Market Overview – Morning Express

E-mini S&P (March) / NQ (March)
S&P, yesterday’s close: Settled at 4222, down 78.00
NQ, yesterday’s close: Settled at 13,507.50, down 355.25
Fundamentals: Last night, Russian President Putin announced a “special military operation” in Ukraine to “demilitarize the country and protect Russian citizens”. Forces attacked cities across the country and the situation has certainly gotten worse. There are many moving parts, President Biden has condemned Russia’s attack and EU officials are scheduled to meet in Brussels later today. We expect to hear from Washington, the EU, and European Commission as the session unfolds. A continued tone of risk off took hold yesterday and equity markets around the world are sharply lower today. Russia’s attack on Ukraine will remain the dominant headline, but we also look to a stacked economic calendar today and tomorrow. The second look at Q4 GDP was better than expected at 7.2%. Remember, inventories are bringing a tailwind here. Also, Jobless Claims, both Initial and Continuous, beat expectations. The Treasury complex is sharply higher this morning on safe haven demand, meaning yields are lower with the 10-year back to Tuesday’s low of 1.85%. The Treasury will auction $50 billion of 7-year Notes at noon CT. Traders also want to keep a pulse on fresh Fed speak. The influential Atlanta Fed President Bostic, who does not vote in 2022, speaks at 10:10 am CT and 2022 voter, Cleveland Fed President Mester speaks at 11:00 am CT. We will likely hear from other officials that may not be scheduled.
Technicals: U.S. benchmarks are sharply lower, and the NQ has entered bear market territory, trading more than 20% from its closing high. The selling has been very orderly in recent session and panic is typically needed to form a low. Some panic seeped into the final hour yesterday and carried into the overnight bludgeoning. First, we did take a Bullish approach yesterday, but that trend was broken, per our details here, upon a decisive move below 4260.50-4276.50. We have been and will remain nimble with this market. Although we are taking a very Neutral approach here today, we are viewing opportunity from the long side at these levels. Following the largest leg down last night, rally attempts after the European open were slammed. These levels at 4159-4164 in the S&P and 13,250 in the NQ will bring resistance. However, if price action can get out above, we could see a steady climb back towards unchanged on the session. To the downside, there is unfinished business in the S&P at rare major four-star support at … Click here to get our (FULL) daily reports emailed to you!
Crude Oil (April)
Yesterday’s close: Settled at 92.10, up 0.19
Fundamentals: WTI Crude Oil traded to a high of 100.54 early this morning, surpassing $100 for the first time since July 2014 on Russia’s invasion of Ukraine. Also, Brent surged to a high of 105.75. Undeniably, the major focus is Russia and the geopolitical landscape. We firmly do not believe these are levels in which to chase price action. Traders want to stay nimble awaiting EIA data and any comments from the White House on Russia and potential SPR release. Last night, API’s private survey was not headline bullish, signaling Crude inventories rose by 5.983 mb and Gasoline by 0.427 mb, while Distillates fell by 0.985 mb. However, inventories at the critical Cushing hub fell by 2.066 mb. If this is confirmed by EIA, inventories at Cushing would be right at those September 2018 lows. This has been a very bullish factor, stoking a steep backwardation. Analysts’ expectations for today’s official EIA read are +0.442 mb, -1.45 mb, -1.763 mb.
Technicals: As we noted above, these are not levels to chase strength. However, price action today and tomorrow will tell us a story. Can price action hold above 98.17-98.67, a critical pocket aligning with July and August of 2014? If so, the bulls are clearly in the driver’s seat and willing to take it higher. We view this most recent leg to remain intact while holding out above … Click here to get our (FULL) daily reports emailed to you!
Gold (April) / Silver (March)
Gold, yesterday’s close: Settled 1910.4, up 3.0
Silver, yesterday’s close: Settled at 24.553, up 0.242
Fundamentals: Less uncertainties are likely to bring some headwinds to precious metals. The Treasury complex is already exuding such with the yield on the 10-year rebounding from a low of 1.85% to 1.98%. To be frank, we would be happy to see geopolitical premium in Gold dissipate, because we believe Gold can breakout above rare major four-star resistance on the larger thematic Fed backdrop we have been discussing for weeks. There is no major economic data today and make no mistake, headlines still must be watched closely.
Technicals: Our momentum indicators signaled some early exhaustion yesterday. Those tracked lower, now providing a point of balance for both Gold and Silver to hop back over. As long as prices stay above the levels denoted as our Pivots below, we view the bulls as in the driver’s seat on the session. Still, as we said yesterday, we will maintain patience and envision a tremendous buy opportunity in Gold if it were to squeeze longs who chased recent action. This level would be 1865.7-1871, just trades below 1881 mark.
Technicals: Gold and Silver surged through critical areas of resistance overnight on Russia’s invasion of Ukraine. We do not believe these are levels to chase Gold and Silver, but pullbacks to previously critical resistance will now act as strong support. This means 1919.2-1930 must hold upon any pullback. Similarly, 24.45-24.76 must hold for Silver. To the upside, price action is testing strong areas of resistance at … Click here to get our (FULL) daily reports emailed to you!
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