Equity Markets dropped around the world and Bonds rallied after President Donald Trump aimed his tariff weapon on economies from South America to Europe and China, denting hopes for a global recovery. The S&P 500 Index fell for a third day, though it pared some of its losses in afternoon trading. The morning brought a flood of trade headlines that rattled markets, with the Trump administration signalling the U.S. plans to move forward with tariffs on Chinese goods if no deal is reached before the mid-December deadline. The president had earlier indicated he’d be willing to wait another year before striking an agreement with China. He also threatened levies on France after hitting steel from Brazil and Argentina. Treasuries surged, driving yields down the most since August, as Gold, the Japanese Yen and the Swiss franc paced gains among haven assets. The cost to protect North American investment-grade debt against default jumped as trade-war induced volatility shook markets. The flurry of trade news roiled global markets just as investors started dipping their toes into riskier waters. A rush to assets that usually outperform during times of economic growth pushed U.S. stocks to record highs last month. But renewed tariff tension and signs of profit deterioration could make traders again more cautious amid the longest bull market on record.
To mark my 1950th 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 email@example.com for details
For anyone following my Platinum Service it made 25 points yesterday as we start December off on a positive mote, having made 780 points in November, 1649 points in October, 1620 points in September, 2387 points in August, 1153 points in July, 1346 points in June,1722 points in May, 955 points in April and 1027 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 narrative on trade has quickly been turned upside down as negative headlines on tariffs have ignited a risk-averse tone in the markets. Yesterday’s headlines are a short reminder of the downside risks that still remain across the investing landscape. Chinese state media said Tuesday the government would soon publish a list of “unreliable entities” that could lead to sanctions against American companies. Meantime, France said the European Union would retaliate if the U.S. follows through on a threat to hit about $2.4 billion of French products with levies. In afternoon trading, U.S. equities trimmed their declines amid a rally in defensive companies such as real estate and utilities. Despite Tuesday’s losses, the S&P 500 was still up 23% this year.
The S&P 500 dipped 0.7% to close at 3,093.
The Dow Jones Industrial Average fell 280 points to close at 27,502.
The Stoxx Europe 600 Index decreased 0.6%.
The MSCI Asia Pacific Index fell 0.3%.
Here is a summary of the main Changes in F.X. Markets:
The Bloomberg Dollar Spot Index decreased 0.1%.
The Euro was little changed at $1.1082.
The Japanese Yen rose 0.3% to 108.62 per dollar.
The yield on 10-year Treasuries slid 11 basis points to 1.71%.
Germany’s 10-year yield sank seven basis points to -0.35%.
Britain’s 10-year yield dipped seven basis points to 0.67%.
The Bloomberg Commodity Index advanced 0.3%.
West Texas Intermediate crude climbed to $56.10 a barrel.
Gold gained 1% to $1,484.40 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 U.S MBA Mortgage Applications at 12.00 pm and the ADP Employment Change at 1.15 pm. At 2.45 pm we have US Markit Services/Composite PMI. Finally, at 3.00 pm we have the ISM Non-Manufacturing PMI and a speech from Fed Member Quarles.
December S&P 500
When volatility spikes as it did at one point yesterday by rising 17% to hit a high of 18 you have to cut your stake size and have wider stops otherwise you will get stopped out of most trades. I mentioned yesterday that trading was a ‘’Game of Small Margins’’ and this proved again to be true as both the S&P and Dow just missed my sell levels before getting slammed after Trump’s latest tweet on the trade agreement. If you did sell in front of my sell levels then this plan worked well before the market hit my 3089 average buy level. A few minutes later I was stopped out of this trade at 3078 as the market made a low of 3069.50 before spending the rest of the session trading sideways before a late rally saw the market close higher at 3093. The S&P has left a large ‘’Open Gap’’ from Monday’s Chicago close at 3114 to yesterday’s 3096 high print and I would expect this Gap to be filled before we head lower. This morning the S&P is again under pressure after the Chinese Foreign Minister said that America will pay for the Hong Kong and Xinjiang bills. The S&P is now trading at the bottom of both its Daily Bollinger Band and Williams Index and I will be a small buyer on any further move lower to 3060/3070 with a 3049 stop. I will now move my sell level lower to 3108/3120 with a 3128 tight stop.
No Change as I am still a buyer on any dip lower to 1.1010/1.1050 with the same 1.0975 stop.
December Dollar Index
The Dollar traded in a narrow range yesterday and therefore I will leave my 98.05/98.45 sell level unchanged with the same 98.80 tight stop.
After Monday’s Downside Key Day Reversal, the DAX traded sideways yesterday before closing flat which was impressive given the rout of the US Indices. I am still flat the DAX and I will continue to be a small seller from 13110/13170 with a 13205 lower stop.
The FTSE never came close to my sell level before getting hit hard eventually closing well over 1% lower. This morning the FTSE is also trading at the bottom of its Daily Bollinger Band and as a result I will be a small buyer from 7065/7105 with a 7030 stop. Given how oversold the FTSE is trading I no longer want to be a seller of the market at this time.
Dow Rolling Contract
Yesterday’s 27320 low was almost 900 points below Monday’s 28200 high print as long positions were slammed. Unfortunately the Dow just missed my 27910 sell level before the rout started. After I was stopped out of my S&P trade I emailed my Platinum Members to buy the Dow at 27380 before that market eventually rallied to my 27500 T/P level and I am now flat. The Dow is oversold and also trading at the bottom of its Daily Bollinger Band while the 50 Day Moving Average is at 27211. I would expect the market to have difficulty in breaking this initial support without a decent rally first. As a result I will now be a buyer from 27180/27330 with a 27090 stop. The Dow has resistance from 27730/27880 and I will be a seller in this area with a 27950 tight stop.
I am still flat the NASDAQ and today I will be a small buyer from 8100/8160 with a 8065 tight stop. If I am taken long I will have a T/P level at 8195.
The Bund rallied an impressive 140 points yesterday as yet again anyone trying to short this market got slammed. Today I will raise my buy level to 170.20/170.70 with a 169.85 stop.
Gold Rolling Contract
My worries yesterday in relation to the underperformance of Gold on the back of the equity sell-off was quickly dismissed as Gold closed 1% higher at 1484. Remember both Gold and Silver have made significant bottoms on each of the last four Decembers before having a 10/15% rally over the following two months. I will now raise my Gold buy level to 1462/1472 with a 1455 stop.
Silver Rolling Contract
My latest 16.90 long Silver position worked well with the market trading higher to my 17.05 T/P level and I am now flat. This morning Silver is trading higher at 17.35 and I will now look to buy the market again on any dip lower to 16.75/17.10 with a 16.45 stop.