Market Overview – Morning Express
E-mini S&P (March) / NQ (March)
S&P, yesterday’s close: Settled at 4198.50, down 128.75
NQ, yesterday’s close: Settled at 13,320.75, down 519.00
Fundamentals: U.S. equity benchmarks are peeling themselves off the pavement after getting bulldozed to start the week. There was no midday bounce and like last Thursday a low volume pre-market spike in the minutes leading into the bell was quickly wrecked. Managers are certainly grappling with the sticker shock of Crude Oil above $120 and relentless strength across commodities, spikes that weigh on the consumer and increase the probability of a recession. Extrapolating these inflationary tailwinds has even spooked the Bond market which has failed to find a safe-haven bid. Without a reprieve, and soon, stagflation becomes increasingly likely.
The Federal Reserve is in quiet period ahead of next week’s policy meeting and the U.S. economic calendar is light ahead of tomorrow’s JOLTs and Thursday’s CPI data. The Treasury will auction $48 billion in 3-year Notes today and $34 billion in 10-year Notes tomorrow. Tonight, we look to a slate of inflation data from China. This morning China’s President Xi spoke with leaders from France and Germany on the Russia-Ukraine conflict, calling for the three countries to be proactive in preventing the situation from escalating further. We will keep an ear to the ground for further developments.
Breaking New: President Biden to ban U.S. imports of Russian Oil and LNG, beginning today.
As a percent of Russia exports, the U.S. is only 1.3%. Chart above.
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Technicals: The S&P consolidated at and above our 4222 mark through the middle part of the session and failed to sustain any type of significant bounce. This laid the groundwork for heavy selling into the close and succeeding washout overnight. Although prices have stabilized at the onset of U.S. hours, we must see sustained buying show up intraday. Going back to last Thursday’s reversal, only a brief midday bounce on Friday has shown up. The January 24th low of 4212 and the 4222 level will align to create our Pivot and point of balance; we see the bears in the driver’s seat while below here. Further, we must see a move and close out above major three-star resistance at … Click here to get our (FULL) daily reports emailed to you!
Crude Oil (April)
Yesterday’s close: Settled at 119.40, up 3.72
Fundamentals: President Biden is set to sign a ban of Russian Oil and LNG imports to the U.S. The overall reaction, relative to recent price volatility, has been somewhat muted, signaling that such a move was discounted over the preceding 36 hours. Russia has threatened to close its Natural Gas pipeline to Germany if Western allies established a coordinated ban on Russian Oil. Goldman Sachs increased their forecast for Brent Crude to $135 barrel for 2022 and $115 for 2023. Brent is currently trading at $130. As traders navigate the news events, U.S. weekly inventories will also hit the picture. Early estimates are for -0.833 mb of Crude, -1.911 mb Gasoline, and -1.732 mb Distillates.
Technicals: Despite immense volatility, the technicals have worked. After pinging a high of 130.50 on the open Sunday night, Crude traded down to a session low of 115.54, perfectly cover the gap from yesterday’s settlement. Today’s spike from the news of the White House banning Russian Oil came from a low of 121.02 and our momentum indicator was hiding out at 120.95. Despite that spike reaching a high of 126.03, we still see … Click here to get our (FULL) daily reports emailed to you!
Gold (April) / Silver (May)
Gold, yesterday’s close: Settled at 1995.9, up 29.3
Silver, yesterday’s close: Settled at 25.72, down 0.069
Fundamentals: Gold secured a strong session yesterday, but broadly pulled back from overnight highs. That pullback left Silver in negative territory, however, each are rebounding to new swing highs today. Tailwinds are coming upon safe-haven demand due to mounting geopolitical uncertainties, but there are crosswinds as Treasury yields rise on inflationary fears due to the same geopolitics. However, the significant flattening of the yield curve has shifted the focus to stagflation and this is seen as a very supportive factor to the precious metals space. Given yesterday’s strong technical groundwork, the bulls will remain in the driver’s seat barring fundamental shifts in headlines as we look into Thursday’s CPI data.
Technicals: Price action is very firm with Gold testing into our next big level of resistance at 2021-2028, but Silver has cleared the elusive 25.72-25.88 level, for now. Silver is also trading above resistance at 26.15-26.37. However, we need to see this stick on a closing basis. For both Gold and Silver, the bulls are in the driver’s while holding out above … Click here to get our (FULL) daily reports emailed to you!
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