Market Overview – Morning Express

3 years ago 1084 views 6 min read

Bill Baruch

President and Founder

Blue Line Futures

– Strong finish to a volatile week on Friday and the S&P eked out a close above its 200-day moving average, but not out of the woods.

– Big week of data, earnings, and central banks, on top of market noise and geopolitical developments.

– China Manufacturing PMI on Saturday was mixed, the state-run release expanded at 50.1 versus 50.0 expected but the private Caixin data point contracted at 49.1 versus 50.4

– China begins their weeklong New Year Spring Festival today.

– *2022 is the year of the Tiger and the last year of the Tiger was 2010. Chart above with S&P 500 returns is dated from 2013, but includes the last zodiac year of the Tiger.

– Atlanta Fed President Bostic grabbed headlines over the weekend, saying if a 50-basis point hike is required due to inflationary pressures and economic conditions he “will lean into it”. However, he does not vote this year.

– Minneapolis Fed President Kashkari, known as the most dovish on the committee, on Friday said the “Fed needs to tighten a little bit”. Alluding to a pause after hikes this spring as inflation could slow. He is also not a 2022 voting member.

– Kansas City Fed President George is a 2022 voting member and she speaks today at 11:40 am CT.

– Chicago PMI due at 8:45 am CT.

– Flattening yield curve, a precursor to an economic slowdown, is grabbing headlines

– The 2-10-year Treasury spread tapped the lowest since November 2020 overnight before stabilizing.

– The 5-30-year Treasury spread has not surpassed Thursday’s low.

– Mounting expectations for front-loaded Fed hikes amid weakening economic data has encouraged a drastic flattening of the yield curve.

– Q4 GDP on Thursday surprised to the upside. This week’s slate of ISMs and Nonfarm will certainly bring a test.

– Remember, markets are as efficient as ever, always quickly discounting developments.

– Banks are already slashing GDP forecasts and discounting five hikes. The same banks that called for 4% 10-year in September 2018!!!

– The Citi Economic Surprise Index had turned negative and has begun to show signs of stabilizing.

Breaking: Pentagon says “some type of Russian invasion could be imminent”

E-mini S&P (March) / NQ (March)

S&P, yesterday’s close: Settled at 4423.25, up 105.50 on Friday and 33.25 on the week

NQ, yesterday’s close: Settled at 14,333, up 446.25 on Friday and 6.50 on the week

– S&P settled Friday above its 200-day moving average, but the NQ has not retested its since slicing through on 1/20.

– Overnight strength carried the S&P to a retest test of .382 Fib retracement back to record highs and major three-star resistance at 4429.50-4440.

– Both the S&P and NQ have not cleared Wednesday’s FOMC spike highs of 4446.25 and 14,639.75.

– Friday’s settlements will serve as crucial levels as the week unfolds.

– Friday’s final 30-minute volume lift-off will bring support throughout the week. Detailed as our first wave of major three-star supports below.

– If these levels are surrendered sellers should quickly take the tape down to major three-star supports at … Click here to get our (FULL) daily reports emailed to you!

Crude Oil (March)

Yesterday’s close: Settled at 86.82, up 0.21 on Friday and 1.68 on the week

– Data cited by Reuters shows OPEC+ producing 600,000 bpd less than target.

– OPEC+ likely to agree to another 400,000 bpd increase this week.

– Plays into our narrative of spare capacity concerns driving prices higher. Whether it be OPEC+ or U.S. and falling inventories at Cushing.

– The UAE is one of two (Saudi Arabia being the other) that can hit production targets and produce higher than pre-pandemic, has faced ongoing Houthi missile strikes. Intercepted fresh attacks overnight.

– Russian capacity in question as saga at the Ukrainian border remains tense.

– Pivot and point of balance is … Click here to get our (FULL) daily reports emailed to you!