Is The Macro Regime Shifting? | Morning Express
S&P trend line from March low
E-mini S&P (September) / NQ (Sept)
S&P, yesterday’s close: Settled at 4251.25, down 67.25
NQ, yesterday’s close: Settled at 14,540.75, down 129.75
Fundamentals: What a healthy pullback! The market absolutely needs this and a bit more. Although healthy, there are realistic fears and one very bad word that describes those fears, stagflation. Is the economy heading towards a period of high inflation and low growth? It is too early to say such has been avoided, but for now we expect economic activity to be surprisingly strong in the second half of the year. However, ongoing Covid worries and a surge in cases due to the stronger Delta Variant, not only in the U.S. but abroad, can slow those growth prospects. In comes the selling, or profit taking, we have seen since late last week; market participants are pricing in the what ifs. What if the economy tightens up due to virus fears and planned growth or activity is pushed out to 2022? For now, we believe those fears are approaching a pinnacle, but the news flow can certainly monger.
Technicals: Price action in each the S&P and NQ has rebounded from yesterday’s healthy selling, but in our minds it has yet to neutralize. We look to resistance aligning with Friday’s settlements as a place where the repair can begin. Also, given such an elevated market, a decisive move through these resistances can spark a quick move back to record highs. For the S&P this is major three-star resistance at 4318.50-4323.25 and for the NQ this is 14,655-14,670. Although the S&P is still 1% from the mark, the NQ tested its overnight. We believe the first hour of trade will be telling. For now, each is holding above our momentum indicators which are denoted as our Pivots and points of balance at 4262.50 in the S&P and 14,575 in the NQ; steady action above here is supportive for a rebound day. Lastly, the S&P tested and held a trend line from the March low by a thread yesterday on settlement, this is major three-star support at 4245.50-4251.25; a close below here today will encourage added selling.
Resistance: 4279.25-4285.25**, 4304.25**, 4318.50-4323.25***, 4332-4234***, 4345-4347**, 4365.75-4370.25***
Support: 4245.50-4251.25***, 4224-4231***, 4211.75-4213.75***, 4202.25**, 4153-4159***
Resistance: 14,655-14,670***, 14,720**, 14,783-14,785**, 14,865-14,891**, 14,946-15,000****
Support: 14,445-14,502***, 14,339***, 14,197-14,263****
Crude Oil (September)
Yesterday’s close: Settled at 66.35, down 5.21
Fundamentals: Crude Oil mounted losses of 7.2% yesterday after OPEC+ inked a deal to bring back production, topping the 7.1% drop on March 18th. OPEC+ talks stalled two weeks ago after the UAE refused to agree to lower base production data. The initial deal planned to bring back 400,000 bpd beginning in August, through December. The new deal essentially plans to bring back all the idled 5.8 mb by adding 400,000 bpd through next September. The new deal was a shock to the market because it came amid growing Covid fears and the impact of surging new cases on the demand recovery. Essentially, this was a double blast that upended the energy market yesterday. On that note, Gasoline was trading above 2.30 and is now below 2.10. As the day unfolds, inventory expectations will also hit the tape.
Technicals: Price action is trying to stabilize after a fresh wave of selling this morning that set a new low of 65.01. There is a trend line from the March low that aligns with yesterday’s low and creates strong support at 65.40-65.56. So far, we are seeing a rejection of the newly set low and traders will look to use unchanged as a point of balance. Still, there is tremendous damage overhead and our momentum indicator aligns to create major three-star resistance at 66.79-67.06; we must close above here in order to than begin a rebound.
Resistance: 66.79-67.06***, 68.56-68.86**, 69.58**, 70.10-70.33***, 71.00**, 71.40-71.56***
Support: 65.40-65.56**, 65.01**, 64.39-64.60***
Gold (August) / Silver (Sept)
Gold, yesterday’s close: Settled at 1809.2, down 5.8
Silver, yesterday’s close: Settled at 25.144, down 0.651
Fundamentals: Gold and Silver have diverged. A surge in Treasuries has underpinned Gold at the psychological $1800 mark, despite U.S. Dollar strength. However, Silver has been caught in the risk-off undertow and fears of slower global growth due to ongoing Covid fears.
Technicals: Price action in Gold responded quickly to key support at 1793-1796 yesterday and settled back above the critical 1815 mark, which now aligns with our momentum indicator. Although continued action above 1815 is bullish, Gold is running into a thick area of major three-star resistance at 1828-1835, one that it failed at last week. On the other side of the coin, Silver and metals broadly took it on the chin yesterday and despite Gold’s strength, it makes us cautious on the sector entirely. Silver is battling at what was major three-star support at 25.25, this now aligns with our momentum indicator; continued action above here is heavy in the near-term.
Resistance: 1828-1835***, 1854.6-1856.4***
Support: 1809**, 1793-1796**, 1783.3-1785.9**, 1775-1777***
Resistance: 25.74-25.80***, 26.44-26.580***
Support: 25.03-25.14**, 24.80**, 23.82**, 23.20***
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