Market Overview – Morning Express
E-mini S&P (March) / NQ (March)
S&P, yesterday’s close: Settled at 4577.75, up 65.25
NQ, yesterday’s close: Settled at 15,038.25, up 303.75
Fundamentals: U.S. benchmarks finished strongly yesterday, but the S&P and NQ have yet to clear their February 2nd highs. The strength comes on the heels of the ninth largest week of inflows since 2009, according to Bank of America data, great technical groundwork, and earnings tailwinds. Still, today’s Consumer Price Index, due at 7:30 am CT, will certainly leave its stamp on the week. It could easily be hotter than the 5.9% YoY expected for the Core read or 7.3% for headline, but what does that change? The Federal Reserve is already expected to hike 125 basis points this year with a better than 80% probability. Just yesterday, Cleveland Fed President Mester, a 2022 voter, said “there is no compelling reason for a 50 basis point hike in March”. The Fed understands liftoff needs to be carried cautiously. Although they are physically behind the curve, markets have begun to discount it via the rate hike probabilities. Therefore, they have no reason to ‘double down’ upon a hotter than expected CPI. Especially, knowing the 2021 base comparisons ranged from 1.4-1.6% in Q1. This was because the pandemic’s deflationary impact did not truly take hold until April 2020. Anticipation has mounted for today’s number and there will be a headline impact, but we view the aftermath as opportunistic.
Weekly Jobless Claims are due also due at 7:30 am CT and the U.S. Treasury will auction $23 billion in 30-year Bonds at noon CT. Auctions have been well received so far this week. However, this may not leave much fire power for the long-end of a flattening curve.
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Technicals: We have maintained a cautiously Bullish Bias. For all intents and purposes, the S&P and NQ are still rangebound, contained below their February 2nd highs. Strength into the close yesterday and solid earnings lifted the S&P to an overnight high of 4583.75. Still, it has remained tethered to major three-star resistance at 4577.25-4580.75 and the 4586 peak. The NQ has been flirting with major three-star resistance aligning with he 200-day moving average at 14,995-15,033, but faces even stronger resistance overhead, noted in our levels below. We do expect some volatility, and our rising momentum indicators, denoted as our Pivots below, will help signal whether the tape is exhausted. Pullbacks can remain of the utmost construction by holding above first key supports at … Click here to get our (FULL) daily reports emailed to you!
Crude Oil (March)
Yesterday’s close: Settled at 89.66, up 0.30
Fundamentals: Crude Oil is firming into the onset of U.S. hours and has held a terrific technical path all week. Ultimately, yesterday’s EIA report was bullish, but the muted reaction signals the market got a little ahead of itself late last week. A supportive tone enters this morning from Russia’s military drills in Belarus and the talking down of an Iran Nuclear Deal. What stood out most in that EIA report was the massive 2.8 mb draw at Cushing, which pins the hub only 1.35 mb above November’s low, the lowest since September 2018. Also, Refinery Utilization surged by 1.5% WoW, compared to an expected -0.3%. Although this is a huge difference, and the products still drew down by a larger composite than expected, the reaction was muted because Net Imports dropped by 1.4 mbpd.
Technicals: The week’s range has tightened to provide our first levels of both support and resistance to be major three-star. Our momentum indicator is starting to rise, coming in at 89.75 this morning. Continued strength above this mark will leave the bulls in control, but ultimately, we must see a close above of … Click here to get our (FULL) daily reports emailed to you!
Gold (April) / Silver (March)
Gold, yesterday’s close: Settled at 1836.6, up 8.7
Silver, yesterday’s close: Settled at 23.341, up 0.141
Fundamentals: Today’s CPI read will certainly impact Gold and Silver. Traders must keep a pulse on how the U.S. Dollar and the Treasury complex digest the data, given that we believe a hot number is already discounted. We have suggested all week that Gold, and to a lesser extent Silver, are signaling very strong underlying fundamentals (as well as technicals). Also, remember Gold’s November surge game on a hotter than expected CPI. This all plays into the narrative that rates and banks are overzealous on the Fed’s path, ignoring the potential headwinds to growth that such would cause. This really could be Gold’s year, but we must await the ‘river’ for confirmation; peak hawkishness, slowing growth and a decade long technical breakout.
Weekly Jobless Claims are due also due at 7:30 am CT and the U.S. Treasury will auction $23 billion in 30-year Bonds at noon CT. Auctions have been well received so far this week. However, this may not leave much fire power for the long-end of a flattening curve. Meaning this could bring a surprise headwind to Gold in the second half of the day.
Check out Phillip Streible’s Metals Edge video, discussing the sector daily after settlement.
Technicals: Gold is trading firmly at and above what was major three-star resistance at 1829-1832. Still, it must close above here on the week and will keep 1832 as our Pivot. However, our momentum indicator is rising, coming in at 1833.5 this morning; if we see a dip below it will signal near-term exhaustion. Silver has directly pinged major three-star resistance at 23.45 as well. Our momentum indicator is rising here and denoted as our Pivot. Still, construction at and above first key supports will build a healthy setup for next week, these come in at … Click here to get our (FULL) daily reports emailed to you!
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