Market Overview – Morning Express
Market Overview – Morning Express
E-mini S&P (December) / NQ (December)
S&P, yesterday’s close: Settled at 3841.00, down 29.25
NQ, yesterday’s close: Settled at 11,446.00, down 267.50
Fundamentals: Today boasts an ECB policy decision, the first look at Q3 GDP, and earnings from the largest company in the world, but yesterday’s news is all the talk. Meta Platforms, the social hit-maker formally known as Facebook, is slipping, falling, and cannot get up. The once behemoth is down another 22% this morning, marking a 74% plunge from its peak one year ago and flirting with the psychological $100 mark after whiffing on earnings. The company said its costs will rise by another 14%, compressing margins further and dragging out a transition to the virtual world that all except its founder and CEO Mark Zuckerberg seem to question, as he asks for “patience”. Meta joins a slew of disappointments from big tech, including Microsoft and Alphabet, but the NQ index has been broadly resilient. All is not negative, though, even within tech. After yesterday’s bell, ServiceNow, known for its strong showing in earnings season (except for last), crushed estimates and is up 13% premarket. Elsewhere, MA, MRK, MCD, CMCSA, HON, and CAT are all reacting favorably to reports this morning, helping to underpin a fresh swing high in the Dow. However, with earnings from Apple, the largest, and Amazon, the fourth largest company by market cap, on deck for after the bell, tech and the market broadly face a real inflection point.
The ECB raised rates by 75bps across the board, as expected. The bank signaled more rate hikes to come but did not announce Quantitative Tightening, saying it intendeds to reinvest principal payments from PEPP program. ECB President Lagarde’s press conference starts at 7:45 am CT. On the economic calendar, the first look at U.S. Q3 GDP came in a touch better than expected at +2.6% versus 2.4%, but the Price Index was much lower than expected at 4.1% versus 5.3%. Initial Jobless Claims beat expectations at 217k versus 220K, and 214k last week. The big miss came from Core Durable Goods Orders which fell by -0.5% when +0.2% was expected.
There is a lot to unpack this morning, but the ECB did not rock the boat, earnings are good aside from Meta, and the economic data provides a favorable twist with prices lower and orders falling.
Technicals: There is a clear divergence between the more value-oriented corners of the markets, the Dow, and outright tech, the NQ. The Dow has poked at a fresh swing high, whereas the NQ is trading nearly 3% from its peak this week. We will look to leadership from the Dow and stability in the S&P to help signal the selling, for now, is abated. The S&P has not breached major three-star support aligning multiple levels, including a recent peak at 3819.25-3824.25, and we find this very constructive. Although the NQ is lower, we still have two ‘line in the sand’ levels of support we referenced here on Tuesday that are still untouched. They are noted below as our first two levels of support. Today’s session must start with stability at first key support in the S&P, unchanged on the session, at 3841. Ultimately, another rally attempt is likely to be born from strength at and above our Pivot and point of balance in the S&P at 3853. Regardless, we cannot ignore the strong overhead resistance in which price action failed at yesterday, as this resistance stretches through 3900 and to a pocket of rare major four-star resistance at … click here to get our (FULL) daily reports emailed to you!
Crude Oil (December)
Yesterday’s close: Settled 87.91, up 2.59
Fundamentals: Crude Oil is staging a rally towards $90, underpinned by another inventory report watered down by a deluge of SPR release. Yesterday’s EIA report pointed to a composite build of 1.28 mb, however, the White House released 3.416 mb from the SPR. Added tailwinds are coming from the G7 looking to drop a plan to establish a price cap on Russian Oil. There is no doubt the plan spearheaded by the U.S. has created rifts among OPEC+ and even counties in the West. At the end of the day, we highlighted on Tuesday that China’s imports of Russian Crude were up 22% YoY in September and exports of refined fuel +36% YoY. A price cap on Russian Oil will only fuel added supplies being diverted and sold through China.
Technicals: Price action is eying a direct test in the psychological $90 mark and major three-star resistance at 89.73-90.00. The tape has decisively cleared previous resistance at 88.12-88.66, and this will act as our Pivot and point of balance. There is now a line in the sand support developing to define this potential bull leg higher and comes in at … click here to get our (FULL) daily reports emailed to you!
Gold (December) / Silver (December)
Gold, yesterday’s close: Settled at 1669.2, up 11.2
Silver, yesterday’s close: Settled at 19.486, up 0.137
Fundamentals: Yesterday, we said, “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.” Gold and Silver have not been able to chew through that resistance, and fundamentally, the U.S. Dollar rebounded overnight and encouraged a wave of selling across the metals complex. Most importantly, the U.S. Dollar gained 0.70% against the Chinese Yuan on the day. However, the Dollar Index has pared its strength in half, and the Treasury complex has firmed up from session lows after the ECB raised rates as expected and did not announce QT. Also, Q3 GDP beat slightly, but Prices came down to 4.1% versus 5.3% expected and 9.1% in Q2, as well as Jobless Claims ticking up to 217k from 214k last week (though 220k expected). All things considered, the pressure is reverted back to the technical landscape.
Technicals: The technical landscape is the same as yesterday, but now price action has pinged both major three-star resistance as well as strong levels of first key support. The emphasis comes back to our Pivot and point of balance, continued action in Gold and Silver above these levels at … click here to get our (FULL) daily reports emailed to you!
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20221027
