Market Overview – Morning Express
E-mini S&P (March) / NQ (March)
S&P, yesterday’s close: Settled at 4558.50, down 51.50
NQ, yesterday’s close: Settled at 15,621.25, down 166.75
Fundamentals: U.S. benchmarks are in rebound mode after what certainly felt like peak negativity yesterday. Up to earnings after the bell, the news flow since Friday was as fear mongering as it gets, from the White House’s messaging and surging case counts to the collapse of President Biden’s Build Back Better agenda and the Federal Reserve’s path to normalization. However, as Bill Baruch highlighted in yesterday’s Midday Market Minute, this could be peak negativity and that brings opportunity. Following a good final hour, the news flow switched gears after the bell when both Micron and Nike beat earnings. They are up 8% and 3.5% respectively premarket, bringing a much needed tailwind and leadership to their sectors. Semiconductors have outperformed all year and the SOXX ETF nearly traded into the 50-day moving average yesterday at the psychology $500 mark; it is now primed to lead the broader market. Retail has been one of the most beaten down sectors of late. In fact, Bill Baruch joined CNBC on November 17th and said he expects Retail to underperform the broader market. Yesterday the XRT ETF finished 18% from its November peak and the underperformance has played out. If Nike can lead Retail to broadly turn higher, so will market sentiment.
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The S&P is 2% from yesterday’s low and although it feels like 10% from Thursday’s record high, it is only 3.5% from the mark. Of course, we cannot get ahead of ourselves. First things first, let us see the overnight gains hold through the first hour. We do not want to see an early rejection of strength like last Thursday, or a dead cat bounce like 9:30 am CT Friday. Yes, we could also see an opening bell rally like December 7th and with sentiment so negative over the last few sessions, there should be room to run.
The economic calendar is light today with a 20-year auction at noon CT. Tomorrow, we look to final Q3 GDP and Thursday brings the Fed’s preferred inflation indicator, Core PCE.
Technicals: Yesterday morning, we said, “the uptrend is still intact, but the viability is being tested and we must see pockets of stability”. A strong finish has been followed by a continuation higher overnight to test areas of significant resistance. For the S&P, major three-star resistance comes in at 4605-4610, aligning multiple technical indicators with lows from over the last week. There is clear supply here and the S&P has its work cutout through the first hour. Price action must remain firm and ideally continue to build higher lows, using first key support at … Click here to get our (FULL) daily reports emailed to you!
Crude Oil (February)
Yesterday’s close: Settled at 68.61, down 2.11
Fundamentals: Crude Oil was hammered yesterday upon rising fears of restrictions and thus less travel. Although price action finished 3.6% from the session low, it was still down 3% on the day. Glass half full, Crude Oil responded at a level of extreme technical significance and has followed the broadly better risk-environment higher into this morning. Virus uncertainties still pose a headwind in the near-term, but news of Moderna’s vaccine increasing antibodies to fight Omicron does pave the way for added positive developments on that front. There is also a growing sense that outside of government imposed restrictions, the average person wants to travel and go about their day. On the positive side of news flow, Libya shut down four Oil fields and declared force majeure yesterday, taking off about 300,000 bpd from the market. Inventory data will also capture the market’s attention and there is an early indication of another headline draw in Crude, this week of about 2 million barrels. Remember, U.S. consumer petroleum demand surged to a record in last week’s report.
Technicals: Buyers showed up at the right spot yesterday, major three-star support aligning with the December 3rd settlement and December 6th low at 66.10-66.62. We no must see Crude repair overhead damage by closing back above Friday’s settlement at 70.72. Ultimately, the tape will remain vulnerable to this wave of selling until such is achieved. Yesterday’s rebound settled above the 200-day moving average that comes in at 67.78 today. We will now look to our the Pivot and point of balance on the session as … Click here to get our (FULL) daily reports emailed to you!
Gold (February) / Silver (March)
Gold, yesterday’s close: Settled at 1794.6, down 10.3
Silver, yesterday’s close: Settled at 22.291, down 0.242
Fundamentals: Silver is shining this morning, can it stick? Although Gold is lagging and a weaker Treasury complex is keeping it in check, the U.S. Dollar is off by a bit and the metals complex from Copper to Platinum is also buoyant. The technicals are very constructive, we will discuss in the Technical section below, but price action in each Gold and Silver did respond at the levels necessary. Ultimately, a slight back and fill from the post-FOMC surge. This can be typical on new events that create large swings. Overall, price action seems to be tracking a wave of risk-on across global markets and on the heels of China’s rate cut yesterday. There is no economic data to look to but a very interesting 20-year auction at noon CT.
Technicals: Weakness in both Gold and Silver yesterday through yesterday created an elongated and sloppy flag pattern. However, as we say, it is more about the market profile trapping bears, in the case. Both also responded to critical levels of major three-star support. First, Gold has two closely tied levels, previous resistance aligning with its newfound range, at 1791.7-1794 and then just below at 1781-1786. Buyers have so far stepped in but we must see 1800 regained. As for Silver, a battle at 22.20 has so far been won by the bulls and it is trading to the highest level since December 1st. This is also first key resistance at 22.63-22.70. We must see it hold out above our Pivot and point of balance at … Click here to get our (FULL) daily reports emailed to you!
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