Market Overview – Morning Express
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E-mini S&P (March) / NQ (March)
S&P, yesterday’s close: Settled at 4782.25, up 66.50
NQ, yesterday’s close: Settled at 16,560.00, up 261.00
Fundamentals: U.S. benchmarks are melting higher and riding a jolly path north, right in the thick of the Santa Claus rally. Yesterday, the S&P made a clear break above previous record highs and this paints a path of least resistance to the 4850 mark, a target we have pointed to in recent weeks. As exuberant as the move might feel, do not be blinded by the holiday magic; pinch yourself if need be. With four trading days left, 2021 might be riding off into the sunset on a high note, but it certainly does not mean 2022 will pick up right where this year ends. Right now, traders and managers are not worried about the Federal Reserve’s path of taper and the better than 50% probability they hike rates in March, but next week they will be. We certainly are not calling for a market correction on the first day of the year, but it is important to remember everyone starts at square one. This could create some unwind as market participants look ahead to projections of less liquidity and slower earnings growth. Use this strength to capitalize on what is in front of you and ready yourself for what is ahead.
Today’s economic calendar brings the Case Shiller Home Price Index at 8:00 am CT, Richmond Fed Manufacturing at 9:00 am CT, Dallas Fed Services at 9:30 am CT, and a 5-year Note auction at noon CT.
Technicals: Our theme has been, ‘we are less worried about the record highs in the S&P as resistance and concerned about the 16,445-16,490 ceiling in the NQ’. This was taken care of yesterday with the NQ achieving its second close above 16,500, missing the November 19th record and previous resistance, now our point of balance, at 16,578. The path of least resistance is higher, but the NQ’s record high and failure on the opening bell of Monday November 22nd still stands in the way. This brings major three-star resistance at 16,740-16,768. Now, let us not ignore that yesterday was the lowest volume day in the S&P since just before Labor Day, right after the market broke to a record high. Price action is holding firmly out above our rising momentum indicator which aligns with the low of the session as first key support. Yesterday’s opening bell spike comes in as second support, but again, there was not a ton of volume through that hour. This creates a line in the sand at … Click here to get our (FULL) daily reports emailed to you!
Crude Oil (February)
Yesterday’s close: Settled at 75.57, up 1.78
Fundamentals: Crude Oil extended gains once again, nearly achieving the $77 mark overnight. Although some headline risks persist; record virus case counts, Iran chirping about a Nuclear Deal, and reprieve in Dutch Natural Gas. To put into perspective the move in Dutch Natural Gas, although the TTF contract has fallen more than 40% from the mind-boggling high of 180.26 achieved one week ago, it still sits comfortable at the 100.00 panic highs from October. While headwinds persist, there is a strong sense of risk-on in broader markets and Crude Oil is being underpinned by a very tight physical market trading in a deepening backwardation and inventory levels sitting well below the 5-year range for weeks. At the end of the day, it has been a nice ride higher from recent lows and regardless of our projections next year, traders should be capitalizing on this rebound.
Technicals: Price action is firmly out above our momentum indicator that aligns to create first key support with yesterday’s late session low and settlement; the bulls are in the driver’s seat while out above here. However, we must point out that price action also got pretty darn close to our intermediate-term upside target at 77.44-77.81, and traders who have followed us on this bounce should make sure to capitalize…. Click here to get our (FULL) daily reports emailed to you!
Gold (February) / Silver (March)
Gold, yesterday’s close: Settled at 1808.8, down 2.9
Silver, yesterday’s close: Settled at 22.989, up 0.049
Fundamentals: Gold and Silver are certainly showing signs of life as the bullish seasonal time of year kicks in. Still, we must not ignore potential headwinds as the Federal Reserve’s tightening cycle comes into the picture next week. Listen, we did not turn Bullish in Bias on Gold and Silver just at the end of last week, upon the seasonal, we turned Bullish in Bias nearly two weeks ago after the FOMC did not exceed hawkish expectations. This is your reminder, just as we did in the S&P/NQ section and the Crude section, to capitalize on strength this week in order to stay flexibility. We believe Gold and Silver will have a great year next year, but we may need to see growth slow in the first quarter before they can enjoy a true breakout.
Technicals: Price action is extending the range higher reaching 1821.6 in Gold and 23.48 in Silver. Do not ignore that this is major three-star resistance in Gold at 1815.7-1819.3 and Silver at 23.48-23.50. Look for price action to hold constructive groundwork off support levels in order to build for another range extension. However, a poor close back below first supports at … Click here to get our (FULL) daily reports emailed to you!
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