Market Overview – Morning Express
E-mini S&P (June) / NQ (June)
S&P, yesterday’s close: Settled at 4158.75, up 38.25
NQ, yesterday’s close: Settled at 12,711.50, up 106.50
Fundamentals: A precipitous drop in Treasuries, rise in yields, paused yesterday, allowing U.S. equity benchmarks to regain their footing. Make sure to check out yesterday’s Morning Express writeup, ‘If Treasuries Taketh, Can They Giveth?’, where we discuss four major tailwinds to the recent move in yields and how a reprieve would support risk-assets. The U.S. Treasury will auction $33 billion of 10-year Notes at noon CT. It is imperative for traders and investors to keep a pulse on the yield’s gyrations at the psychological 3.0% mark and the response to the auction.
Crude Oil has traded above the $120 mark for much of the session, stoking inflation fears and underpinning today’s rebound in yields. The EIA will release weekly inventory data at 9:30 am CT. There are reports that Russia and Iran are working diplomatically on a Nuclear Deal. China’s reopening has certainly supported Oil prices. Tonight, we look to May Trade Balance data from China. This comes after state representatives released a statement discussing economic downward pressures and the plans “to further boost opening up”.
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The economic calendar begins to pick up a bit today, as we move into a busier back-half of the week. Preliminary Eurozone GDP for Q1 improved to 5.4%, from 5.1%. This comes ahead of tomorrow’s ECB policy meeting, where the bank is expected to signal a rate lift-off next month to battle record high inflation. In fact, markets are beginning to price in 75-basis points worth of hikes through September, by the ECB.
Technicals: The S&P and NQ are trading in a clear consolidation pattern, and this could persist into Friday’s CPI data. Buyers stepped in at previous lows, right at the opening bell yesterday. The NQ edged out a new low and both indices are creating bull-flag-like patterns. Remember, we are concerned less with the beauty of the pattern and more about the market profile created by trapping shorts at lower levels (and longs at higher levels with the inverse). Furthermore, it is not extremely bullish until it resolves through previous highs on a closing basis. This is a ceiling clearly defined by major three-star resistance at 4168-4175.25 in the S&P and 12,893-12,934 in the NQ. We still find sentiment be excessively negative with portfolio managers and investors to be positioned offsides in the case of a move higher. Such could create a potential squeeze targeting … Click here to get our (FULL) daily reports emailed to you!
Crude Oil (July)
Yesterday’s close: Settled at 119.41, up 0.91
Fundamentals: Crude Oil tapped a new swing high overnight, reaching 121.37 and taking out that from Monday at 120.99. Comments from the UAE Energy Minister and OPEC+ Secretary General on the lack of spare capacity, and especially so as demand in China rebounds out of lockdowns, have reignited a very constructive bull leg. This is the exact narrative we have been talking about since mid-2021 and we believe the fact such high-profile representatives are now admitting it is extremely bullish for the intermediate-term view. Stoking the bullish view are also reports from Reuters that European insurers are banned from insuring seaborne cargoes of Russian Oil.
Weekly EIA inventories are due at 9:30 am CT. The private API survey was released last night and said +1 mb Crude, +1.821 mb Gasoline, and +3.386 mb Distillates. However, inventories at the Cushing hub slipped by 1.839 mb. This was overall a bearish read, but the draw at Cushing exudes the tightness within the physical market. Expectations for today’s official report are -1.917 mb Crude, +1.075 mb Gasoline, and +1.06 mb Distillates.
Technicals: Price action continues to hold the utmost construction with yesterday’s midday whipsaw holding major three-star support. This fresh leg is trading at and above previous highs, resistance, defined through our Pivot and point of balance at 119.98-120.46. If such construction continues, we are targeting a move in the near-term to … Click here to get our (FULL) daily reports emailed to you!
Gold (August) / Silver (July)
Gold, yesterday’s close: Settled at 1852.1, up 8.4
Silver, yesterday’s close: Settled at 22.178, up 0.086
Fundamentals: Gold and Silver are again mixed but feeling some pressure from the most recent swing high as the Treasury complex slips back. As we noted above, strength in Crude Oil is stoking yields higher. Similar to that of stocks, currencies, and Treasuries, we are likely to see metals hold a consolidation patter ahead of tomorrow’s ECB policy decision and Friday’s CPI data. As a reminder, keep a close eye on the USDCNH which continues to see a bid at the 6.50 mark, underpinning the U.S. Dollar, and thus a headwind to metals.
Technicals: Price action in Gold held a whipsaw low, which is now defined as first key support at 1846.6-1848.7 on the session. Silver’s whipsaw held major three-star support at 21.68-21.86. Due to the consolidation, there are multiple levels of strong support below the market, all listed below. If we are seeing renewed strength, it is imperative for Gold and Silver to confirm such with a close above major three-star resistance at … Click here to get our (FULL) daily reports emailed to you!
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