Market Overview – Morning Express
– Core PCE, the Federal Reserve’s preferred inflation indicator, came in at 4.9% for April. Yes, inflation is below 5.0% and this was inline with expectations.
– Personal Spending +0.9% versus +0.7% and Personal Income +0.4% versus +0.5%; these are inflation-adjusted, but the impact of the nominal cost of spending can be seen in this data.
– Contrary to Walmart and Target, the consumer is not as bad off and it was not that hard for companies to navigate higher costs; Dollar Tree, Dollar General, Ulta, and even Costco.
– Earnings from Pinduoduo crushed expectations. The China-based agriculture-focused tech platform carries the baton after Alibaba beat yesterday (+14.79%). The stock is +8% premarket after gaining 9.45% yesterday.
– U.S. and Taiwan plan economic talks in the coming weeks to tighten ties.
– U.S. Secretary of State says, “the U.S. remains committed to the One China policy,” on the offensive after President Biden’s remarks.
– The One China policy refers to a United States policy which recognizes the PRC as the sole legal government of China, but only acknowledges, and does not endorse, the PRC position that Taiwan is part of China.
– China announces military drills near Taiwan in a show of strength after President Biden’s remarks.
– To clear up our opinion on China invading Taiwan: Earlier this year, we viewed it as a potential one-two punch; Russia invades Ukraine and then China takes Taiwan. We have held the belief for quite some time there is a Cold War between China and the U.S. (broadly the West). China knows it can inflict inflationary pain through supply-chain bottlenecks and is using this, coupled with lockdowns, advantageously to weaken the West. China has benefited from Russian sanctions, purchasing energy and materials from Russia at a discount and now with its own currency. We find it more likely that China is patiently waiting for the West to be at its weakest this winter when energy supply is at its tightest.
Do not miss the story we tell here as the week unfolds:
Stocks Have “A” Bottom (written from Monday)
Visit our Standard and Premium Research sections on our website to see all material throughout the week.
The Onset of Seller’s Exhaustion? (written)
Have We Reached Seller Exhaustion in Risk Assets? (Midday Market Minute video from Thursday)
Bottom for Stocks? (interview on Fox Thursday)
What’s Next for Stocks After Today’s Rally? (Thursday post-close technical video)
E-mini S&P (June) / NQ (June)
S&P, yesterday’s close: Settled at 4055.75, up 79.00
NQ, yesterday’s close: Settled at 12,279.25, up 337.00
– We remain cautiously Bullish in Bias, per the above links from above, we said “A” bottom was forming on Monday and we began getting confirmation as the week unfolds.
– Still, and this is the important takeaway, we are not in the clear and risk-volatility remains high.
– In the videos, we discussed the overhead levels to keep an eye and they are reiterated in the details below.
– It becomes most crucial to trade out above such resistance, but amid waves of selling, strong first supports at … Click here to get our (FULL) daily reports emailed to you!
Crude Oil (July)
Yesterday’s close: Settled at 114.09, up 3.76
– Previous major three-star resistance at 11.82-112.39 is now major three-star support.
– Strength ahead of the long holiday weekend, however, Memorial Day is typically viewed as a seasonal peak. We do not view this environment as typical.
– Momentum indicator is catching up with the tape, providing a Pivot and point of balance on the session at … Click here to get our (FULL) daily reports emailed to you!
Gold (August) / Silver (July)
Gold, yesterday’s close: Settled at 1853.9, up 1.4
Silver, yesterday’s close: Settled at 21.965, up 0.095
– Silver is breaking out of a long-winded consolidation, trading to highest since May 6th.
– Chinese Yuan strengthening by 0.77% on the session underpins a rally in metals.
– Gold is holding well at and above our Pivot and point of balance on the session, aligns with our momentum indicator.
– Core PCE at 4.9% and not hot helps underpin rally.
– Look for Silver to hold above our Pivot and point of balance in order to target a move to major three-star resistance at … Click here to get our (FULL) daily reports emailed to you!
https://www.bluelinefutures.com
20220527
