U.S Indices closed higher as Stimulus hopes boosted markets. Yesterday was a volatile trading session with plenty of two-way price action with markets closing well off their intra-day high. Speaker of the House Nancy Pelosi’s office said she and Treasury Secretary Steven Mnuchin were closer to resolving policy differences holding up a Stimulus agreement. And Senate Majority Leader Mitch McConnell said that he would put a bipartisan bill to a vote if it had the backing of the White House. There was also good news on the vaccine front. Moderna’s CEO said the company could file for emergency use authorisation for its COVID-19 vaccine as early as December. And AstraZeneca’s U.S. trial for its vaccine candidate could reportedly restart as soon as this week. In terms of economic data, Housing Starts missed estimates, but Building Permits beat expectations. This is another sign of strength for the housing market. The S&P led the equity rally closing with a gain of 0.47%. European Equity Markets also closed higher. European Union officials said they expect post-Brexit trade talks to resume in London next week despite the U.K.’s insistence for concessions to be made prior. The German government is said to be considering enacting tax incentives to boost stock market participation. German Producer Price Index data for September were stronger than expected, rising versus August, signalling that demand for raw materials is rising. And more support could be coming from across Europe. A poll of economists signalled more stimulus on the way from the Bank of England next month. Elsewhere, Oil closed 1% higher after OPEC pledged support for the Oil markets, while Gold rose on Dollar weakness.
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The S&P 500 closed 0.47% higher at a price of 3443.
The Dow Jones Industrial Average closed 113 points higher for a 0.40% gain at a price of 28,308.
The NASDAQ 100 closed 0.37% higher at a price of 11,677.
The Stoxx Europe 600 Index closed 0.7% higher.
The MSCI Asia Pacific Index rose 0.2%%.
This morning the Nikkei closed 0.31% higher at a price of 23,639.
The Bloomberg Dollar Spot Index closed 0.4% lower.
The Euro closed 0.5% higher at $1.1828.
The British Pound closed 0.1% higher at $1.2965.
The Japanese Yen closed 0.1% lower at 105.39 per dollar.
The yield on 10-year Treasuries closed five basis points higher at 0.82%.
Germany’s 10-year yield closed four basis points higher at -0.59%.
Britain’s 10-year yield closed three basis points higher at 0.19%.
The Bloomberg Commodity Index closed 0.3% higher.
West Texas Intermediate closed 1% higher at $40.71 a barrel.
Gold closed 0.8% higher at $1904 an ounce.
This morning on the Economic Front we already had the release of UK CPI which rose 0.5% versus +0.6% expected. At 12.00 pm we have the U.S MBA Mortgage Applications. Finally, we have a speech from the Fed’s Brainard at 1.50 pm and the release of the Beige Book at 7.00 pm.
December S&P 500
Yesterday, turned out to be a volatile trading session with the S&P reacting to every piece of news on a proposed Stimulus Agreement. As I have said countless times over the past few months that the main reason for equity markets trading at these lofty highs is based on QE, Central Bank Intervention and the three Stimulus Agreements since the market bottomed after the five-week crash in February/March. It is simple ”No Stimulus No Rally”. This latest Stimulus when it arrives is largely priced in. On top of this we have the U.S Election is 13 days. Volatility will continue to rise over the next few weeks. After the S&P rallied to my 3445 initial sell level I covered this position too early at 3440. Subsequently I emailed my Platinum Members to sell the S&P again which I did at an average rate of 3460 before the market had a late sell-off to a low of 3417. Frustratingly, I covered this latest short position at 3455 and I am still flat. Optimism of an Agreement in Washington has the S&P trading at 3456 this morning. So far, the key 3465 resistance level is holding. I will be a small seller from 3462/3477 with a 3491 stop. I am not going to chase the S&P higher and I will leave my 3398/3410 buy level unchanged with the same 3389 tight stop.
Thankfully, we had no sell level in the Euro with the market trading 80 points higher from where I marked prices 24 hours ago to sit at 1.1850 this morning. I am getting more and more bullish of the Euro especially if we can break last month’s 1.2005 high. Today, I will raise my buy level to 1.1780/1.1820 with a higher 1.1735 stop.
December Dollar Index
I was lucky yesterday as just as I posted the Dollar was trading at my 93.45 T/P level on my latest 93.30 long position and I am now flat. This morning the Dollar is trading lower at 92.75. The Dollar has resistance from 93.10/93.50 where I will be a seller with a 93.85 stop. The Dollar has short-term support from 91.80/92.30 where I will be a small buyer with a 91.45 stop.
I am still flat the DAX as the market fell shy of my initial 12650 buy level before rallying. The stronger Euro is weighing on the DAX. The DAX has support from 12530/12610 and I will be a buyer in this area with a lower 12465 stop. If I am taken long I will have a T/P level at 12675. I will now lower my sell level to 12920/13010 with a lower 13075 stop. If I am taken short I will have a T/P level at 12865.
Shortly after I posted yesterday morning the FTSE traded higher to my 5855 T/P level on my latest 5830 long position and I am still flat. Today, I will again be a buyer from 5750/5800 with a lower 5695 stop. I still do not want to be short the FTSE at this time.
Dow Rolling Contract
My Dow plan worked well with the market trading higher to my 28400 sell level before selling off to my revised 28295 T/P level and I am still flat. Yesterday was a wild trading session with the Dow trading in both directions at a ferocious pace. The Dow has strong resistance from 28520/28670 where I will be a seller with a 28805 stop. I am not going to chase the market higher and I will continue to be an aggressive buyer from 27720/27920 with a 27595 stop.
My NASDAQ plan also worked well with the market trading higher to my 11750 sell level before falling over 120 points. Unfortunately, as I had so many positions on board, covered this short position too early at 11717 and I am still flat. As long as the NASDAQ does not break and close above the key 11900/12000 resistance area, I will continue to be a seller on rallies. Today, my sell level will be from 11770/11870 with a wider 12005 ‘’Closing Stop’’. I will leave my aggressive buy level from 11300/11400 unchanged with the same 11195 stop.
With U.S Treasuries selling off over the past few days we finally saw some catch-up in the Bund with the market trading 70 points lower from where I marked prices 24 hours ago. The Bund has support from 174.50/175.00 where I will be a small buyer with a wider 173.95 stop. I will now lower my sell level to 175.95/176.45 with a 176.81 stop.
Gold Rolling Contract
The weaker Dollar sees Gold trading higher at 1915 this morning and I am still flat. I will now raise my buy level to 1878/1892 with an 1865 stop.
Silver Rolling Contract
Silver rallied to my 24.40 T/P level on my latest 24.20 long position and I am still flat with Silver trading higher at 25.05 as I go to press. Silver has support from 24.10/24.60 where I will be a small buyer with a 23.65 stop.