Market Overview – Morning Express

– Do not mis our Top Things to Watch this Week, out every Sunday.
– The S&P +6.5% an NQ +7.4% last week closed above the June 10th gap settlement
– U.S. 10-year yield held 3.00% support we highlighted throughout the week to finish at 3.134%, rising to 3.18% today.
– China led gains overnight with the Hang Seng posting +2.35% after officials promised to continue supporting the economic recovery.
– G7 June 26 – 28, discussions on Russia-Ukraine war, sanctions on Russian energy/materials, countering China’s infrastructure planning, Iran Nuclear Deal, and global economy, among other topics.
– Russia has defaulted on foreign currency sovereign debt in a mostly symbolic event. Due to sanctions, Russia says it cannot send the money to bondholders. The country is arguably becoming cash rich, selling commodities in Rubles to Asia.
– ECB meets in Portugal this week. The use of an ‘anti-fragmentation tool’ will be the hot topic, in attempt to avoid a bond fallout as the bank is set to hike rates next month.
– Italian debt leads the ECB conversation. After the yield of the Italian 10-year retreated from a 4.305% peak, it was down six of seven sessions, to 3.419% low. It is now up for the last two sessions at 3.66% today.
– Durable Goods beat expectations this morning and Pending Home Sales are due at 9:00 am CT.
– U.S. Treasury will sell $46 billion 2-years and $47 billion 5-years today. Also, $40 billion -years tomorrow.
– ECB President Lagarde is expected to speak at 1:30 pm CT
– NY Fed President Williams speaks at 5:30 pm CT.
– Japan, 2-year JGB auction and BoJ Core CPI overnight tonight. The Yen’s fallout must be closely watched.
– Tomorrow, Case Shiller Home Price Index tomorrow at 8:00 am CT and CB Consumer Confidence at 9:00 am CT.
– Final Q1 GDP and Fed Chair Powell on Wednesday morning.
Do not miss our daily Midday Market Minute from Friday.
Bill Baruch joined CNBC on Friday to discuss inflation and commodities.
E-mini S&P (September) / NQ (September)
S&P, yesterday’s close: Settled at 3916.25, up 116.50 on Friday and 240.50 on the week
NQ, yesterday’s close: Settled at 12,140.50, up 403.50 on Friday and 843.75 on the week
Highlights from Friday’s Morning Express:
– Did equity markets incur capitulation over the last two weeks?
– Last week was record weekly volume in the Russell 2000 and the most weekly volume in both the S&P and NQ since March 2020. Capitulation is defined by volume.
– Despite ongoing weakness, investors have been resilient, until now; another sign of capitulation.
– According to Bank of America data, in the week ending June 22nd, U.S. equities had their first week of outflows in seven weeks, totaling $17.4 billion. Bloomberg
– Global equity funds had their biggest week of outflows in nine weeks
– SURE SEEMS LIKE A NICE TIME FOR STOCKS TO RALLY. Friendly Friday?
Looking ahead:
– We remain cautiously Bullish. Although it is ok for price action to digest last week’s run, it must hold constructively at Friday’s breakout. Major three-star support at 3900.50 and 12,001-12,021.
– Overnight high in S&P is 3948, 21-day moving average aligns to bring major three-star resistance at 3943.50-3946.75
– Constructive path would point to rare major four-star resistances at … Click here to get our (FULL) daily reports emailed to you!
Crude Oil (August)
Yesterday’s close: Settled at 107.62, up 3.35 on Friday and -0.37 on the week
– Quarter-end this week, and we could not ignore this information pertaining to Energy provided on Twitter by Gavin Baker, @GavinSBaker, in three tweets:
o “This was fascinating to me. Energy has cumulatively returned 65% in the first 5 days of the month for the last ~18 months vs. a total return for energy in the same time frame of 22%. Is there a better explanation than ESG window dressing?
o ESG window dressing meaning that a lot of funds don’t want to show energy on their month end holdings for ESG reasons so they sell energy towards the end of the month and buy it back at the beginning of the next month. Which is truly insane.
o This ESG effect likely larger at end of the quarter. May explain some of the extreme underperformance seen in energy this month. And if this is true, very bullish for energy into July.
– OPEC+ meets this week and is expected to raise production as expected by 648,000 bpd
– Price action settled above previous resistance at 106.82-107.29 on the week, this will now act as our Pivot and point of balance to begin this week.
– The prior week’s settlement is 104.27, out above there helps define last week’s bottom
– In order to begin repairing the larger-scale breakdown, we must see a close above major three-star resistance at … Click here to get our (FULL) daily reports emailed to you!
Gold (August) / Silver (July)
Gold, yesterday’s close: Settled at 1830.3, up 0.5 on Friday and down 10.3 on the week
Silver, yesterday’s close: Settled at 21.125, up 0.083 on the week and down 0.462 on the week
– Gold and Silver opened up strong Sunday night, but have struggled to muscle through those opening spikes, leaving the tape vulnerable.
– Gold and Silver July options expire today, July Silver futures begin to roll off. We attribute recent pressures in commodities to the July contract expirations.
– Still, it has been a nice rebound from Friday’s early flush.
– G7 will ban Russian precious metals imports, grabbing headlines, but nothing new.
– U.S. Dollar Index is down on the day buy USDCNH slight firmer
– Treasury futures are lower on the session, yields up; weighs on Gold and Silver.
– Gold must hold out above major three-star support at … Click here to get our (FULL) daily reports emailed to you!
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