Market Overview – Morning Express
Market Overview – Morning Express
E-mini S&P (December) / NQ (December)
S&P, yesterday’s close: Settled at 3870.25, up 61.00
NQ, yesterday’s close: Settled at 11,713.50, up 234.75
Fundamentals: U.S. equity benchmarks are mixed after earnings reports from big tech underwhelmed. Although the NQ lost as much as 2.4% after the second and third-largest companies in the market cap-weighted index plunged, the Russell 2000 is up by 0.75%, and the Dow is flirting with unchanged. This leaves the S&P on its back foot, slipping as much as 1.1% before trimming losses ahead of the opening bell. Microsoft beat top-and-bottom-line estimates, but its cloud business, which includes Azure and Windows, missed consensus, and the company lowered its guidance. Alphabet is a different story, it missed both top-and-bottom-line estimates, marking its worst growth since 2013. To make matters worse, YouTube ad revenue fell 2% when analysts expected +3%. Microsoft and Alphabet are both down more than 6% ahead of the bell. Additionally, Texas Instruments is down about 5% after lowering forecasts, despite beating both earnings and revenue estimates. All was not negative, though, as Visa crushed earnings and revenue on strong consumer spending and raised its dividend by 20%. Like Coca-Cola, which reported yesterday morning, it is up more than 2% post-report. The struggles of each tech company highlight a difficult macro environment. It is not a complete surprise, simply more of a shock to the market from the elevated levels and massive technical resistance achieved into yesterday’s close.
This morning’s earnings were broadly strong, with TMO, BMY, ADP, EM, and GD beating top-and-bottom-line estimates. However, the reactions due to guidance have been muted overall, with only ADP gaining ground. Boeing is a different story and reported a much larger than expected loss at -6.18 versus +0.18 expected, however, strong cash flow has helped the stock only lose about 2% ahead of the open. Meta and ServiceNow are set to report after the bell.
Do not miss our daily Midday Market Minute, from yesterday.
Case in point, yesterday’s home price data fueled a banner day for stocks. Case Shiller data showed home prices falling more than expected from July to August and gained less than expected from a year ago. A steadfast rise in home prices from November through March peaked had slowed, but this marks the second consecutive month that prices actually fell and provides a light at the end of the tunnel for Owner Equivalent Rents. OER makes up one-third of CPI and is ultimately a survey of homeowners for what they would rent their house at. Therefore, it lags drastically. Although structural problems persist in the labor market, expectations for OER to recede will allow the Federal Reserve to raise rates more patiently. It is also important to note that CB Consumer Confidence fell for the first time in three months to a three-month low.
New Home Sales are due at 9:00 am CT, and the Bank of Canada is expected to announce a policy decision then. The Treasury will auction $43 billion of 5-years Notes at noon CT today and $35 billion 7-years tomorrow. Tomorrow, the ECB holds a policy decision at 7:15 am CT, and we get the first look at Q3 GDP at 7:30.
Technicals: There are clear pressures this morning across tech, but all is not lost when seeing strength in the Russell 2000. The real concern is technical after the NQ achieved rare major four-star resistance at 11,721-11,760 yesterday into settlement and right before failing. The level combines many technical indicators as well as a trend line from the August peak. We must now see a technical response to support aligning with Friday’s strong settlement and our recurring major three-star 11,207-11,257 just below. As for the S&P, it is retesting previously strong resistance, now support, at 3819.25-3824.25, with other constructive levels highlighted below. If supports can hold through the first hour, in order to begin repairing the damage, the bulls must regain first key resistance at … Click here to get our (FULL) daily reports emailed to you!
Crude Oil (December)
Yesterday’s close: Settled at 85.32, up 0.74
Fundamentals: Crude Oil is firm ahead of inventory data this morning. Currency dynamics are certainly underpinning strength in the commodity landscape this morning, with the Chinese Yuan gaining more than 1% on the U.S. Dollar from a critical technical level, more on this in the Gold/Silver section. The strength in Crude comes despite a much larger build in yesterday’s private API survey at 4.52 mb, although Gasoline stocks did drawdown by 2.278 mb. It would seem the market is readying itself for today’s official EIA report at 9:30 am CT. Analysts expect +1.029 mb Crude, -0.805 mb Gasoline, and -1.138 mb Distillates. Remember, keep a close eye on the SPR release, Refinery Utilization, and inventories at Cushing.
Technicals: We remain Neutral in Bias as the market consolidates in a wide range between $80 and $90. We believe our near-term caution will position us to be significant buyers below $80, if it were to happen. Price action is trying to breakout above major three-star resistance at 85.98-86.18 ahead of the EIA report, but the level will remain crucial on a closing basis. Our momentum indicators are starting to point higher this morning and align closely with previous resistance to create our Pivot and point of balance, the bulls are in the driver’s seat while holding above this level at … Click here to get our (FULL) daily reports emailed to you!
Gold (December) / Silver (December)
Gold (December) / Silver (December)
Gold, yesterday’s close: Settled at 1658.0, up 3.9
Silver, yesterday’s close: Settled at 19.349, up 0.16
Fundamentals: Gold and Silver are showing signs of life this morning, and it is no coincidence the Chinese Yuan is strengthening. We spoke of this relationship at great length to start the week, as well as in an interview with the TD Ameritrade Network. Chinese state banks are reported to have sold U.S. Dollars overnight to help support the Yuan, and government officials voiced plans to support economic growth. At the same time, price action had hit a significant level of resistance, a rising trend line in the USDCNH or a falling one in the CNHUSD. Strength in the Treasury complex is also helping to lift Gold and Silver, 30-year Bond futures are up more than a point.
Technicals: With fundamentals helping to support underlying strength, it is now a matter of whether Gold and Silver can chew through significant levels of technical resistance. Both are trading above our momentum indicators, which align as our Pivot and point of balance on the session. However, major three-star resistance at … Click here to get our (FULL) daily reports emailed to you!
https://www.bluelinefutures.com
20221026
