U.S. Equity Markets continued their positive start to February, finishing the day higher, led by the Dow which closed higher by 1.57%. This rally saw the VIX fall a huge 15%, closing at 25.56. Stimulus remained in the headlines after Republican senators were said to have held a productive discussion with President Joe Biden on additional Coronavirus aid. But even with the progress, Democrats are likely to push through their $1.9 trillion proposal without bipartisan support. Growth optimism also pushed markets higher, as the Congressional Budget Office said its estimate for domestic economic output this year was too low, with growth likely to exceed the pre-pandemic peak by mid-2021. And better than-expected-earnings continue to be a tailwind. Forty percent of the S&P 500 has now reported, with average earnings decline of about 2%. That is far better than the estimated decline of 13%. Sustained earnings above estimates will drive down the multiple on the S&P 500, making it more attractive to buy. European Markets closed higher. German Chancellor Angela Merkel said the country’s vaccination campaign remains on track to offer everyone an inoculation by the end of September. Euro-Zone preliminary Fourth-Quarter Gross Domestic Product data were stronger than expected, demonstrating regional economic activity held up despite social-distancing restrictions. French preliminary Consumer Price Index data for January exceeded expectations, rising versus December and signalling the Country’s economy is coming back to life. Pharmaceutical giant Pfizer committed to delivering an additional 75 million doses of its coronavirus vaccine jointly developed with BioNTech to the European Union this quarter. As a result, the EU reportedly expects a surge in vaccine supply in the second quarter of the year, which would go a long way toward getting life back to normal. Elsewhere, Oil closed 2.33% higher on growth optimism, which in turn would boost the demand outlook for crude, while Gold fell 1.46% on Dollar strength.
To mark my 2225th issue of TraderNoble Daily Commentary I am offering a special 2 year rate of Euro 2750 for my Platinum Service which includes 1 to 4 updated emails throughout the trading day To demonstrate this value, a monthly subscription over the same period would cost 4440 euro in total This offer represents a 38% discount and is open to both new and existing members. If anyone is interested in this offer can you please email me on firstname.lastname@example.org for details
For anyone following my Platinum Service it lost 140 points yesterday and is now ahead by 65 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 1.39% higher at a price of 3826.
The Dow Jones Industrial Average closed 475 points higher for a 1.57% gain at a price of 30,687.
The NASDAQ 100 closed 1.56% higher at a price of 13,456.
The Stoxx Europe 600 Index closed 1.1% higher.
The MSCI Asia Pacific Index rose 0.5%.
This morning, the Nikkei closed 1% higher at a price of 28,646.
The Bloomberg Dollar Spot Index closed 0.3% higher.
The Euro closed 0.3% lower at $1.2028.
The British Pound closed 0.2% lower at $1.3660.
The Japanese Yen closed 0.1% lower at 105.05 per dollar.
Germany’s 10-year yield closed four basis points higher at -0.47%.
Britain’s 10-year yield closed three basis points higher at 0.35%.
US 10 Year Treasury closed three basis points higher at 1.11%.
West Texas Intermediate crude closed 2.33% higher at $54.33 a barrel.
Gold closed 1.46% lower at $1,836.20 an ounce.
This morning on the Economic Front we have German, Euro-Zone and UK Markit Services PMI at 8.55 am, 9.00 am and 9.30 am respectively. This is followed by Euro-Zone CPI and PPI at 10.00 am, while at 12.00 pm we have U.S MBA Mortgage Applications. At 1.15 pm we have ADP Employment Change and this is followed by U.S Markit PMI at 2.45 pm. Next, we have ISM Services PMI at 3.00 pm. Finally, we have speeches from Fed Members Bullard and Harker at 6.00 pm and 7.00 pm respectively.
March S&P 500
The S&P has now risen over 180 Handles from the 3659 low on Sunday night as yet again anyone shorting the market (including me) gets slammed. Incorrectly I assumed that the break and close below the 50-Day Moving Average was the start of a decent correction for the U.S Indices but the ferocity of the rally on Monday and yesterday has quickly put that notion to bed. Having been in Florida for the previous two weeks where everything except cinemas and night-clubs are open. Florida has been open since the end of June. Cases have fallen over 35% in the last month as the vaccine is rolled out at pace. The U.S is in a better place, and by the end of May I would expect life across America getting back to some sort of normality. Europe is far behind in this regard with the EMA taking far too long to approve the various vaccines in my opinion. Yesterday the S&P traded the whole of my sell range for a 3814 average short position. I will leave my stop unchanged at a 3835 ‘’Closing Stop’’ while raising my exit level to a small loss at 3821. I will be a buyer on any further move lower to 3795/3812 with a 3783 stop. The S&P has resistance from 3863/3878 where I will be a seller with a 3891 stop. If I am taken long I will have a T/P level at 3825. If I am taken short I will have a T/P level at 3851.
No Change. I am still a buyer from 1.1970/1.2010 with the same 1.1925 stop. Meanwhile, I will continue to be a seller from 1.2110/1.2150 with the same 1.2175 tight stop.
March Dollar Index
I am still flat and I will now raise my buy level to 90.30/90.80 with a higher 89.85 stop.
Thankfully we cancelled any sell level in the DAX with the market trading at 13950 this morning, 600 points higher than where we finished last Friday. The DAX has resistance from 14050/14130 where I will be a small seller with a 14205 stop. I will now raise my buy level to 13650/13720 with a tight 13585 stop.
I am still flat and I will now raise my buy level to 6405/6455 with a 6375 stop. I still do not want to be short the FTSE at this time.
Dow Rolling Contract
The idea of selling rallies in the Dow ran out of steam yesterday as I was stopped out of my 30600 latest short position at 30740 and I am still flat. As mentioned in my S&P commentary above that the break and close below the 50 Day Moving Average was yet another false break as I have no doubt that the Central Banks bought the markets on the re-open on Sunday night using the latest PPP programme as cover. This bull market will end in tears as valuations are so stretched despite the better than expected earnings reported by most companies so far. The Dow has support from 30480/30630 where I will be a small buyer with a tight 30355 stop. If I am taken long I will have a T/P level at 30760.
The NASDAQ also traded the whole of my sell range yesterday and I am now short at 13450 with the same 13555 ‘’Closing Stop’’. I will now raise my T/P level on this position to 13420 and if this T/P level is filled I will be back with a new update for my Platinum Members.
Late yesterday the Bund traded lower to my 176.70 buy level. I am still long and I will add to this trade at 176.20 with the same 175.85 stop. I will now lower my T/P level to 176.90.
Gold Rolling Contract
As I am now long Silver, I will lower my Gold buy level to 1800/1814 with a lower 1789 stop. Remember a break and close below 1810 will see an acceleration to the downside.
Silver Rolling Contract
Silver traded lower to my 26.70 buy level as the market continues to reverse after breaking the $30 level on Monday. I will add to this trade at 26.10 while leaving my stop unchanged at 25.65. I will now lower my T/P level to 26.95.