Market Overview – Morning Express
E-mini S&P (December) / NQ (December)
S&P, yesterday’s close: Settled at 4686.25, down 9.25
NQ, yesterday’s close: Settled at 16,311.50, up 10.75
Fundamentals: U.S. benchmarks battled through waves of selling yesterday, but Apple and Tesla staved off any noticeable damage. Apple gained 1.65%, marking a five-day run of 3%. Tesla added 3.25%, lifting the stock for a rebound of more 5.38% on the week. The Russell 2000 is a different story, shedding 1.27% as Energies, Materials, and Financials were battered. Although Tech did not broadly perform yesterday, it has clearly taken a lead through midweek, dragging both the S&P and NQ within 0.25% of record highs overnight. Now, it is important to note that Covid cases across Europe are spiking, giving way to what can safely be called a fourth wave. We are beginning to see signs of the same macro impact from late May as the third wave took hold; a plunge lower in Copper and Crude while the Russell 2000 and Emerging Market Index underperform. Bonds rallied yesterday and the yield on the 30-year slipped back below 2.0%. Under these circumstances, Tech has proven to outperform.
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Today, Philly Fed Manufacturing crushed expectations and weekly Jobless Claims were not bad, but mixed. Overall, the slate of U.S. data this week has vastly beaten expectations. The Bond market is lower on the week, but as mentioned, it is paring losses. What does the Bond market try telling us into the weekend? We believe this could be a very good tell of things to come.
Technicals: The overnight rally places the S&P just below key resistance at 4701-4705 and the NQ against major three-star resistance aligning with its record at 16,392-16,449. Price action in both is holding steadily out above our momentum indicators at 4692 in the S&P and 16,343 in the NQ. Below here, each index has several layers of key support within proximity that price action responded to very well yesterday. If first key supports hold through early tomorrow, look for it to help catapult both the S&P and NQ to fresh record highs. However, 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 (January)
Yesterday’s close: Settled at 77.55, down 2.19
Fundamentals: Crude Oil slipped sharply yesterday despite bullish inventory data. As we noted here, the White House is closely monitoring supplies and would unload SPR in the wake of further tightening. The administration is also trying to coordinate a release with China and other Asian nations. Our rhetoric welcomes this. We believe it would artificially lower prices and present a buying opportunity. Most recently, the Reserve Bank of Australia was trying to implement yield curve control. Their 3-year Note yield rallied one whole percentage point through the month of October, only to pare back once they threw in the towel. Inflation will muscle policy and a cold winter coupled with stronger demand prospects will muscle an SPR release and furthermore signal the White House may not be able to contain a price rally. This would encourage Oil prices to feed on themselves. Now, as we mentioned in the S&P/NQ section, a surge in Covid cases across Europe is a developing headwind for Crude Oil and brings an added layer of uncertainty to the downside.
Technicals: We maintain a more Bullish Bias despite our recent lack of enthusiasm and the market’s lack of direction. We hold this because we have been very Bullish for over a year and see more upside through 2022. Price action slipped sharply yesterday through December options expiration and January is now the front month. For December we were eyeing rare major four-star support at 76.12-76.26, however, for the January contract this is 74.96-75.12. The market did not get there and is so far responding off support aligning with the July and September high in the January contract at 76.67-76.98. Still, there was tremendous damage yesterday and this brings major three-star resistance at … Cick here to get our (FULL) daily reports emailed to you!
Gold (December) / Silver (December)
Gold, yesterday’s close: Settled at 1870.2, up 16.1
Silver, yesterday’s close: Settled at 25.167, up 0.223
Fundamentals: Gold and Silver are digesting the recent rally and holding onto those gains very well. Yesterday, the U.S. Dollar slipped, and Bonds rallied, this helped precious metals rebound quickly from Tuesday’s weakness. U.S. economic data has been very strong over the last week and Philly Fed Manufacturing was the latest this morning. Gold and Silver may not only be pausing to absorb the recent rally, but as they wait for options expiration for the major December contract to expire Monday. Between now and then we do expect price action to whipsaw on Fed speak and a potential Fed Chair announcement; traders must stay nimble.
Do not miss our daily Metals Edge video, covering the sector after settlement at 12:30 CT.
Technicals: The technical landscape remains unchanged from yesterday. There is clear supply overhead, but Gold and Silver are battling at previously significant levels of resistance that now align with our momentum indicators as our Pivots, noted in the details below. In the wake of a wave lower, we see strong support in Gold at 1843-1846 and have rare major four-star support at … Cick here to get our (FULL) daily reports emailed to you!
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