U.S. Equity Markets rebounded from Tuesday’s sell-off before falling into the close led by the NASDAQ which ended yesterday’s session with a loss of 2%. Federal Reserve Governor Lael Brainard said the central bank will employ a patient approach to Interest Rate hikes based on outcomes rather than projections. Federal Reserve Chairman Jerome Powell gave another Testimony before Congress. He said the central bank anticipates inflation will rise in 2021. However, he highlighted that he does not see a sustained pickup. Meanwhile, health care services company Catalent said it received approval by the U.S. Food and Drug Administration to produce the active ingredient in Johnson & Johnson’s COVID-19 vaccine. This has helped ease some supply-chain concerns, and will likely boost the supply of vaccinations. Economic data were also positive, after Markit Manufacturing and Composite PMI rose above estimates in March. There was also news on a new support package out of Congress, with President Joe Biden set to unveil a $3 trillion infrastructure bill. European Markets closed mixed. In an effort to offset COVID-19-related economic damage, German Chancellor Angela Merkel’s cabinet approved a plan to increase borrowing by $71 billion in 2021. Merkel also walked back plans for another lockdown around the Easter holiday. Dutch Prime Minister Mark Rutte said the country would extend its current COVID-19 restrictions until April 20 due to a rising number of infections. Euro-Zone’s Markit Preliminary Composite PMI for March was stronger than anticipated, transitioning back into expansion territory. The number of COVID-19 vaccinations rose in European Union countries to 56.6 million yesterday, with a daily average of 1.14 million shots administered over the past seven days. Elsewhere, Oil rebounded 5.25% after Tuesday’s 6.50% fall, on U.S. stimulus, rising economic activity, and a rebound in Chinese industrial activity offset European demand concerns, while Gold closed 0.29% lower of Dollar strength.
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The S&P 500 closed 0.55% lower at a price of 3899.
The Dow Jones Industrial Average closed 3 points lower for a 0.01% loss at a price of 32,420.
The NASDAQ 100 closed 1.68% lower at a price of 12,798.
The Stoxx Europe 600 Index closed 0.5% lower.
The MSCI Asia Pacific Index rose 0.3%.
This morning the Nikkei closed 1.14% higher at a price of 28,729.
The Bloomberg Dollar Spot Index closed 0.4% higher.
The Euro closed 0.5% lower at $1.1815.
The British Pound closed 0.3% lower at $1.3685.
The Japanese Yen closed 0.3% lower at 108.95 per dollar.
Germany’s 10-year yield closed one basis points lower at -0.36%.
Britain’s 10-year yield closed one basis points lower at 0.74%.
US 10 Year Treasury closed three basis points lower at 1.61%.
West Texas Intermediate crude closed 5.25% higher at $60.87 a barrel.
Gold closed 0.59% lower at $1,723.80 an ounce.
This morning on the Economic Front we already had the release of German GFK Consumer Confidence which fell 6.2 versus -12.1 expected. At 9.00 am we have Euro-Zone Money Supply and a speech from ECB President Lagarde. This is followed at 12.30 pm by U.S Weekly Jobless Claims, Personal Income/Expenditure and GDP. Finally, we have a speech from Fed Member Williams at 2.30 pm and the Kansas City Fed Manufacturing Activity Index at 3.00 pm.
June S&P 500
For the second consecutive trading session the S&P reversed earlier gains by selling off into the close. This late move lower saw my 3880 buy level filled before I exited this position at 3882.50 and I am now flat. Overnight, we hit a high of 3895 as we sit slightly lower at 3886 as I go to press. The S&P looks tired which is no surprise given the fact that the NASDAQ cannot break back above its 50 Day Moving Average despite testing this level every day this week. The 50 Day MA for the June Contract is at 3858 and will offer some support on first test but the odds are now growing that this key support will be broken over the coming days. I will be a small buyer from 3848/3863 with a 3839 ‘’Fixed Stop’’. If stopped, I will be an aggressive buyer from 3813/3828 with a 3799 ‘’Closing Stop’’. The S&P has resistance from 3908/3921 where I will be a small seller with a ‘’Closing 3933 Stop’’. If I am taken long I will have a T/P level at 3875. If I am taken long a second time I will have a T/P level at 3845. If I am taken short I will have a T/P level at 3898.
No Change. I am still long at an average rate of 1.1850. I am not comfortable with this position and I will now lower my exit level to a small loss at 1.1830. Meanwhile, I will leave my 1.1785 stop unchanged and if any of the above levels are hit I will be back with a new update for my Platinum Members.
June Dollar Index
No Change. I am still short at 92.30 and I will continue to look to add to this trade on any further move higher to 92.80 while leaving my stop unchanged at 93.05. I will now raise my T/P level on this position to 92.20.
Germany reported a huge 22,657 Coronavirus cases this morning which is not good as the cases are certainly going in the wrong direction. This makes today’s EU Virtual Summit even more important as the European Union has to source more vaccines in order to prevent the pro-longing of this difficult and expensive lockdown. I am still flat the DAX and I will continue to be a buyer from 14395/14465 with the same 14325 stop. I still do not want to be short the DAX at this time. If I am taken long I will have a T/P level at 14515.
The FTSE continues to trade in a narrow range and I am still flat. I will now raise my buy level to 6540/6590 with a higher 6495 stop. If I am taken long I will have a T/P level at 6620.
Dow Rolling Contract
The portrait of unending investor speculation appears to be fading. I mentioned in Tuesday’s commentary about the highest number of weekly buying climaxes in eleven years. The Russell 2000 Index, one of the leaders of the market’s rally since an interim low last September (24), topped on March 15 and has now declined nearly 10% in seven days, as the market broke and closed below its 50 Day MA for the second consecutive trading session. According to a Bloomberg Report last night, a number of SPACs (IPOs) are now trading below their $10 offer price while the percentage of NYSE stocks making new highs has plunged below 50% for the first time in five months. The speed of the contraction indicates a change of character for the market. In my opinion, these above measures depict a decrease in the desire of investors to speculate. If the S&P can break its 50 Day MA then the Dow should swiftly follow suit and test its 50 Day MA which comes in at 31500 this morning. I am still flat the Dow. We have resistance from 32630/32780 where I will be a seller with a 32925 ‘’Closing Stop’’. The Dow has support from 31900/32100 and I will now lower my buy level to this area with a 31785 ‘’Closing Stop’’. If stopped I will be an aggressive buyer from 31380/31580 with a wider 31195 ‘’Closing Stop’’. If I am taken short I will have a T/P level at 32500. If I am taken long I will have a T/P level at 32280. If I am taken long a second time I will have a T/P level at 31810.
My NASDAQ plan worked well with the market trading lower to my 12920 buy level before rallying to my 12995 T/P level and I am now flat. The NASDAQ again tested its 50 Day MA before having an aggressive sell-off into the close. If the NASDAQ continues to sell-off over the coming days I will be an aggressive buyer from 11950/12100 with a 11825 ‘’Closing Stop’’. I still do not want to be short the NASDAQ at this time. I will be a buyer if the market can build value and settle above 13120. If I am taken long I will have a T/P level at 12280.
No Change. I am still a buyer on any dip lower to 171.25/171.75 with the same 170.88 tight stop. If I am taken long I will have a T/P level at 172.05.
Gold Rolling Contract
I am still flat and I will continue to be a buyer on any dip lower to 1699/1712 with the same 1689 stop. If I am taken long I will have a T/P level at 1719.
Silver Rolling Contract
I am still long at 25.10 as the market just missed my 25.35 T/P level with a 25.33 high print. I will now lower my T/P level to 25.25 while leaving my stop unchanged at 24.59.
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