U.S. Equity Markets finished yesterday’s volatile trading session mixed as the Dow closed 0.26% lower while the NASDAQ 100 ended the day with a gain of 1.3%. Federal Reserve Bank of New York President John Williams said the central bank needs to raise interest rates to curtail demand and improve the supply side of the equation. He added that as inventories replenish, they will help make goods more readily available – while also fuelling a fall in prices and inflation growth. But these changes will come at a cost. The rate-setting Federal Open Market Committee vice-chair said higher rates will reduce labour demand, as household and business borrowing costs will rise. As a result, economic activity may slow, fuelling a potential rise in unemployment. So, the Fed is trying to ease growth expectations with small growth forecasts than what was previously provided. All of this will likely materialise in the form of a lower price-to-earnings multiple for the S&P 500, which is just one part of the broader expectation for a reset in the market. But what policymakers do want Wall Street and Main Street to understand is that they must raise rates to bring supply and demand back into balance. Borrowing costs are headed higher, meaning home, car, and credit card loans won’t be as affordable as they once were. And in the process, economic activity will have to slow but does not have to suffer. The change implies growth expectations may need a reset. That could weigh on the S&P 500 Index going forward. Within the S&P 500, 7 of the 11 sectors finished lower. European Markets closed higher. French President Emmanuel Macron visited German Chancellor Olaf Scholz on his first foreign trip since re-election in a gesture of European solidarity. Italian Industrial Production figures for March surprisingly did not contract as consumer goods output surged. The Centre for European Economic Research’s Germany Economic Sentiment Survey for May showed investor pessimism is waning as respondents were more optimistic about the outlook. In Asia, The People’s Bank of China reiterated its commitment to bolstering economic activity by ensuring support for the small businesses and sectors most hurt by COVID-19 lockdowns. Chinese state-run media outlet Securities Daily suggested the recent Yuan weakness is likely to end as the nation’s economy recovers from COVID-19 lockdowns. Bank of Japan Executive Director Shinichi Uchida said tightening monetary policy would hurt the economy as it is still trying to rebound through continued support. Bank of Korea rate-hike speculation rose for the policy meeting later this month as inflation continues to increase and the Won weakens. Elsewhere, Oil fell 3.25% after a key German energy buyer conceded to Russia’s demand to pay in Rubles, While Gold closed a further 0.81% lower.
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For anyone following my Platinum Service it made 760 points yesterday and is now ahead by 895 points for May having made 762 points in April, following a gain of 5883 points in March. The Platinum Service made an impressive 5324 points in February, after ending January with a gain of 3878 points, more than making up for December’s 932 points loss, having made 2466 points in November, 1028 points in October, 2866 points in September, 1543 points in August, and 996 points in July. The Platinum Service made 1366 points in June, 1439 points in May, 1244 points in April, after ending March with an impressive gain of 3769 points. 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
The S&P 500 closed 0.25% higher at a price of 4001.
The Dow Jones Industrial Average closed 85 points lower for a 0.26% loss at a price of 32,160.
The NASDAQ 100 closed 1.3% higher at a price of 12,345.
The Stoxx Europe 600 Index closed 0.7% higher.
Yesterday, the MSCI Asia Pacific Index rose 0.3%.
Yesterday, the Nikkei closed 0.58% lower at a price of 26,167.
The Bloomberg Dollar Spot Index closed 0.1% higher.
The Euro closed 0.3% lower at $1.0530.
The British Pound closed 0.1% lower at 1.2309.
The Japanese Yen fell 0.2%, closing at $130.43.
Germany’s 10-year yield closed seven basis points lower at 1.01%.
Britain’s 10-year yield closed 11 basis points lower at 1.85%.
US 10 Year Treasury closed six basis points lower at 2.98%.
West Texas Intermediate crude closed 3,23% lower at $99.89 a barrel.
Gold closed 0.81% lower at $1842.10 an ounce.
This morning on the Economic Front we have German CPI at 7.00 am, followed by a speech from ECB President Lagarde at 9.00 am. This is followed by U.S. MBA Mortgage Applications at 12.00 pm and the all-important CPI which will be released at 1.30. Finally, we have a 10-year Treasury Auction at 3.00 pm.
Cash S&P 500
There is no doubt that these markets are not easy to trade and you have to be patient. Although the S&P is only trading lower by 17%, the destruction below the surface is enormous. Take Amazon. This share topped at $3800 last December. It rebounded to a high of $3400 at the end of March. Last night it closed at $2177. Fund Managers and Retail are sitting on massive losses in Amazon and the same could be said for many of the other big names of 2021. This sell-off in Amazon shows the Weekly Chart having its lowest RSI ever, lower than the tech bubble in 2000 and the Global Financial Crisis of 2008/09. The good news yesterday was the continued fall in 10-year Treasuries, closing at 2.98% last night-25 basis points below Monday’s high. We need the 10-year to trade lower to at least 2.50% as this would help the NDX to recover some of the rout over the past six weeks. At 1.30 pm we get the latest U.S. CPI. As I said yesterday I am seeing plenty of Commodities rolling over but it is probably to soon to be reflected in the headline data. A ‘’7’’ Handle this afternoon would go along way to getting the S&P to rally. I am still long the S&P from Monday at 4050 as the market fell shy of my 4080 T/P level with a 4070 high print. I will now lower my T/P level to 4065 with no stop and if this level is hit I will be back with a new update for my Platinum Members.
No Change. I am still long at 1.0565 with the same 1.0625 T/P level and 1.0485 stop. If I am stopped out of this position I will be an even more aggressive buyer from 1.0430/1.0480 with a 1.0365 stop. If I am taken long a second time I will have a T/P level at 1.0580.
March Dollar Index
The Dollar made a slight new high on Monday before having a small sell-off into the close. I am still short at 103.30 with the same 104.05 closing stop and 102.90 T/P level.
The DAX had a small rally yesterday and I am still flat. The DAX has support from 13250/13350 where I will be a small buyer with a 13175 tight stop. I have no interest in pressing the downside given how oversold the DAX is at this time.
My FTSE plan worked well with the market hitting my 7130 buy level before rallying to my 7205 T/P level and I am still flat. The eleven basis points fall in U.K. Gilts certainly helped the equity mood. The FTSE has support from 7100/7170 where I will be a small buyer with a 6995 wider stop.
Dow Rolling Contract
My Dow plan worked well yesterday as shortly after lunch the Dow rallied to my 32590 T/P level on Monday’s 32310 long position. The Dow did not stay up for long before falling over 700 points, hitting my second buy level at 31925 as emailed to my Platinum Members before rallying to my 32250 T/P level and I am still flat. Today, I will again be a buyer on any dip lower to 31700/31900 with no stop and a T/P level at 32200 if triggered.
Cash NASDAQ 100
No Change. The NDX had a small 1.30% rally yesterday. I continue to nurse last month’s 14327 long position which I have now carried into May. I will now lower my exit level on this position to 14100 which I am hopeful we will see this month. With the McClellan Oscillator closing at – 202 last night I will now look to add to my long position. I will move my buy level higher to 11800/12000. If I am taken long in this range I will have a T/P level at 12270. If anything changes I will come back with a special update for my Platinum Members.
My long 151.85 Bund position finally paid dividends rallying to my 152.65 T/P level and I am now flat. Ahead of CPI in both Germany and America I will not chase the Bund higher. I will be a small buyer on any dip lower to 151.10/151.80 with no stop.
Gold Rolling Contract
Gold got hit hard again yesterday, hitting my second buy level at 1840 for a now 1848 average long position. I will now lower my T/P level to 1860 while leaving my 1825 closing stop unchanged for now. One level of concern is the last time the 10-Year was trading above 3%, Gold was much lower at $1300.
Silver Rolling Contract
Silver hit my second buy level at 21.70 for a now 22.15 average long position. I will leave my 20.95 stop unchanged while lowering my T/P level to 22.50.