European Indices ended the day lower. Bank shares led the declines after it was reported the ECB were said to considering asking banks to withhold dividend payments for longer, to ensure they have plenty of capital to deal with the Coronavirus stress. The DAX closed 1% lower as the market reacted negatively to yesterday’s disappointing Industrial Production. In the US, the NASDAQ 100 made yet another all-time high at 10704 before revering hard to close 0.75% lower at 10525. National Institute of Allery and Infections Diseases Director Dr. Anthony Fauci said any Coronavirus vaccine is likely a ‘’finite’’ benefit, but he still anticipates one of the candidates to prove safe and effective by late 2020 to early 2021. Meanwhile it was announced that the U.S has awarded $1.6 billion to Novavax to develop and produce its Coronavirus vaccine, with a goal of delivering 100 million doses by January. President Trump announced that a further stimulus cheque for $1200 will be sent to each household by the end of July. In other news, the Atlanta Fed President Bostic said the U.S economic recovery may be ‘’ levelling off’’ as fears of a second wave of COVID 19 grows. Elsewhere, Oil fell towards $40 while Gold closed at a 6-year high just below $1800.
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The S&P 500 Index fell 1.1%, closing at a price of 3145.
The Dow Jones Industrial Average fell 396 points for a fall of 1.5% to close at 25890.
The NASDAQ 100 fell 0.75% to close at 10524.
The Stoxx Europe 600 Index sank 0.6%.
The MSCI Asia Pacific Index declined 0.7%.
The MSCI Emerging Market Index decreased 0.9%.
This morning the Nikkei closed lower by 0.78% to close at 22,438
Here is a Summary of the main changes in F.X Markets:
The Bloomberg Dollar Spot Index gained 0.4%.
The Euro decreased 0.3% to $1.1274.
The British Pound rose 0.4% to $1.2543.
The Japanese Yen weakened 0.2% to 107.55 per dollar.
The yield on 10-year Treasuries dipped four basis points to 0.64%.
Germany’s 10-year yield was little changed at -0.43%.
Britain’s 10-year yield sank two basis points to 0.18%.
West Texas Intermediate oil fell 0.8% to $40.32 a barrel.
Gold rose 0.7% to $1,796.73 an ounce.
This morning on the Economic Front we have a speech from ECB Member De Guindos at 9.45 am and this is followed by U.S MBA Mortgage Applications at 12.00 pm. Finally, at 8.00 pm we have U.S Consumer Credit.
September S&P 500
Shortly before the Chicago close last night the S&P traded lower to my 3135 buy level. Overnight the S&P just missed my 3149 T/P level with a 3148.75 high print and I am still long. This morning the S&P is opening lower at 3127. I will add to this position at 3115 with a now lower 3105 stop. I will also lower my T/P level on this position to 3145 and if any of the above levels are hit I will be back with a new update for my Platinum Members. I read an interesting report on Money Supply from the St Louis Federal Reserve which shows M1 up 33.9% to more than $5.3 trillion. M1 is an important indicator of household liquidity. In simple terms, it includes all funds that are readily accessible for spending. It consists of deposits at commercial banks including chequing accounts. M1 has increased due to most people working from home and are still not spending money as many are afraid to come in contact with other people for fear of contacting the virus. Once we get a vaccine this saved money will be spent resulting in an economic boom and in my opinion as long as the Fed are still buying the markets will support a sustained rally in the S&P.
The Euro traded in a narrow range yesterday and I am still flat. I will now lower my buy level slightly to 1.1180/1.1220 with a lower 1.1145 stop. I will also lower my sell level to 1.1340/1.1380 with the same 1.1425 stop.
September Dollar Index
I am still flat the Dollar which has not moved for the past week. My only interest in selling the Dollar is on a further rally to 97.40/97.80 with a higher 98.25 stop.
My DAX plan worked well yesterday with the market trading lower to my 12520 buy level before rallying to my revised 12585 T/P level and I am still flat. As long as the DAX does not close below 12270 then the market will continue to be a buy on dips. The DAX has near term support from 12310/12430 where I will be a buyer with a 12235 wider stop. I still do not want to be short the DAX at this time.
The FTSE continues to trade heavy, meeting lots of selling on any rally. Yesterday after the FTSE traded lower to my 6150 buy level I emailed my Platinum Members to exit any long position at my revised 6173 T/P level and I am still flat. This morning the FTSE is trading lower at 6100. We have strong support from 6030/6070 where I will again look to buy the FTSE with a 5985 stop.
Dow Rolling Contract
At 8.30 pm last night I emailed my Platinum Members to lower their Dow buy level. This morning the Dow hit my new buy range and I am now long at a price of 25830. I will add to this position on any further move lower to 25650 with a 25545 tight stop. I will now lower my T/P level on this position to 25950 and if any of the above levels are hit I will be back with a new update for my Platinum Members. Technically I am still worried about the Dow as the rare Island Reversal from last month has held every rally so far. On top of this the 200 Day Moving Average has also proved to be formidable resistance (26243) and we need to break and close over this key level for a couple of days before the Dow can move higher. The 50 Day MA comes in at 25200 and is rising every day. A break and close below the 50 Day MA will be a worry and needs to be watched closely along with the price action in the FTSE above.
Shortly after I posted the NASDAQ traded lower to my 10550 T/P level on my latest 10595 short position. Subsequently I emailed my Platinum Members to sell the NASDAQ again at 10630 (high 10692) before the market sold off to my 10590 revised T/P level and I am still flat. With the DSI recording back-to-back readings above 90% it is difficult to see the NASDAQ move much higher without a meaningful sell-off first to correct its overbought condition. I will be a small seller from 10620/10720 with a 10805 stop. The NASDAQ has short-term support from 10350/10450 where I will be a buyer with a wider 10245 stop.
No Change as I am still a seller from 176.60/177.00 with the same 177.35 stop.
Gold Rolling Contract
Despite the BPGDM Gold Miners Bullish Percent Index again closing at 100, Gold rallied to close at a new 6-year high. Sentiment towards Gold is near extreme levels and today I will continue to be a small seller from 1812/1825 with a higher 1834 stop. I will now raise my buy level slightly to 1735/1745 with a higher 1726 stop.
Silver Rolling Contract
This morning Silver is trading higher at 18.34 as yesterday’s buy level never came close to being hit. I will now raise my buy level to 17.70/18.10 with a higher 17.35 stop.