Market Overview – Morning Express
– Equity markets erased early post-NFP gains on Friday after Russia’s Gazprom said the Nord Stream 1 pipeline will remain closed for repairs.
– Gazprom’s announcement ironically came only hours after the West agreed to price caps on Russian Oil and has since admitted flows will not resume until sanctions lifted.
– A full shutdown of Nord Stream 1 would reduce Eurozone GDP by 1.5-2% in 2023 – Fitch
– Nonfarm Payrolls topped expectations at 316k versus 300k and Wage Growth was soft at +0.3% Mom vs +0.4% expected and +5.2% YoY vs +5.3%. Participation Rate increased to 62.4% and Unemployment Rate rose from 3.5% to 3.7%.
– S&P held critical area of support 3902-3923.25, helping to encourage a consolidation through holiday trading.
– OPEC+, on Monday, announced it will reduce production by 100,000 bpd. Other than a headline knee-jerk higher, the impact is like minimal as the cartel is already producing 2.8-2.9 mbpd below their target.
– New virus cases detected in Shanghai, adding one high-risk area and two middle-risk areas.
– Commodities are feeling the impact of the Shanghai news
– Europe’s plan to limit energy consumption certainly has weighed on price sentiment this morning, but we believe selling in Crude Oil is more attributed to the virus news in China and the Yuan weakness that followed.
– Asian currency fallout, the Yen is at the weakest level against the U.S. Dollar since August 1998, before futures were available.
– U.S. 10-year yield is hanging at the highest since 3.31% on June 21st.
– Services data divergence is front and center. Final August SPGI read is due at 8:45 am CT and expected to hold deep contraction at 44.3 after 47.3 in July. However, the ISM is due at 9:00 am CT and expected to expand again at 55.1 after surprising with a 56.7 in July.
– China Trade Balance due tonight at 10:00 pm CT.
E-mini S&P (September) / NQ (September)
S&P, yesterday’s close: Settled at 3924.50, down 44.25 on Friday and 135.00 on the week
NQ, yesterday’s close: Settled at 12,104.25, down 188.00 on Friday and 516.25 on the week
– Precipitous selling Friday afternoon stopped on a dime at major three-star support at 3902-3908.25. After holding earlier in the week this area was revised from rare major four-star support at 3902-3923.25.
– Similar area of support in the NQ stands at 12,031-12,089
– These are viewed as the line in the sand, and a close below will bring the next leg lower.
– Immediate-term selling can be Neutralized with a close above major three-star resistance at … Click here to get our (FULL) daily reports emailed to you!
Crude Oil (October)
Yesterday’s close: Settled at 86.61, down 2.94
– The levels work, key resistance at 90.06-90.54 slowed buying on the OPEC+ news and gasp for air early this morning stalled at 89.55.
– We took a Neutral Bias upon a break below $93 and maintain such.
– Major three-star support floor at 86.16-86.28 has been reaffirmed upon multiple tests but we cannot ignore the weakening of its strength upon such multiple tests and fear a potential washout below brewing.
– Upon a break and close below 86.16-86.28, we see a minimum test of rare major four-star support at … Click here to get our (FULL) daily reports emailed to you!
Gold (December) / Silver (December)
Gold, yesterday’s close: Settled at 1722.6, up 13.3 on Friday and down 27.2 on the week
Silver, yesterday’s close: Settled at 17.881, up 0.215 on Friday and down 0.944 on the week
– Burst of strength overnight has been met with currency headwinds, a strengthening U.S. Dollar.
– Price action did exceed first layers of major three-star resistance but has since slipped below; these levels will remain crucial as the session unfolds.
– Added selling is likely encouraged upon continued price action below our Pivot and point of balance in Gold at … Click here to get our (FULL) daily reports emailed to you!