Market Overview – Morning Express
E-mini S&P (September) / NQ (September)
S&P, yesterday’s close: Settled at 3962.50, up 25.00
NQ, yesterday’s close: Settled at 12,465.25, up 191.25
Fundamentals: U.S. equity benchmarks secured the elusive encore yesterday. Each of the four major indices gained at least 2% on Tuesday and managed to settle higher yesterday, occurring for only the second time this year. The rebound began brewing last Thursday when price action had every reason to break lower after the hot CPI read but rejected support. A similar phenomenon happened after PPI Friday and upon the negative Apple news Monday. One of the greatest technical indicators is a fundamental rejection.
Another attractive statistic comes from Jason Goepfert of Sentiment Trader, who we have referenced here before. He noted the S&P has never lost ground over the following year when advancing volume was 87% or more of total volume for 2 out of 3 days coming off a 52-week low.
The ECB raised rates by 50 basis points this morning, bringing the main deposit rate to 0%. In their first hike since 2011, consensus expectations had leaned on a 25 basis point move. Bringing further pressure to the bank’s decision is evolving turmoil in Italy. Mario Draghi, the former ECB President, resigned as Italy’s Prime Minister overnight after losing coalition support. The move hung in the balance for weeks, spiking Italian yields to uncomfortable levels. The ECB announced a new program aimed to counter fragmentation across sovereign debt. The maneuver has so far been well received with equity markets setting fresh session highs and the U.S. Dollar sinking back to swing lows. ECB President Lagarde is set to speak at 7:45 am CT.
From the U.S., Initial Jobless Claims came in higher than expected for the seventh week in a row. At 255k, this was the highest level since the final week of January. Also, Philly Fed Manufacturing for July came in at -12.3. Before June’s -3.3, this read has not been in negative territory since May 2020. Within the Philly Fed set, Price Paid dropped from 65.5 in June to 52.2 in July. This is a one-two-three punch of a cooling job market, demand, and prices. The weakness in data has added further pressure to the U.S. Dollar.
Also buoying the market has been a solid slate of earnings beginning with Tesla last night. Danaher, AT&T, Philip Morris, Union Pacific and Blackstone Group also all beat top and bottom-line estimates this morning. However, some of the individual stock reactions were mixed upon their respective reports.
Technicals: Both the S&P and NQ settled above the 50-day moving average for the second day in a row yesterday. Price action remains firm ahead of the opening bell and tech continues to signal leadership. Although we remain cautiously Bullish in Bias, we cannot ignore the NQ testing into our next upside target, major three-star resistance at 12,520-12,565. The tape retreated from this level yesterday with an early high of 12,517. Previously strong resistance is now major three-star support listed below. What matters most as price action digests this run through the first hour of trading is a constructive battle at and above our Pivot and point of balance at … Click here to get our (FULL) daily reports emailed to you!
Crude Oil (September)
Yesterday’s close: Settled at 99.88, down 0.86
Fundamentals: Crude Oil slipped sharply overnight in a broad commodity rout due to demand fears tied to China’s virus testing, something we have been noting for over a week now. Libya returning production and an overall bearish EIA report yesterday has also overshadowed the energy complex. At the end of the day, we find the slip exacerbated due to the failure at overhead technical resistance, but make no mistake, this would continue amid a broad risk-off scenario.
Technicals: Price action struggled to hold ground above the psychological $100 mark yesterday and remained contained below Tuesday’s settlement, ultimately paving the way for a close below first key support and overnight selling. The sharp slip quickly took out what was major three-star support at 96.52-96.97, a shelf that was built to start the week. This will serve as our Pivot and point of balance on the session, but open further weakness, bulls must respond to major three-star support at … Click here to get our (FULL) daily reports emailed to you!
Gold (August) / Silver (September)
Gold, yesterday’s close: Settled at 1700.2, down 10.5
Silver, yesterday’s close: Settled at 18.668, down 0.045
Fundamentals: Gold and Silver flushed out overnight with Gold trading to the lowest level since March 2021. They began a turn higher after the ECB hiked rates by 50 basis points, more than the 25 expected. Despite a spike in the Euro to 1.0320, volatility remains high through ECB President Lagarde’s press conference and the Euro has surrendered the entire spike. Also supportive to Gold was the U.S. economic data slate. Initial Jobless Claims came in higher than expected for the seventh week in a row. At 255k, this was the highest level since the final week of January. Also, Philly Fed Manufacturing for July came in at -12.3. Before June’s -3.3, this read has not been in negative territory since May 2020. Within the Philly Fed set, Price Paid dropped from 65.5 in June to 52.2 in July. This is a one-two-three punch of a cooling job market, demand, and prices. The weakness in data has added further pressure to the U.S. Dollar and helps to signal the Fed’s tightening is working.
Technicals: Gold and Silver are battling to hold their U-turn. Given Gold’s suppressed action since early yesterday, our momentum indicator has move sharply lower and now aligns with major three-star support at 1692.6-1698; continued action above here will be seen as constructive. Silver is also battling at our momentum indicator which comes in as our Pivot and point of balance at 18.55. As we have noted the Managed Money net-short position in each, after such a sharp move lower today, if these metals can begin trading higher and create a formidable reversal, those shorts would likely look to cover into Friday’s close. Every rally starts with a short cover, and we see this level for Gold coming in at … Click here to get our (FULL) daily reports emailed to you!
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