Market Overview – Morning Express
Market Overview – Morning Express
E-mini S&P (December) / NQ (December)
S&P, yesterday’s close: Settled at 3980.00, up 69.50
NQ, yesterday’s close: Settled at 12,263.25, up 244.25
Fundamentals: A reprieve in the rise of the U.S. Dollar and rates yesterday helped lift the S&P from the depths of 3900. The U.S. Dollar Index peaked at the onset of U.S. hours, but it was Fed Vice Chair Brainard’s comments later in the session that encouraged a sharp reversal. This brought a bullish tailwind to U.S. equity benchmarks, which were looking for a reason to consolidate ahead of today’s critical session. Although she reiterated the ‘as long as it takes’ rhetoric when referring to the Fed’s hiking cycle to tame inflation, she acknowledged the bank could move ‘too much’. That one comment arguably signaled a narrow hole in Fed Chair Powell’s deliberate hawkishness at Jackson Hole. Ultimately, risk assets were looking for a reason to consolidate from the pre-Labor Day panic ahead of today’s European Central Bank policy decision at 7:15 am CT and Fed Chair Powell’s speech scheduled for 8:10 am CT. Consensus is leaning on the more aggressive 75 basis point hike from the ECB, for the bank to battle surging inflation, underpinned by the energy crisis, and stay on track with the Federal Reserve’s aggressiveness, regardless of recession risks. Odds have signaled as much as an 80% chance they move with 75, but some call it a coin flip. Despite ECB President Lagarde’s post-decision press conference at 9:15 am CT, Fed Chair Powell’s comments could easily become the most pivotal. Did the market misinterpret Brainard’s comments? Will Powell redeliver a Jackson Hole like blow to again set things straight?
Technicals: Price action quickly stabilized in the first hour yesterday, finding a tailwind from the pullback in the U.S. Dollar and rates. Both the S&P and NQ are testing thick areas of resistance aligning with Friday’s rollover and highlighted below. This kept the tape in check overnight, but first support in the S&P at 3962.50-3968.75 held strong. Ultimately, the bulls must clear major three-star resistance aligning with Friday’s high at 4017-4023.25 in order to neutralize the latest wave of weakness and spark a rally driven by both short-covering and longs repositioning. To the downside, a break below major three-star support in the S&P at … Click here to get our (FULL) daily reports emailed to you!
Crude Oil (October)
Yesterday’s close: Settled at 81.94, down 4.94
Fundamentals: Crude Oil has stabilized ahead of today’s inventory data and deluge of central bank speak. Last night’s private API survey signaled a small build of 0.733 mb, when a small draw was expected. They also posted Gasoline at -0.836 mb and Distillates at +1.833 mb, with inventories at Cushing falling for the second week (-0.772 mb), after eight straight weeks of builds. Analyst expectations for today’s official EIA read at 10:00 am CT are for -0.25 mb Crude, -1.667 mb Gasoline, and +0.53 mb Distillates. We continue to believe virus related lockdowns in China are the largest near-term headwind to the price of Crude Oil. Lockdowns in Chengdu, a city with 21 million residents, were extended indefinitely.
Technicals: We continue to hold an outright Neutral Bias, something we maneuvered to when $93 was breached last Tuesday. Constructively, price action has responded to rare major four-star support at 81.75-82.63, a level that we called to be tested at minimum upon a break below $86. Rebound attempts are going to face a tough headwind of resistance in close proximity at … Click here to get our (FULL) daily reports emailed to you!
Gold (December) / Silver (December)
Gold, yesterday’s close: Settled at 1727.8, up 14.9
Silver, yesterday’s close: Settled at 18.26, up 0.352
Fundamentals: Gold and Silver, like stocks, enjoyed a rebound from the Tuesday night low, underpinned by a reprieve in the rise of the U.S. Dollar and rates. Both re-checked highs of the week, aligning with resistance, ahead of today’s ECB policy decision and a pivotal speech from Fed Chair Powell at 8:10 am CT. The ECB hiked rates by 75 basis points, and we have not gotten all of the details yet, but risk-assets have so far pared some of yesterday’s gains. With markets eyeing Powell, we cannot forget ECB President Lagarde’s post-meeting press conference scheduled for 9:15 am CT.
Technicals: Overnight strength in Gold pinged major three-star resistance for the second time this week at 1737.5-1740, while Silver hit a new high achieving major three-star resistance at 18.60-18.83. The week has been fairly constructive for both precious metals, holding critical levels of support at the lows. However, a failure today and break below support at … Click here to get our (FULL) daily reports emailed to you!
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