E-mini S&P (December) / NQ (December)
S&P, yesterday’s close: Settled at 4699, up 14.00
NQ, yesterday’s close: Settled at 16,392.25, up 74.25
Fundamentals: U.S. benchmarks are digesting gains and rightfully so. In essentially two trading days, the S&P rallied 4.9% from Friday’s low of 4492 at 2:00 pm CT. There have been and will be years where investors hope to eek out a 5% return. The pause makes sense, not only from a technical supply/demand perspective, refreshing the market’s profile, but as we look ahead to economic data and answers on Omicron before the weekend. Both of which will play a crucial role in next week’s Federal Reserve policy meeting. Markets are also absorbing the impact of Evergrande’s official default and a stream of news from China overnight. Weekly Jobless Claims crushed expectations, falling to a new pandemic low of 184k versus 215k, but it is tomorrow’s CPI read that carries the largest impact. In the U.K., Prime Minister Johnson moved to “Plan B” as case counts rise to their June and October peaks, announcing work from home and mask orders. Despite concerns from the virus and Evergrande, a soft to mixed read on inflation from China overnight was seen as soothing; CPI YoY was lighter than expected at 2.3% versus 2.5%, and whereas CPI MoM and PPI YoY were higher than expected, they retreated from October’s levels. This is seen as providing monetary policy flexibility. Also, the Chinese Yuan weakened from the strongest level against the U.S. Dollar since May 2018 as the PBOC raised the FX Reserve Ratio for banks to rein it in. The Hang Seng found the news favorable, gaining 1% to a two-week high.
Technicals: Price action across indices is consolidating in a very healthy manner. The S&P and NQ held out above first levels of resistance yesterday and built for a strong close. Those levels are back in play today, for the S&P this is major three-star support at 4662-4669.75 and for the NQ it is key support at 16,245-16,265. Price action has dipped below our momentum indicator for each and while below, it leaves the door open for waves of selling; these levels come in at 4691.50 in the S&P and 16,355 in the NQ. The two things we cannot ignore. First, major three-star resistance in the S&P at 4699-4702 and the NQ at 16,445-16490 has been achieved; we now must close above here or face waves of profit taking. Second, if we do see selling, there is an even strong second layer of support at … Click here to get our (FULL) daily reports emailed to you!
Crude Oil (January)
Yesterday’s close: Settled at 72.36, up 0.31
Fundamentals: Crude Oil is working lower on the session amid a wave of risk-off. The weakness comes upon tighter restrictions as case counts rise across the globe. However, we also attribute the selling to the weaker Chinese Yuan. The PBOC raised the FX Reserve Ratio for banks and the Yuan slipped from the highest level versus the U.S. Dollar since May 2018. As we all know, China is the heartbeat of global demand, and a weaker currency means they can purchase less goods. Price action is also working through yesterday’s EIA data and strong technical resistance at $73. The headline data was bearish and carries such an undertone, but internally the weekly inventory was more upbeat and that is why prices quickly snapped back. While Crude Oil works through such near-term headwinds, we maintain a very upbeat view over the intermediate and long-term.
Technicals: Price action, like equity indices, is digesting a tremendous bounce from the back half of last week and merely consolidating at this level is very constructive for higher prices. First key support at 70.76-70.91 has buoyed waves of selling thus far and this is of the utmost construction, however, we could see selling move as low as major three-star support at … Click here to get our (FULL) daily reports emailed to you!
Gold (February) / Silver (March)
Gold (February) / Silver (March)
Gold, yesterday’s close: Settled at 1784.7, up 5.2
Silver, yesterday’s close: Settled at 22.432, down 0.091
Fundamentals: The metals complex is broadly under pressure, as are commodities across the board, but it is Silver taking the largest hit. Whereas Gold is holding constructively out above technical support and only down about 0.5%, Silver is down about 2.5%, breaking to the lowest levels since September 30th. As we mentioned in the Crude Oil section, the PBOC raised the FX Reserve Ratio for banks and the Yuan slipped from the highest level versus the U.S. Dollar since May 2018. Metals are more likely than any other commodity to be hit the hardest on Chinese Yuan moves and this is exactly what we are seeing this morning. Weekly Jobless Claims came in at a fresh pandemic low of 184k versus 215k expected and helped bring a fresh wave of selling across Silver and Gold, right when they were the most vulnerable. Tomorrow’s CPI and currency developments as Omicron unfolds will be the most crucial. We will leave you with this; early selling in Gold and Silver over the last two weeks has rebounded as the session unfolds.
Technicals: Gold’s weakness traded into first key support at 1771-1776 and it is holding well out above rare major four-star support, a level in which it responded last week. Although this is constructive, Gold has done the minimum. However, Silver tapped the lowest level since September 30th, trading below key support at 22.18-22.25 and the 22.03 from Friday. Speaking of that low from Friday, Silver was able to rebound steadily on that session, meaning and buyers have shown up to defend Silver in the $22 area, not only over the last week but as it sold off sharply late in September. Can they one more time? We see rare major four-star support in Silver 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