U.S. stocks halted a two-day slide and Treasuries tumbled after the Trump administration de-escalated its trade war with China. Oil surged and Gold fell. The S&P 500 Index jumped as much as 2% after trade officials granted a grace period before tariffs take effect on a broad swath of consumer goods Americans shoppers covet at the holidays. Makers and sellers of consumer electronics, toys and apparel led the advance. The trade headlines sparked demand for risk assets that had been under pressure for more than a week as investors grew increasingly concerned the spat with China would slam global growth. President Donald Trump said he delayed the tariffs to spare the Christmas shopping season after his representatives had a “productive” call with China. Gold fell $50 from its high on the news as yet again the Daily Sentiment Index proved what a fantastic technical tool that it is.
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For anyone following my Platinum Service it made 273 points yesterday and is now ahead by 921 points for August, having made 1153 points in July, 1346 points in June,1722 points in May, 955 points in April, 1027 points in March, 1013 points in February and 1671 points in January. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1600 points
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Some investors also remained cautious about the prospects for a trade truce as signs of the war’s impact grow. Singapore’s government cut its forecast for economic growth this year to almost zero. In Europe, Henkel was among the worst-performing stocks after missing quarterly profit estimates, which the detergents maker blamed on the trade conflict and a competitive retail environment. Meanwhile, the situations in Hong Kong and Argentina remained unstable. The South American nation’s Peso tumbled anew amid rising concern the nation will default on its debt, while Hong Kong equities slumped after its airport cancelled flights for a second day as protesters clashed with police. The S&P 500 Index rose 1.4% to close at 2926 having earlier hit a high of 2942, 75 Handles higher than its early morning low of 2867. The Dow Jones Industrial Average rose 1.2%, while the Nasdaq Composite Index gained 2%, and the Nasdaq 100 Index closing 2.2% higher. The Stoxx Europe 600 Index rose 0.5% and the MSCI Asia Pacific Index decreased 1.4%.
Here is a summary of the main changes in F.X. Markets:
The Bloomberg Dollar Spot Index advanced 0.2%.
The Euro fell 0.4% at $1.1174.
The British Pound slipped 0.2% at $1.2057.
The Japanese Yen fell 1.3% to 106.678.
The Argentine Peso slumped 4.8% to 55.55 per dollar.
Before the trade headlines landed, fresh inflation data showed an unexpectedly hot reading, denting arguments for cutting interest rates and flattening the Treasury yield toward inversion. The spread between two- and 10-year yields hit the narrowest since 2007. The tariff detente did halt the Bond rally, pushing the 10-year rate toward 1.7%, closing four basis points higher at 1.68%. Meanwhile the two-year rate rose eight basis points to 1.66%. In Europe Germany’s 10-year yield fell two basis points to -0.609%.
Gold futures fell 0.1% to $1,515 an ounce.
West Texas Intermediate crude rose 3.8% to $57.04 a barrel.
This morning on the Economic Front we have German GDP at 7.00 am and this is followed at 9.30 am by UK CPI, PPI and the Retail Price Index. At 10.00 am we have Euro-Zone GDP and the Employment Change. Finally we have the US MBA Mortgage Change at 12.00 pm and the Import/Export Price Index at 1.30 pm.
September S&P 500
I mentioned in yesterday’s commentary that I expected a rally in the US Indices given the high reading for the Trin over the past few days. This certainly proved to be correct with the S&P trading lower to my 2872 buy level with a 2867 low print before rallying 70 Handles as yet again anyone trying to hold a short position in this market gets slammed. This move higher saw me exit this long position at my 2879 T/P level and I am now flat. I still expect the S&P to rally further to 2950 and possibly 2965/2975 where I will be a small seller with a 2982 stop. The fact that the S&P closed over the 2903/2913 area is bullish and I will be a buyer on any dip to this area with a 2896 stop.
No Change as I am still a small buyer on any dip lower to 1.1090/1.1130 with a lower 1.1045 stop.
September Dollar Index
I am still flat the Dollar and today I will again leave my 98.25/98.65 sell level unchanged with the same 99.05 stop.
The DAX just missed my 11520 buy level before rallying 300 points as thankfully we had no sell levels in this market yesterday. Today I will raise my buy level to 11570/11640 with a 11515 stop. I still do not want to be short the DAX at this time.
My FTSE plan worked well with the market trading lower to my 7140 buy level before rallying to my 7170 T/P level and I am now flat. Today I will again look to buy the market on any dip lower to 7120/7160 with a 7085 stop.
Dow Rolling Contract
My Dow plan worked really well yesterday with the market trading lower to my 25780 buy level with a 25750 low print before rallying over 650 points as thankfully we had no sell level in this market either. This move higher enabled me to cover this position at my 25850 T/P level and I am still flat. Today I will again look to buy the Dow from 25980/26130 with a 25905 tight stop.
My NASDAQ plan also worked well with the market trading lower to my 7520 buy level before rallying 275 points to a high of 7789. Unfortunately I had too close a T/P level at 7555 and I am still flat. The NASDAQ has strong resistance above the market from 7840/7890 and I will be a seller in this area with a 7945 stop. I no longer want to be a buyer of this market at these inflated levels.
No Change as I am still a seller from 177.95/178.35 with the same 178.70 stop.
Gold Rolling Contract
The idea of selling Gold on rallies based on a DSI reading over 90% certainly proved to be correct yesterday. After Gold rallied to my 1530 sell level I unfortunately emailed my Platinum Members to exit and short position at my revised 1526.50 T/P level and I am still flat. Subsequently Gold traded below 1490 on what turned out to one of the largest routs for Gold in Dollar terms form many months. Gold has support from 1473/1483 and I will be a buyer in this area with a 1465 stop.
Silver Rolling Contract
My Silver plan worked well with the market trading lower to my 16.65 buy level before rallying to my revised 16.98 T/P level and I am now flat. Today I will again look to buy the market on any dip lower to 16.15/16.55 with a 15.85 tight stop. If I am taken long I will have a T/P level at 16.80.