Opinion – Monday 29 March 2021
U.S. Equity Markets continued Thursday’s reversal ending the week higher, led by the S&P which closed Friday with a gain of 1.66%. Economic data eased inflation fears. Core personal consumption expenditures (“PCE) came in at 1.4%, below the 1.5% expectation. PCE is the Federal Reserve’s preferred inflation gauge, which indicates that a spike in inflation is not an issue yet, and that the Fed won’t raise interest rates anytime soon. This falls in line with commentary from Philadelphia Fed president Patrick Harker, who said that he is in favour of keeping policy accommodative until the country is fully on the other side of the pandemic. Other economic data were also positive. Consumer Sentiment rose in March to the highest level in a year, as Americans became more optimistic on the economy thanks to increased pace of vaccinations and the recent round of stimulus cheques. The month-over-month jump from February also marked the largest increase in eight years. European Markets closed near record highs. Italian Prime Minister Mario Draghi encouraged European Union leaders to employ new powers that would allow them to block COVID-19 vaccine exports until commitments are met. German Business Confidence data for March rose more than expected, indicating companies are increasingly optimistic despite the recent round of COVID-19 restrictions. And the International Monetary Fund (“IMF”) said that all 19 Euro-Area countries have enough capital to get through the pandemic and finance an economic recovery. It added that Euro-Zone banks should have enough capital to continue lending throughout the pandemic. On a negative note, the French government extended coronavirus-related social-distancing restrictions to three more regions, as daily cases surge across the country. Elsewhere, Oil gained 3.94% as the blocked Suez Canal likely indicates a temporary disruption to oil shipments while Bitcoin jumped 2.29% on reports that Fidelity was trying to launch a Bitcoin ETF.
The S&P 500 closed 1.66% higher at a price of 3974.
The Dow Jones Industrial Average closed 453 points higher for a 1.39% gain at a price of 33,072.
The NASDAQ 100 closed 1.55% higher at a price of 12,979.
The Stoxx Europe 600 Index closed 0.8% higher.
The MSCI Asia Pacific Index rose 0.6%.
This morning the Nikkei closed 0.71% higher at a price of 29,384.
The Bloomberg Dollar Spot Index closed 0.2% lower
The Euro closed 0.3% higher at $1.1795.
The British Pound closed 0.5% higher at $1.3791.
The Japanese Yen closed 0.3% lower at 109.61 per dollar.
Germany’s 10-year yield closed three basis points higher at -0.34%.
Britain’s 10-year yield closed three basis points higher at 0.76%.
US 10 Year Treasury closed four basis points higher at 1.66%.
West Texas Intermediate crude closed 3.94% higher at $60.48 a barrel.
Gold closed 0.33% higher at $1,732.80 an ounce.
This morning on the Economic Front we have UK Mortgage Approvals, Net Lending to Individuals and Money Supply at 9.30 am. The only other data of note on either side of the Atlantic is the Dallas Fed Manufacturing Business Index at 3.30 pm.
June S&P 500
The S&P just missed my 3903 buy level with a 3907 low print before surging in the last hour of trading, closing at 3965, 122 Handles higher than where we traded on Thursday afternoon as yet again anyone trying to short the S&P gets slammed. As we saw from Thursday’s turnaround that threats of a trend break continues to be averted which is no surprise as the Fed itself continues on its $120 billion per month QE Programme. We have now seen new highs each month this year with the expectation that new highs can be expected every month to follow as this is currently the trend. The 50 Day Moving Average is now the key support for the market as every test gets bought. This morning the 50 Day MA comes in at 3863 for the June Contract. This morning the S&P is trading 25 Handles lower at 3940. We have strong support from 3918/3935 where I will be a buyer with a 3903 ‘’Closing Stop’’. We have resistance from 3975/3990 where I will be a small seller with a 4005 ‘’Closing Stop’’. If I am taken long I will have a T/P level at 3948. If I am taken short I will have a T/P level at 3965.
I am still flat and today I will continue to be a buyer from 1.1710/1.1750 with the same 1.1675 stop. If I am taken long I will have a T/P level at 1.1785.
June Dollar Index
No Change. I am still short at 92.55 with the same 93.05 tight stop. I will now raise my T/P level on this position to 92.45 and if any of the above levels are hit I will be back with a new update for my Platinum Members.
The DAX never came close to my buy level before following the U.S Indices higher and I am still flat. I will now raise my buy level to 14600/14670 with a higher 14535 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 14715.
The FTSE traded in a narrow range for most of Friday before rallying into the close and I am still flat. I will now raise my buy level to 6600/6650 with a higher 6565 stop. If I am taken long I will have a T/P level at 6685.
Dow Rolling Contract
The VIX closed at a 14 month low of 18.86, falling 4.8% on Friday as U.S Indices remain complacent to any sell-off. As a result, the Dow surged over 1200 points from Thursday’s low print, closing just below 33100. The late rally above the 32800 resistance level saw an acceleration into the close and I am still flat. The Dow will have strong support from 32650/32850 where I will be a buyer with a 32495 ‘’Closing Stop’’. The Dow has resistance from 33180/33330 where I will be a small seller with a 33455 ‘’Closing Stop’’. If I am taken long I will have a T/P level at 32980. If I am taken short I will have a T/P level at 33060.
My NASDAQ plan worked well with the market trading lower to my 12730 buy level before rallying to my 12795 T/P level and I am still flat. The NASDAQ has support from 12690/12790 where I will again be a buyer with a 12595 ‘’Closing Stop’’. I still do not want to be short the NASDAQ at this time. If I am taken long I will have a T/P level at 12850.
No Change. I am still a buyer from 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 Gold as the market traded sideways on Friday. Gold has support from 1699/1710 where I will be a small buyer with a 1687 stop. If I am taken long I will have a T/P level at 1718.
Silver Rolling Contract
I am still flat and I will continue to be a buyer on any dip lower to 23.90/24.50 with the same 23.55 stop. If I am taken long I will have a T/P level at 24.85.
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