Market Overview – Morning Express
Market Overview – Morning Express
E-mini S&P (March) / NQ (March)
S&P, yesterday’s close: Settled at 3846.00, down 15.00
NQ, yesterday’s close: Settled at 10,945.50, down 76.75
Fundamentals: U.S. equity benchmarks wobbled out of the gate yesterday but found footing in the final hours of trade. The late session rebound carried overnight, starting with the Hang Seng gaining 3.2%, marking a 5.1% surge to start the year. In a stark difference from 2022, Chinese officials made supportive comments on the economy and real estate sector. Bullish tailwinds also came from Europe, where French CPI, like German CPI yesterday, surprised to the downside, even deflating m/m. Add a better read on Services PMI and the German DAX is up more than 1.5%.
As the attention shifts to the U.S., there is a slew of downgrades the market must digest, including Microsoft, Honeywell, Target, and Pfizer. ISM Manufacturing data is then front and center and follows yesterday’s final SPGI Manufacturing PMI that contracted at 46.2. Expectations for headline ISM are at 48.5, Employment at 48.3 and Prices contracting at 42.6, in what would be the largest drop in prices since the onset of the pandemic.
Do not miss our daily Midday Market Minute, from yesterday.
The CME FedWatch Tool currently signals the Fed will hike by 25bps on February 2nd with a 72.3% probability. We have a busy week ahead and this afternoon brings the Minutes from the Fed’s December meeting at 1:00 pm CT. Tomorrow, we get a glimpse at jobs with the private ADP survey and weekly Initial Jobless Claims. Friday brings Nonfarm Payrolls for December, followed by ISM Non-Manufacturing.
Technicals: Price action is firm ahead of the opening bell but faces strong first resistance aligning with yesterday’s early reversal, detailed below. Ultimately, the levitation overnight from settlement creates a gap and strong first key support at 3846-3847.50 in the S&P and 10,945-10,986 in the NQ. Continued price action out above these levels will create a constructive session and one that paves the way for a retest into major three-star resistance at 3908.50-3912.50 in the S&P and 11,181-11,208 in the NQ. We will keep a pulse on our Pivot and point of balance in anticipation that it will help steer the price action in both the … Click here to get our (FULL) daily reports emailed to you!
Crude Oil (February)
Yesterday’s close: Settled at 76.93, down 3.33
Fundamentals: Crude Oil is down more than 2% on the session with broad recession fears remaining the blatant headwind. Despite supportive comments from Chinese officials on the economy, a surge in virus cases dents the near-term demand outlook. Furthermore, China lifted its Coal import ban. Coal competes with petroleum and Natural Gas for power generation. Data this morning showed OPEC+ was less over-compliant in December than November at 161% versus 163%. Quota-bound members missed their output goal by 780,000 bpd versus 800,000 bpd in November. However, due to a rebound in Nigerian production, not quota-bound, OPEC+ production rose by 120,000 bpd from November.
Early expectations for tomorrow’s inventory report (and the private API survey after today’s bell) are for +2.27 mb Crude, -1.5 mb Gasoline, and -1.833 mb Distillates.
Technicals: Price action sharply broke support at the $76 mark upon the European open and tested head on our major three-star support at 74.03-74.46 before stabilizing. Ultimately, we must see a close back above what is now major three-star resistance at 75.75-76.23, or the tape will remain vulnerable to added selling down to our next shelf of major three-star support at … Click here to get our (FULL) daily reports emailed to you!
Gold (February) / Silver (March)
Gold, yesterday’s close: Settled at 1846.1, up 19.9
Silver, yesterday’s close: Settled at 24.236, 0.196
Fundamentals: Gold and Silver continue to find bullish tailwinds, underpinned by strength across the Treasury complex and seasonality. Yesterday’s spike in the U.S. Dollar is all but erased, helping to elevate Gold to the highest since June 27, 2022. We also want to keep a close eye on the Gold miners to confirm this breakout, discussed in the Technical section below. As we noted above, in the S&P/NQ section, the week is just getting underway, and it is a busy one ahead. ISM Manufacturing is due at 9:00 am CT, and the December FOMC Minutes at 1:00 pm CT. Tomorrow, we get a glimpse at jobs with the private ADP survey and weekly Initial Jobless Claims. Friday brings Nonfarm Payrolls for December, followed by ISM Non-Manufacturing.
Technicals: Although yesterday’s strength marked a potential breakout in Gold, it failed to settle above rare major four-star resistance at 1848.5, now support. This marks the 50% retracement from the November low back to the March 2022 high. We reduced our cautiously Bullish Bias to Neutral and cited a time to capitalize on longs, not due to technicals but more due to the uncertainty the economic calendar brings in the near-term. Also, we still need the Gold miners to … Click here to get our (FULL) daily reports emailed to you!
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