Market Overview – Morning Express
E-mini S&P (June) / NQ (June)
S&P, yesterday’s close: Settled at 4386.75, down 0.75
NQ, yesterday’s close: Settled at 13,907, up 14.00
Fundamentals: Everyone is on Spring Break. Of course, I mean this figuratively, but the reality is people are out, and people are spending money. I took the family down to Florida, and for the first time, we chose to drive. We have three kids under five years old, and it seems the younger they are, the more stuff they have and things they need; why not pack up the car for a road trip. Stopping for a night in Nashville each way, the trip was twelve days. The roads were packed, the gas stations were as busy as I’ve ever seen, and the hotels very occupied. In other words, higher gas prices and travel costs did not derail people’s plans. We first visited my partner and our Chief Market Strategist, Phillip Streible, in Miramar Beach. Being right on the beach, naturally, one would expect people to actually be on Spring Break, and this was the case. The coffee shops had lines down the street, while the stores and restaurants were vibrant. Our next stop was a town called WaterColor in Santa Rosa Beach. Of course, people are on vacation and spending, but restaurant reservations were hard to come by, and the over-priced branded clothes were flying off the shelves. Although I am always dialed into the markets, it was a terrific trip and nice to get off the desk. However, separating myself from the day to day, it was easy to see how financial media can dictate a mood surrounding the market. When stocks go up, the skies are clear, and the good times are rolling. When stocks go down, the world is falling apart, it’s all the Fed’s fault, and inflation will force people to eat lentils. Listen, stocks may go down a little more, in fact, I hope they do. However, it is essential to understand things are never as bad as they seem in the moment.
On the earnings calendar, JNJ and LMT both missed revenues and are each down slightly ahead of the bell. HAL is lower after beating top and bottom, whereas CFG and SBNY are higher after beats and FITB is following.
Technicals: U.S. equity benchmarks surged into the close yesterday in what was quite the afternoon whipsaw. Ultimately, we find it very technical with the S&P holding a massive level of support at 4363.50 upon two tests. Price action overnight reached a higher high than yesterday in both the S&P and NQ, but early morning weakness has pinned the tape back in the range of yesterday’s intraday lows and the 4363.50 support level before consolidating ahead of the bell. Buyers are keeping things rangebound after Thursday’s outside bearish daily bar in the NQ. To the upside, Thursday’s late selling is providing a headwind, defined as resistance in Technicals below. The first hour of trade will be crucial. Even if buyers step in, the issue has been holding a rally. Our momentum indicators will provide a point of balance on the session and failed rally attempts that trade back below, or vice versa, would help signal a reversal on the session at … Click here to get our (FULL) daily reports emailed to you!
Crude Oil (June)
Yesterday’s close: Settled at 107.61, up 1.23
Fundamentals: Crude Oil is lower on the session after achieving resistance yesterday upon the May-June roll. We believe positioning post options expiration last week and through this futures expiration has played a key role in the latest swings. As Crude Oil slips, the news flow is actually supportive, but from what price level? A report this morning said OPEC+ produced 1.45 mbpd below its target in March, due to sanctions on Russia. Remember, outside of Russia, the lack of spare capacity within OPEC+ may be the most bullish undertone. Libya’s production has fallen by about 535,000 bpd as the NOC declared a force majeure and more disruptions can follow. Further underpinning prices, the EU is working on a Russian Oil embargo. Of course, fears of a China slowdown are front and center after GDP estimates were cut due to zero-virus policy. However, the trend has been, as soon as China’s lockdowns pose a serious threat to growth and capture media attention, their commodity buying takes a complete U-turn. To play along, the PBOC announced a negligible RRR cut over the weekend of 25 basis points
Technicals: Price action has slipped below yesterday’s first support at 105.43-105.52 and this level will now act as our Pivot and point of balance. The strength through early this morning hit a high of 109.20 yesterday and aligns with the previous 108.75 high in the May contract to bring a near-term ceiling. Our momentum indicator is still rising to catch up with the four-day surge and aligns to create first key support at … lick here to get our (FULL) daily reports emailed to you!
Gold (June) / Silver (May)
Gold, yesterday’s close: Settled at 1986.4, up 11.5
Silver, yesterday’s close: Settled at 26.15, up 0.45
Fundamentals: Gold and Silver had a terrific start to the week, but the strength began fading after Gold achieved the $2000 mark upon the traditional intraday open at 7:20 am CT. Another down day for Treasuries, higher rates, and U.S. Dollar strength did not bode well for Gold holding such elevated and psychological levels. However, it is trading just as we anticipated, broad underlying strength that will face headwinds upon such moves in rates or the Dollar. Hawkish comments from St. Louis Fed President Bullard are to be expected but opening the door to a 75 basis point hike at the May meeting did not help Gold in the near term. Housing Starts data this morning topped expectations and we now look to comments from Chicago Fed President Evans at 11:05 am CT, along with any other speakers that decide to pop up.
Technicals: A near-term failure is developing after Gold achieved major three-star resistance at 2007.9 and price action is now chewing through major three-star support at 1972.5-1974.9. As we noted yesterday, the bulls are in the driver’s seat across all timeframes while Gold holds above that support, and this level has now been surrendered. Silver traded out above major three-star resistance at 26.16-26.18 yesterday but failed to settle above it. However, it is holding much better than Gold, so far today. Silver is also holding out above our recurring 25.88 level that now happens to align with our momentum indicator; this is constructive if it continues. As for Gold, the door is opened for a move into major three-star support at … lick here to get our (FULL) daily reports emailed to you!
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