U.S. Equity Markets continued their choppy trade, finishing yesterday’s session mixed as the Dow and S&P closed flat while the NASDAQ 100 fell 0.47%. Economic data were positive, highlighted by a strong Consumer Confidence number. In the past two months, optimism has moved higher at a quicker pace than any two-month period before. This month, the confidence was driven by vacation hopes and labour market strength. Home Prices continued to rise, boosted by a lack of supply, in another strong showing for the housing market. The big catalysts for the week remain in the days ahead – Big Tech earnings and the Federal Reserve’s policy meeting. Alphabet (GOOGL) and Microsoft (MSFT) reported after the close today as both disappointed. As for the Fed, there’s talk on Wall Street that the central bank will begin tapering assets in the fourth quarter. This is what investors are watching for a market move in the near term. European Markets closed lower for the third consecutive trading session. Italian Prime Minister Mario Draghi will present his economic rescue plan to the two houses of Parliament in an attempt to kickstart growth. British Prime Minister Boris Johnson said the country was on track to lift all its COVID-19 restrictions by June 21. European Central Bank Governing Council member Fabio Panetta said the central bank should hold off on withdrawing economic support until inflation is sustainably back at 2%. In Asia, the Bank of Japan left its monetary policy unchanged, as Governor Haruhiko Kuroda said the central bank anticipates a moderate growth pickup and a steady increase in inflation. China’s Industrial Profit data for March rose 92.3%, versus the 179% gain in the first two months of the year, as easy year-over-year comparisons drove the outsized gains. South Korea’s preliminary first-quarter gross domestic product data were stronger than expected on a year-over-year basis, rising above their pre-pandemic peak. Elsewhere, Oil rose 2.15% after an oil spill in China limited supply, while Gold fell 0.26% on Dollar strength.
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The S&P 500 closed 0.02% lower at a price of 4186.
The Dow Jones Industrial Average closed 3 points lower for a 0.01% loss at a price of 33,984.
The NASDAQ 100 closed 0.47% lower at a price of 13,960.
The Stoxx Europe 600 Index closed 0.4% lower.
Yesterday, the MSCI Asia Pacific Index fell 0.3%.
Yesterday, the Nikkei closed 0.46% lower at a price of 28,991.
The Bloomberg Dollar Spot Index closed 0.1% higher
The Euro closed 0.1% higher at $1.2088.
The British Pound closed 0.1% higher at $1.3905.
The Japanese Yen closed 0.5% lower at 108.75 per dollar.
Germany’s 10-year yield closed two basis points higher at -0.24%.
Britain’s 10-year yield closed two basis points higher at 0.78%.
US 10 Year Treasury closed six basis points higher at 1.63%.
West Texas Intermediate crude closed 2.15% higher at $63.07 a barrel.
Gold closed 0.26% lower at $1,774.10 an ounce.
This morning on the Economic Front we have the German GFK Consumer Confidence at 7.00 am. This is followed by U.S. MBA Mortgage Applications at 12.00 pm and Wholesale Inventories along with the latest Trade Balance at 1.30 pm. Next, we have a speech from ECB President Lagarde at 3.00 pm. Finally, we have the FOMC Statement at 7.00 pm and the Powell press conference at 7.30 pm.
June S&P 500
The S&P made an afternoon low of 4167, thus enabling me to exit my latest 4155 short position from last Friday at a price of 4171 and I am now flat. So far, the S&P is trading below its recent new high from Monday which occurred against a backdrop of a negative RSI divergence after a near uninterrupted rally of the March lows from last year. Coincidently, this same pattern occurred from the March 2009 lows to their April 2010 top before a sizeable correction emerged. The 2021 pattern is almost a 100% replica of the 2010 initial top. With so many unfilled Gaps below the market from the November low at 3200 a .382% Fib retracement off Monday’s high would see a sell-off to the 3436 level and would go along way to filling many of the unprecedented ‘’Open Gaps’’ in the S&P. To give you an idea of this over extended market, the 50 Day Moving Average comes in at 3986 and the 200 Day MA at 3640. Today we get the latest FOMC Statement and hopefully some two-way volatility. The S&P has resistance from 4190/4205 where I will be a seller with a 4217 ‘’Closing Stop’’. I will now raise my buy level to 4145/4160 with a 4133 ‘’Closing Stop’’. If I am taken short I will have a T/P level at 4178. If I am taken long I will have a T/P level at 4170.
No Change. I am still a seller from 1.2145/1.2195 with the same 1.2235 stop. Meanwhile, I will leave my 1.1980/1.2020 buy level unchanged with the same 1.1935 stop.
June Dollar Index
The Dollar finally rallied to my 91.00 T/P level on my latest 90.80 long position and I am now flat. Today, I will again be a buyer on any further move lower to 90.10/90.60 with a 89.75 stop.
I am still flat and ahead of the FOMC Statement I will now lower my buy level to 15010/15090 with a lower 14955 stop. If I am taken long I will have a T/P level at 15135.
Just like the DAX above, I am still flat and I will now lower my buy level to 6810/6860 with a lower 6765 stop. If I am taken long I will have a T/P level at 6890.
Dow Rolling Contract
I am still flat as the Dow traded heavy in comparison to the S&P. I will now lower my buy level slightly to 33650/33810 with a lower 33575 ‘’Closing Stop’’. I still do not want to be short the Dow at this time.
I am still flat as I continue to be a buyer on any dip lower to 13800/13880 with the same 13740 ‘’Closing Stop’’. I will now lower my sell level to 14055/14140 while leaving my 14225 ‘’Closing Stop’’ unchanged.
The boring sideways price action in the Bund continued yesterday and I am still flat. Today, I will leave my 169.80/170.30 buy level unchanged with a now lower 169.55 stop.
Gold Rolling Contract
No Change as I am still a buyer from 1736/1751 with the same 1727 tight stop.
Silver Rolling Contract
I am still flat and ahead of the FOMC Statement, I will now lower my buy level to 25.00/25.60 with a lower 25.65 tight stop.