Market Overview – Morning Express
– Central bank bonanza, maybe 20 different bank policy meetings this week, including the top four.
– The Federal Reserve is the star of the show and concludes their two-day meeting Wednesday at 1:00 pm CT. ECB and BOE on Thursday, and BOJ Friday.
– Friday’s CPI data was contained. Yes, inflation is sticky and but not more so than expected.
– Does this buy the Federal Reserve time? We like to think so from the perspective of how hawkish Chair Powell was two weeks ago. Less hawkish than such, but more hawkish than November 3rd.
– Still, Core CPI at 30-year high and headline inflation at 39-year high.
– Data on Omicron is telling us what we already believed. Highly transmissible but less dangerous.
– Still, the wave of infections has not fully taken hold. U.K. Prime Minister Johnson said the country faces a “tidal wave” of infections.
– Odds of a Fed hike as soon as May at 57.8%. CME Fed Watch Tool above.
– President Biden’s fiscal hopes in the spotlight, Build Back Better. He is expected to meet with Senator Manchin later today.
– Mounting expectations for Chinese stimulus. After starting on very strong footing gains were pared, Hong Kong’s Hang Seng finished -0.17% and China’s Shanghai Composite +0.40%
– Keep an eye on
o Semiconductor space with news from TSM and INTC on capacity expansion,
o Surge in European Natural Gas to highest since October on Nord Stream 2 doubts
o Turkish Lira, -30% against the U.S. Dollar over last five weeks.
E-mini S&P (December) / NQ (December)
S&P, yesterday’s close: Settled at 4711, up 44.00 on Friday and 173.50 on the week
NQ, yesterday’s close: Settled at 16,329.75, up 181.00 on Friday and 612.00 on the week
– Bull-flag breakouts building in S&P, NQ, and Dow. Can we get true follow through and confirmation? All face strong resistance overhead.
– We always roll to the new contract on Tuesday’s, the week of quad witching. New core positions should be in March.
– Major three-star supports, detailed below, were tested perfectly at 10:00 am CT on Friday. S&P did not cover Thursday closing gap by 1 point, but NQ covered. Mounting line in the sand.
– S&P is trading above 11/5 and 11/26 highs, seen as right and left shoulder to 11/22 head. Can bull-flag breakout overpower head and shoulders top? Shown in chart above.
– Similar activity in the NQ with ceiling of major three-star resistance at 16,445-16,490 coming from right and left shoulder.
– If follow through confirmed, measured moves point to major three-star resistance at … Click here to get our (FULL) daily reports emailed to you!
Crude Oil (January)
Yesterday’s close: Settled at 71.67, up 0.73 and 5.41 on the week
– OPEC Monthly Report said Omicron impact is expected to be mild.
– Cartel raised demand forecast for Q1 to 99.13 mbpd, up by 1.11 mbpd.
– Left full-year guidance unchanged. Growth of 4.15 mbpd YoY, pinning above 2019 demand.
– In November they added 290,000 bpd. Shy of the 400,000 planned add.
– Overnight strength on mounting expectations for Chinese stimulus.
– Traded to, but again contained by, major three-star resistance at 72.93-73.13.
– Trading back below our momentum indicator at … Click here to get our (FULL) daily reports emailed to you!
Gold (February) / Silver (March)
Gold, yesterday’s close: Settled at 1784.8, up 8.1 and 0.9 on the week
Silver, yesterday’s close: Settled at 22.195, up 0.182 on Friday and down 0.286 on the week
– Metals jolted higher in relief after CPI not hotter than expected.
– Still, sticky inflation expectations and a recently hawkish Fed Chair Powell have contained rally attempts and kept trading very rangebound ahead of FOMC Meeting.
– We expect a decisive move Wednesday after policy announcement. For now, we favor higher metals prices due to a hawkish bar already being set and upcoming seasonal tailwinds.
– Despite waves of buying, price action in Gold cannot seem to clear and breakaway from major three-star resistance at 1781-1786.3. Momentum indicator has caught up to here.
– Rally attempts batted down from key resistance at 1791-1795.
– Check out Phillip Streible’s weekend article on Silver. How Low is Too Low, part 2.
– Has Silver formed a low? Good volume off major three-star support at … Click here to get our (FULL) daily reports emailed to you!
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