E-mini S&P (March)
Yesterday’s close: Settled at 3114.75, up 117.75
Fundamentals: U.S benchmarks are again on their back foot. After surging right up to the closing bell, the rally then quickly dissipated overnight. One major catalyst for yesterday’s strength was the economic data. ISM Non-Manufacturing was surprisingly strong; at 57.3 it was the best in a year. This February Services survey conducted by The Institute of Supply Management was night and day from that done by Markit Economics which actually confirmed a contraction yesterday at 49.4. The conflicting data in and of itself is a cause for concern, exuding uncertainty as to the impact of Covid-19 and markets hate uncertainty. Two additional tailwinds came out of Washington: the market pricing in less uncertainty with Joe Biden now being the Democratic front-runner and the House throwing an $8.3 billion spending bill at the virus. When it comes down to it, the price action is contained in a very wide range and the technicals are of the utmost importance; the tape failed at the reactionary spike from the Fed’s emergency rate-cut Tuesday, this also aligns with a thick wall of resistance already in place.
Risk-sentiment is keeping a close eye on the rising number of Covid-19 infections and in the case of Italy, Iran and South Korea, the mounting death toll. The number of deaths in the U.S hit 11 and California declared a state of emergency.
On the economic calendar in the U.S, we look to Initial Jobless Claims and Nonfarm Productivity at 7:30 am CT followed by January Factory Orders at 9:00. Tomorrow brings a very closely watched Nonfarm Payroll report, a number that could help define this week’s price action. OPEC is concluding a meeting and have seemingly agreed to a production cut of 1.5 mbpd in order to stabilize the energy market. Fiscal stimulus measures from the U.S to China and the lines of credit from the IMF and the World Bank are also working to battle this uncertain impact to the virus.
Technicals: The S&P traded to a high of 3129.50 yesterday and a lower high on today’s session, each lower than 3137 from the Fed spike. We have had major three-star resistance in two places: the February 26th gap at 3110.25 and the 50% retracement on this entire range at 3125.75. Coming into yesterday we found 3110.25 still significant enough to hold a major three-star designation because the secondary attempt post-Fed announcement stalled here. The same goes for today given yesterday’s settlement and today’s session high. A move out above here today is very bullish, but it still must settle out above 3125.75. As for the NQ, it has also produced lower highs with major three-star resistance at 9000-9037.50 being a ceiling. Yesterday’s 8950 high stalled at our first wave of major three-star resistance at 8944.25 before settling lower. Our point across all of this is that the overheard supply created with last week’s bloodbath and the panic selling cannot go unnoticed and we now have a definitive line in the sand. Price action this morning is again flirting the 3051-3061 area which has now been broken up. Our Pivot is 3051.25-3054.25 aligning a key retracement with the 200-day moving average; continued price action below here is negative. Only a move that holds above 3069.25-3076 is favorable for the tape. A weak tape will look to retest Tuesday’s close which has a large gap from yesterday’s action at 2997 with a wave of major three-star support below at 2976.50-2981.75; a break below here will encourage a windfall of selling. Similarly, the NQ has first key resistance at 8781.25-8800 and only a move above here is favorable. Our Pivot is 8729.25 and continued price action below here is negative and a break below 8677 will open the door down to Tuesday’s close and major three-star support at 8508.25-8512.50; below here, all bets are off. We have held a buy the dip mentality since last Friday. Our Bias has been cautiously Bullish, but we have now gone Neutral given this budding failure.
Resistance: 3069.25-3076**, 3092.50**, 3110.25***, 3125.75***, 3137**, 3182-3189.50***
Support: 3032.75**, 3010.50*, 2997**, 2976.50-2981.75***, 2940-2947**, 2878.25-2889.25**, 2855-2857.25***
Resistance: 8781.25-8800***, 8845.75**, 8896.50**, 8944.50-8950***, 9000-9037.50***
Support: 8677**, 8612.50**, 8508.25-8512.50***, 8390-8408**, 8257***, 8203.50***
Crude Oil (April)
Yesterday’s close: Settled at 46.78, down 0.40
Fundamentals: Crude Oil is waffling around unchanged but overall weak as OPEC musters the case to cut production by 1.5 mbpd. Although this is larger than initially anticipated, the problem is the entire cartel is not on board with such a move. It would seem this is a mere recommendation awaiting Russia’s response. We would expect something conclusive before the weekend. OPEC+ also proposed extending the current cuts agreed to last year through the remainder of 2020. The question now is whether this is too little too late? One might think so given the inability to rally despite yesterday’s headline supportive inventory data showed a composite draw of nearly 8 mb. However, refinery runs were down 1%, bringing Utilization to 86.9%, this lowest since November 2019; this means less Crude is pulled to create the products – paving the way for product draws. Still, given such, Crude Oil did not build more than expected only coming in at +0.785.
Technicals: Today’s early developments elude to additional weakness; looking at the daily chart, the previous two sessions have left upward tails with lower highs just below our rare major four-star resistance. Our momentum indicator is also trending lower, coming in this morning at 47.28; we will align this with what was a previous level at 47.65 and one Crude Oil has not been able to close above. Continued price action below 47.28-47.65 is negative and paving a path of least resistance to 45.33-45.47.
Resistance: 48.99-49.50****, 50.32**
Support: 46.32** 45.33-45.47***, 44.76**, 43.32**, 42.36***
Yesterday’s close: Settled at 1643, down 1.4
Fundamentals: Gold is higher by almost 1% this morning as weakness makes its way back into the risk landscape. Treasuries are higher and the Dollar is again lower; this is a perfect mix for Gold, however, traders still must be cautious given the metal’s previous rout upon sharp selling the equity markets. We remind you of this because of the budding failure in equities (see S&P section for levels of affirmation). Initial Jobless Claims and Nonfarm Productivity both came in a shade below expectations and we now look to January Factory Orders at 9:00 am CT. Ultimately, Nonfarm Payroll is due tomorrow and we expect this to cause definitive action on the week.
Technicals: Our momentum indicator aligns well with the 1642.9-1644 Pivot which is also exactly where Gold settled yesterday. The move out above 1654 this morning is firm and eludes to a higher tape, however, we do have major three-star resistance at 1662.5, aligning with a previous failure and this keeps us only cautiously optimistic in the near-term but of course unequivocally Bullish in Bias over the longer-term. A failure to close above 1642.9-1644 would be very disappointing, pointing to a near-term failure.
Resistance: 1654**, 1662.5***, 1691.7-1700****
Support: 1632.6-1635.4**, 1612.8-1619.6***,1598-1600**
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