Market Overview – Morning Express
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E-mini S&P (March) / NQ (March)
S&P, yesterday’s close: Settled at 4778.50, down 3.75
NQ, yesterday’s close: Settled at 16,488.00, down 72.00
Fundamentals: After battling for nearly two months and in a range of 5%, the S&P resolved higher Monday with its strongest start to the Santa Claus rally in 20 years. This was the resolution our Bullish Bias was predicting and waiting for; it has already played out. Our intermediate-term upside target remains 4850, but volume is dissipating, and the yearend swings may become less and less predictable. Aside from the daily headline virus news, it will likely be a slow news day. On the economic calendar, we look to Pending Home Sales at 9:00 am CT, weekly EIA petroleum inventories at 9:30 am CT, and a 7-year auction at noon CT. Traders want to keep an eye on the 10-year yield which has forged three-week highs at 1.52%. As we noted here yesterday and are implying here today, the S&P already resolved higher, and the easy money has already been made. Traders are preparing for next year, which begins next week. Although we have been Bullish in Bias all year and remain such for now, it is highly likely the attention of market participants quickly shifts to the path of the Federal Reserve’s tightening next week and the probability of a hike in March has now risen to 62%. Trade with prudence.
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Technicals: Price action is digesting the recent run of 6.1% from low to high in the S&P. What matters most at this point is continued construction at and above support levels. However, for us, we typically look for reasons to dial back our Bullish Bias amid such times of digestion; as we noted above, the easy money has already been made on this move. Price action in both the S&P and NQ is below our momentum indicators, denoted as our Pivot and point of balance below, and gearing up for another test of key support in the S&P and major three-star support in the NQ. If the S&P decisively surrenders the 4772-4773.50 level, it will likely drag the NQ through major three-star support which is its previous ceiling resistance. This is where our caution lies, a break of these levels could easily take the tape to … Click here to get our (FULL) daily reports emailed to you!
Crude Oil (February)
Yesterday’s close: Settled at 75.98, up 0.41
Fundamentals: Fresh off a six day and 16.3% surge, the last weekly EIA inventory report released this year is front and center. Expectations are for -3.233 mb Crude, -0.031 mb Gasoline, and -0.059 mb Distillates. Last night’s private API survey was overall in line with expectations and the headline draw of Crude has helped buoy the tape amid profit-taking in front of $77. In today’s report, aside from the headline numbers, we are watching for any uptick in production, Refinery Utilization relative to product builds/draws, and of course Cushing. We will use this time to remind you, two weeks ago consumer petroleum demand hit an all-time high, Crude stocks are well below their 5-year low range, and although Cushing inventories have rebounded by about 7 mb in recent weeks, they are basically halved from the start of the year. These all play into our longer-term bullish thesis.
Technicals: In order to exude our near-term cautiousness, like in S&P/NQ, we have reduced our more Bullish Bias to become more Neutral. Price action in Crude decisively broke below our momentum indicator early this morning and is battling at first key support at 75.45-75.56. Although we remain intermediate to long-term Bullish in Bias, we do fear that amid low volume, a negative fundamental report today could lead to an air pocket within the range of … Click here to get our (FULL) daily reports emailed to you!
Gold (February) / Silver (March)
Gold, yesterday’s close: Settled at 1810.9, up 2.1
Silver, yesterday’s close: Settled at 23.121, up 0.132
Fundamentals: Gold and Silver are failing in a fashion that only Gold and Silver can. After a strong move early yesterday morning, that perfectly achieved major three-star resistance, they have fallen flat on their face. We do hope that you followed our directive in capitalizing on such strength. Weakness across the Treasury complex is a key factor in today’s selling as 30-year Bond futures are more than a point from the session high and the yield on the 10-year is at three-week highs above 1.50%. On the positive side, early strength in the U.S. Dollar has dissipated. On the economic calendar, we look to Pending Home Sales at 9:00 am CT, weekly EIA petroleum inventories at 9:30 am CT, and a 7-year auction at noon CT.
Technicals: Price action ran perfectly to our near-term targets in Gold and Silver yesterday but has failed dramatically over the last 24 hours. What matters most over the coming days is construction against a slew of strong levels of support, listed below; buyers must show up. Gold will now need to close above … Click here to get our (FULL) daily reports emailed to you!
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