U.S. Equity Markets opened at new all-time highs before having a small sell-off into the close. Although the Dow closed 0.20% higher, both the S&P and NASDAQ closed with small losses. All eyes are on stimulus and vaccine news. With former president Donald Trump’s impeachment trial over, Democrats can now turn to pursuing President Joe Biden’s economic agenda. Biden was said to be readying a speech to pitch his plan directly to voters. On the vaccine front, Moderna said that it would deliver 100 million additional doses by the middle of May. That is earlier than its previous forecast, supporting the case for increased vaccine supply. In terms of economic data, the New York Federal Reserve Empire Manufacturing Index rose to a seven-month high on increases in orders and inventories. The NAHB Housing Market Index fell just short of estimates, but remained within touching distance of an all-time high. These are good signs for economic strength. European Markets closed mixed. Former European Central Bank President Mario Draghi was sworn in as Italy’s new Prime Minister, stressing the need for unity and putting Italy’s interests ahead of party allegiance. European Union Health Commissioner Stella Kyriakides said it will fast track approval of COVID-19 vaccine updates intended to fight new variants. German Bundesbank President Jens Weidmann warned the country’s inflation rate could hit 3% this year, creating the need for interest rate hikes. European Union coronavirus vaccinations rose to 21.8 million yesterday, with a daily average of 657,000 doses administered during the last week. Elsewhere, Oil closed 1.23% higher, rising to a 13-month high as cold weather through the Midwest sparked an increase in demand for heat, while Gold fell 1.50% on U.S Dollar strength.
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For anyone following my Platinum Service it made 370 points yesterday and is now ahead by 1558 points for February, having finished January with a gain of 2077 points, 2273 points in December, 2025 points in November, 2779 points in October, 3042 points in September, 2383 points in August, 3128 points in July, 2580 points in June, 2456 points in May, 4773 points in April, and an incredible 9264 points in March. 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 0.06% lower at a price of 3932.
The Dow Jones Industrial Average closed 64 points higher for a 0.20% gain at a price of 31,522.
The NASDAQ 100 closed 0.25% lower at a price of 13,773.
The Stoxx Europe 600 Index closed 0.5% higher.
The MSCI Asia Pacific Index fell 0.2%.
This morning the Nikkei closed 0.58% lower at a price of 30,292.
The Bloomberg Dollar Spot Index closed 0.3% higher.
The Euro closed 0.3% lower at $1.2095.
The British Pound closed 0.4% lower at $1.3873.
The Japanese Yen closed 0.6% lower at 106.05 per dollar.
Germany’s 10-year yield closed five basis points higher at -0.34%.
Britain’s 10-year yield closed five basis points higher at 0.62%.
US 10 Year Treasury closed seven basis points higher at 1.30%.
West Texas Intermediate crude closed 1.24% higher at $59.71 a barrel.
Gold closed 1.50% lower at $1,792.20 an ounce.
This morning on the Economic Front we already had the release of UK CPI which rose 0.70% versus +0.60% expected. At 10.00 am we have Euro-Zone Construction Output and this is followed at 12.00 pm by U.S MBA Mortgage Applications. At 1.30 pm we have Retail Sales and PPI, followed by Industrial production and Capacity Utilisation at 2.15 pm. Finally, we have the NAHB Housing Market Index at 3.00 pm and the Minutes of last Month’s FOMC Meeting at 7.00 pm.
March S&P 500
Over the past few weeks I have made the case that the S&P is topping out and that we are going to experience a significant wave of volatility, despite the VIX closing below 20 last Friday. Yesterday the VIX closed 7.5% higher at 21.46. One market I have mentioned a few times this year is the Russell 2000. The iShares Russell 2000 Fund is trading 40% above its 200-Day Moving Average. This has never happened before and shows how much stocks have gotten away from reality. We are likely to see a reversion to the mean which means a large drop is likely. On top of this the 10 Year Treasury closed with a yield of 1.30% last night., 60% higher than where we were last November. This is significant as most traders have never experienced a ‘’Bear Market’’ in bonds which have been trading lower since the early 1980s. Remember almost $18 trillion trade with a negative interest rate and a melt down in bonds will have serious repercussions for pensions and stocks. Yesterday the S&P traded lower to my 3935 T/P level on Monday’s 3939 average short position. Overnight my S&P plan worked well with the market trading lower to my 3915 buy level before rallying to my 3929 T/P level and I am now flat. The S&P has strong support from 3890/3905 where I will again be an aggressive buyer with a 3879 stop. We have resistance from 3952/3967 where I will be a seller with a 3981 ‘’Closing Stop’’.
The Euro rallied to a high of 1.2170 yesterday morning before falling 100 points to sit at 1.2072 this morning. After the Euro hit my 1.2100 buy level I emailed my Platinum Members that I wanted to be flat overnight as I exited this long position at 1.2115. The Euro has strong support from 1.2020/1.2060 where I will again be a buyer with a 1.1985 tight stop.
March Dollar Index
The Dollar traded higher to my 90.55 sell level. I am still short and I will now add to this trade at 91.05 with the same 91.31 tight stop. I will now raise my T/P level on this position to 90.35.
I am still flat as the DAX traded sideways/lower over the past 24 hours. I will now lower my sell level to 14110/14180 with a lower 14255 stop. I still do not want to be long the DAX at this time.
The FTSE traded lower to my 6700 buy level. I am still long and I will now lower my T/P level to 6725. I will add to this trade on any further move lower to 6650. I will also raise my stop on this position to 6615.
Dow Rolling Contract
The Dow continues to trade in a narrow range between 31100 and 31600 and I am still flat. The Dow has support from 31150/31320 where I will be a buyer with a 30995 stop. I will now lower my sell level slightly to 31770/31950 with the same 32125 ‘’Closing Stop’’.
The NASDAQ got hit hard yesterday afternoon. This move lower saw my too tight 13800 T/P level filled, before trading to an overnight low at 13695. The NASDAQ has strong support from 13550/13650 and I will be a buyer in this area with a 13470 stop. I will continue to be a seller of rallies and today my sell range will be 13840/13920 with a 14005 ‘’Closing Stop’’.
The Bund just missed my 175.65 sell level with a morning high of 175.50 before falling 100 points and I am still flat. Negative yields are insane for Bond markets especially given the expectation for inflation to rise over the coming months. I will now lower my sell level to 175.05/175.45 with a 175.81 tight stop.
Gold Rolling Contract
My Gold plan worked well with the market trading the whole of yesterday’s buy range for a 1794 average long position before thankfully rallying to my 1808 T/P level and I am now flat. This morning, Gold is getting hit hard again trading at 1782 as I go to press. Gold has short-term support from 1745/1760 where I will be a small buyer with a 1734 stop. If I am taken long I will have a T/P level at 1769.
Silver Rolling Contract
No Change as I am still a small buyer from 26.00/26.60 with the same 25.65 stop.