Market Overview – Morning Express

– U.S. equity benchmarks rip and safe-havens slip after the Kremlin and Russian President Putin say “positive shifts in talks with Ukraine”.
– At the same time, Ukrainian intelligence is reporting that Russia is planning a terrorist attack on Chernobyl nuclear power plant
– Core CPI surged hotter than expectations yesterday at 6.4% versus 5.9% expected.
– Headline CPI in line at +7.9%. In line, but hottest in 40 years.
– Shelter is the wildcard at +4.7%. It is the biggest component, accounting for 33% of CPI. Rents and home prices have risen by nearly 20% over the last year.
– If Shelter catches up to reality, combined with the rise in commodities due to Russia-Ukraine, inflation will foreseeably surge through midyear.
– Fed has pointed to midyear. In our minds, June – August will remain the biggest test. Core CPI YoY base comparison for that period rises to 4.3% versus 1.3% in Q1.
– The Federal Reserve meets next week with a policy decision announced on Wednesday.
– Fed Chair Powell made a 25-basis point hike a forgone conclusion during his Congressional testimony in an attempt to reduce rising uncertainties from Russia-Ukraine conflict.
– With 25-basis points next week priced at nearly 100%, May meeting now in focus.
– Odds of another 25-basis point hike in May are 55.8%, but odds of a 50-basis point hike have risen to 43% (would total 75 basis points between March and May). (chart above)
– The larger move in May seems plausible given liftoff occurred in March and to fight added inflation tailwinds due to the war.
– Fresh Michigan Consumer data for March due at 9:00 am CT.
E-mini S&P (March) / NQ (March)
S&P, yesterday’s close: Settled at 4257.25, down 18.00
NQ, yesterday’s close: Settled at 13,586, down 148.75
– Early morning spike on potential positive diplomatic developments between Russia-Ukraine, but no real substance.
– S&P and NQ both achieved rare major four-star resistance targets at 4321-4327.25 and 13,839-13,899.
– Not the time to chase long into here. We used this as an opportunity to clear the deck on longs we have been building through this week’s volatility.
– Today’s high of 4335 pinged the 21-day moving average. There have been only four closes above the 21-day since January 5th, and only one decisive on February 9th (failed dramatically the 10th). (chart above, for NQ too).
– Another potential bear wedge/flag developing upon weakness today, would trap longs and force liquidation at lower levels.
– A break below major three-star supports at … Click here to get our (FULL) daily reports emailed to you!
Crude Oil (April)
Yesterday’s close: Settled at 106.02, down 2.68
– After yesterday’s electronic close, news of a drone strike on Saudi Oil field may have buoyed late session selling.
– Overnight strength attributed to stalled Iran talks with concessions too high a price.
– This strength was slammed on the Kremlin citing progress in diplomatic talks.
– However, other sources point to potential escalation. Weekend premium comes back?
– EU official says Russia plans to clarify its position on Iran Nuclear Deal in a “few days”.
– Previous support is now resistance at 110.00-110.28; close above here will ignite bull move into the weekend.
– Failure to get back above major three-star resistance aligning with last week’s settlement could bring head and shoulders top through next week. (chart above)
– Price action is chewing through critical support and opens door for retest to … Click here to get our (FULL) daily reports emailed to you!
Gold (April) / Silver (May)
Gold, yesterday’s close: Settled at 2000.4, up 12.2
Silver, yesterday’s close: Settled at 26.256, up 0.44
– Gold and Silver slipped sharply on Kremlin saying progress in talks. Had been clinging to the $2000 mark.
– We welcome this weakness as a buying opportunity. Weekend premium comes back?
– Treasury complex remains buoyant, a positive sign
– Fed next week, will be crucial for precious metals.
– We will use our technicals to begin re-establishing a long position. Must be patient in order to really lean into rare major four-star support in Gold at … Click here to get our (FULL) daily reports emailed to you!
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