Market Overview – Morning Express
E-mini S&P (December) / NQ (December)
S&P, yesterday’s close: Settled at 4508.50, down 57.75
NQ, yesterday’s close: Settled at 15,869.75, down 280.75
Fundamentals: Equity markets sold off sharply in the final hours yesterday, after the first case of the Omicron variant was reported in the U.S. Was it a surprise to see the variant show up here? Absolutely not, it was only a matter of time. However, Fed Chair Powell’s hawkish twist on Tuesday has likely elevated the virus angst and markets hate uncertainties. More surprising is the level of selling, slicing through tremendous areas of support in the S&P, ultimately finding an air pocket to reverse as much as 3% on the session. U.S. benchmarks have found some stability overnight, but the volatility will continue. As of now, the new variant appears to be more transmissible than Delta, but the cases have been reported as milder. The potential bullish tailwind from all of this is peak Covid fears due to a weakening strain and a Fed that is more dovish than Tuesday as more information is gathered.
Although Omicron will dominate headlines, there is heavy news flow across the board. Apple is leading the NQ into the red after Bloomberg reported the company warned suppliers of falling iPhone 13 demand into the holiday season. This morning, Eurozone PPI was hotter than expected and the highest we see on record at 21.9% YoY and 5.4% MoM. This helped lift the Euro and weaken the U.S. Dollar. Also, OPEC+ is meeting and will decide whether to hold back some or all of their monthly planned production add of 400,000 bpd. On the U.S economic calendar, Initial Jobless climbed to 222,000 from last week’s new pandemic low of 194,000. However, this was better than the 240,000 expected. We now look to a deluge of Fed speak on the heels of Fed Chair Powell’s comments. Fed Governor Quarles is set to speak at 10:00 am CT. Also, Richmond Fed President Barkin, Atlanta Fed President Bostic, and San Francisco President Daly are all expected to speak at 10:30 am CT. They must be watched closely as all vote at the meeting in two weeks.
Technicals: As disappointing as yesterday’s tape played out, there is still no reason to be anything but upbeat about this market. We have highlighted the wide, but significant, range in the S&P that holds several major areas of support. This did start with our rare major four-star level at 4549.50-4557. It was tested and held perfectly on Tuesday before price action sliced through it yesterday to find an air pocket into the close, trading to a low of 4497.75. The selling pinged the midpoint between the September low and the recent all time high at 4500.25. Continued stability above here should open the door for buyers to again try to clear the 4549.50-4557 level that is now resistance. This level was tested overnight, before the Apple news weighed on the S&P and more so the NQ. However, a close above 4549.40-4557 today should bring a further rebound. The NQ is trading a bit heavier, reaching a new swing low after the Apple news. Price action has dipped below major three-star support at 15,850-15,897, but like the S&P there are layers of tremendous support underneath. The next aligns with the early September record high at 15,700. To the upside, a close above major three-star resistance at … Click here to get our (FULL) daily reports emailed to you!
Crude Oil (January)
Yesterday’s close: Settled at 65.57, down 0.61
Fundamentals: Crude Oil cratered to a new low after OPEC+ signaled it will rollover their planned production increase, adding 400,000 bpd in January. The news comes as a surprise given rising concerns over the Omicron variant and the technical committee’s analysis of surplus in the first quarter of 2022. As we cited here yesterday, they see the surplus worsening to 2 mbpd in January, 3.4 mbpd in February and 3.8 mbpd in March. It was known the cartel was considering slowing the planned add and many, including us, believed this was a likely scenario. For now, price action has rebounded a bit from the low a new low of 62.43.
Technicals: Today’s early rebound failed to regain the 200-day moving average at 67.52. This will be the third consecutive day under the 200-dma, an indicator it has been steadfastly above since last November. Resistance aligning with previous lows comes in at 64.84-65.10; Crude must regain and close above here in order to show any sign of stability… Click here to get our (FULL) daily reports emailed to you!
Gold (February) / Silver (March)
Gold, yesterday’s close: Settled at 1784.3, up 7.8
Silver, yesterday’s close: Settled at 22.339, down 0.476
Fundamentals: It is a day ending in ‘Y’, therefore it must be a disappointing one for the metals. The U.S. Dollar is down, and Bonds are higher, yet Gold is lower. One would think Gold could capitalize as a safe-haven given the inflationary environment and uncertainties around Omicron, but it has shown little enthusiasm. Initial Jobless Claims came in better than expected and this batted down an early morning rebound from the overnight low. Up next, we look to a deluge of Fed speak. Fed Governor Quarles speaks at 10:00 am CT. Also, Richmond Fed President Barkin, Atlanta Fed President Bostic, and San Francisco President Daly are all expected to speak at 10:30 am CT. Traders must keep an eye on these comments as they are all 2021 voters, voting in two weeks. Do they share the same view as Fed Chair Powell’s newfound hawkishness? Has anything changed amid rising variant fears? If so, it could provide fuel to Gold and Silver.
Technicals: Price action continues to bleed. Gold is now testing into rare major four-star support at 1757-1766 and it must respond. From an upbeat perspective, this 1763.9 was the settlement pre-FOMC on November 3rd. One way to think about it, there was unfinished business that is now taken care of. As for Silver, it built a floor around the September 29th plummet and rebound; it is testing into that floor at … Click here to get our (FULL) daily reports emailed to you!
You can sign up for a free trial here: https://www.bluelinefutures.com/free-trial
https://www.bluelinefutures.com
20211202
