, despite the insane volatility that continues in Gold. Today I will lower my buy level to 13.10/13.50 with a tight 12.75 stop.