Market Overview – Morning Express
– Equity benchmarks in Europe and Japan stabilize on diplomacy but China and Hong Kong plummet.
– Fed week, the Federal Reserve begins their two-day policy meeting tomorrow. Concludes Wednesday at 1:00 pm CT.
– Do not miss our Top Thins to Watch this Week, every Sunday.
– Over the weekend, Russian Delegate to talks with Ukraine said there was substantial progress. Ukraine officials said talks are ongoing.
– Diplomacy in the air Monday as talks between the two sides continue and as U.S. National Security Advisor Sullivan expected to meet his Chinese counterpart in Rome.
– China and Russia both deny that China supplied Russia with military equipment.
– German Finance Minister said this morning that pressure must be increased on Russia and Putin to end this war.
– Omicron hits China with the most cases since the onset of the pandemic.
– Beijing enacts zero-tolerance policy locking down several cities.
– China locks down entire Shenzhen province, a high-tech manufacturing hub. There are two Foxconn factories here.
– U.S. equity benchmarks, DAX, Euro Stoxx 50, and Nikkei off best levels of session.
– Hang Seng finished -4.97%, lowest level since February 2016.
– Shanghai Composite finished -2.60%, retesting lows from last week, was lowest since mid-2020
– KWEB, the Chinese internet ETF, lost 19.35% last week and is set to open down another 5.87% this morning. Absolutely bloodbath across Chinese tech companies, something we have been cautioning for over a year.
– Ongoing trainwreck in China tech is much deeper than local lockdowns. Just today, Tencent with country’s largest ever anti-money-laundering fine.
– China lockdowns weighing on Crude Oil despite an active weekend of airstrikes in the Middle East.
– Quiet economic calendar to start the week, but fittingly a deluge of China data for February is due tonight at 9:00 pm CT. Includes Industrial Production.
Make sure you are signed up to receive our daily videos. Tomorrow’s special edition Midday Market Minute will be titled: Buying Opportunity of the Year; We Can Only Hope for Such Carnage.
E-mini S&P (March) / NQ (March)
S&P, yesterday’s close: Settled at 4201.50, down 55.75 on Friday and 125.75 on the week
NQ, yesterday’s close: Settled at 13,292.00, down 294.00 on Friday and 547.75 on the week
– We do not roll futures until Tuesday of roll week. Tomorrow we will highlight June as the front month contract.
Recap from Friday’s Morning Express because these were such good bullet points
– – 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).
– – 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 4257.25-4260 in the S&P and 13,571-13,586 in the NQ would encourage added liquidation.
Fresh bullet points for this morning
– Longs were trapped and forced selling into close Friday.
– Low untested in the S&P due to diplomatic talks between Russia-Ukraine, however, NQ taking it out now.
– Firm open last night due to the trapped longs liquidation scenario and positive developments on diplomatic talks between Russia-Ukraine.
– Overnight stability found at our Pivot and point of balance; 4222 in the S&P and 13,320-13,377 in the NQ.
– Major three-star support aligns with settlement at 4197.50-4101.50 in the S&P and 13,267-13,292 in the NQ; steady and decisive action below here intraday will encourage added selling.
– Such would open the door at minimum to … Click here to get our (FULL) daily reports emailed to you!
Crude Oil (April)
Yesterday’s close: Settled at 106.02, down 2.68
– Head and shoulders top highlighted here on Friday has played into continued weakness and a violation of rare major four-star support aligning last week’s sharp move and previous support at 103.41-103.61; a decisive close below here could get ugly in the near term.
– China lockdowns weighing on over-exuberant sentiment across the energy space; peak pain for bears and peak FOMO for the bulls.
– The above is why we have and will maintain a very Neutral view.
– India looks to continue trade with Russia, “we will be happy to take the heavy discount on oil and other commodities”. India’s top refiner buys 3 mb of Russia Crude.
– Buoying Crude Oil are drone strikes on U.S. and Israeli sites over the weekend, marking a blow to a quick Iran Nuclear Deal.
– Continue action below 105.30 on the session will encourage added weakness
– Per the first bullet point, could get ugly below 103.41-103.61 opens the door 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
– News of diplomatic talks between Russia-Ukraine and U.S.-China has taken wind out of the sails of safe-havens, yields rise, Dollar and precious metals fall.
– Noted here on Friday that we welcome weakness as a buying opportunity, but patience will be crucial.
– Federal Reserve policy announcement Wednesday will bring added volatility and uncertainty, especially for precious metals.
– Price action is decisively below our momentum indicators, signaling further weakness ahead
– We like building a long position into rare major four-star supports in each Gold and Silver at … Click here to get our (FULL) daily reports emailed to you!