Market Overview – Morning Express
– The U.S. 5-year yield is up 22 bps this month to highest since February 2020 on inflation tailwinds and rate hike expectations.
– Curve flattening: the spread between the 5-and-30-year is the tightest since April 2020.
– CME Fed Watch Tool says a 50% chance of a rate hike by June 2022.
– Crude Oil and Copper march higher to start the week, pushes inflation narrative. Despite China data.
– U.S. Dollar firm on rising rates and Covid talk as cases rise in U.K. and Russia
– Deluge of economic data from China disappoints: GDP YoY at 4.9% versus 5.2% expected, Industrial Production YoY 3.1% versus 4.5% expected, Fixed Asset Investment 7.3% versus 7.9% expected, but Retail Sales beat 4.4% versus 3.3% expected.
– From U.S., Industrial Production at 8:15 am CT and NAHB Housing due at 9:00.
– Bitcoin trading above $60,000, finding support from potential ETF approval. All-time high on Coinbase is $64,899 and futures $65,520. There is a micro-Bitcoin futures contract, 1/10 of one Bitcoin.
E-mini S&P (December) / NQ (December)
The S&P500, yesterday’s close: Settled at 4462.50, up 33.50 on Friday and 80.25 on the week
NQ, yesterday’s close: Settled at 15,134.50, up 97.25 on Friday and 326.25 on the week
– Strong session Friday, but soft close. Russell 2000 was +1% and finished -0.5% with all negative action coming in final 90 minutes.
– S&P closed above rare major four-star resistance on Friday, this is now support detailed below.
– NQ tested rare major four-star resistance at 15,165-15,200 on Friday and Sunday night, struggling so far.
– Price action in both S&P and NQ battling slightly below our momentum indicators detailed as our Pivots below.
– Buy opportunity in the S&P upon first test of … Sign up for a Free Trial at Blue Line Futures to have our entire fundamental and technical outlook, actionable bias, and proprietary levels for the markets you trade emailed each morning.
Crude Oil (November)
Yesterday’s close: Settled 81.73, up 0.96 on Friday and 2.97 on the week
– New swing high despite slate of weak China data detailed above. Also, due to energy crunch and outages, throughputs hit 16-month low of 13.4 mbpd.
– OPEC+ over-compliance at 115% for September, members struggling to bring back production. New underpinning latest leg.
– Russia production trending higher in October.
– Nord Stream 2 front and center after Russia limits any extra gas through Ukraine in November. Dutch Natural Gas futures rise more than 10%
– November contract expires on Wednesday, not tradable after tomorrow. Could see squeeze into expiration. We have been noting $85 entirely possible into this.
– Price action opens strongly Sunday night, trades through resistance, now critical support for latest leg at… Sign up for a Free Trial at Blue Line Futures to have our entire fundamental and technical outlook, actionable bias, and proprietary levels for the markets you trade emailed each morning.
Gold (December) / Silver (December)
Gold, yesterday’s close: Settled at 1768.3, down 29.6 on Friday and up 10.9 on the week
Silver, yesterday’s close: Settled at 23.349, down 0.128 on Friday and up 0.644 on the week
– Gold technical failure early Friday and had already broke 1775 before strong Retail Sales
– 30-year Bond futures holding up relative to short-end but flattening curve does not bode well for precious metals. Especially behind a narrative of rates hikes.
– Continued action below our Pivots, detailed below, will encourage added selling…. Sign up for a Free Trial at Blue Line Futures to have our entire fundamental and technical outlook, actionable bias, and proprietary levels for the markets you trade emailed each morning.
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