Risk-On with an Eye on Data | Actionable Macro Fundamental and Technical Analysis | Morning Express
E-mini S&P (December)
Last week’s close: Settled at 3264.75, down 37.50
NQ, last week’s close: Settled at 11,046.25, down 256.50
Fundamentals: The S&P tested unchanged on the year overnight into Friday and the bulls responded. Price action was choppy intraday but could not break the session low and this set the table for a surge into settlement. Those tailwinds coupled with better than expected PMI data have carried U.S. benchmarks higher ahead of Monday’s opening bell. On the other side of the coin, risk-sentiment seems less focused on uncertainty heading into U.S. elections and widespread lockdowns across Europe. Last night, Chinese Manufacturing PMI notched expectations at 53.6 versus 53. This morning, final October Manufacturing PMI for every region in Europe came better than their Flash reads earlier. Still, with the U.K. following Germany and France by increasing restrictions, it raises doubt over the immediacy of an economic rebound. Domestically, final October Manufacturing PMI is due at 8:45 am CT and the more closely watched ISM read follows at 9:00 am CT.
Technicals: Price action has steadily rebounded from the depths of Friday, but the bulls certainly have their work cut out for them. We again became cautiously optimistic after the inability to chew through unchanged on the year Friday and believe the reversal sets a path of least resistance to our rare major four-star level at 3383 in the S&P and 11,588-11,621 in the NQ. Still, we must continue to see construction in order to remain cautiously Bullish in Bias. This starts with Friday’s settlement which aligns to create major three-star support at 3258.25-3264 in the S&P and 11,039-11,046 in the NQ. Our momentum indicators are lagging the tape, but are ahead of settlement, and come in at 3273 in the S&P and 11,095 in the NQ. It is not uncommon to see some back and fill after the bell given the surge, however, construction above these levels is paramount; a break below will quickly become negative and completely Neutralize our Bias. Furthermore, previously strong resistance levels are overhead, first in play is 3302.25 in the S&P, a level in which price action has waffled around overnight; decisive action above here is bullish. Additionally, major three-star resistance in the S&P was tested overnight at 3329-3330.50. This was a level that the tape failed at intraday a week ago and will prove to be a Pivotal battleground. Given the increased resistance at 3383, as the week unfolds, traders do want to be on the lookout for a test of such that does not close above 3329-3330.50.
Resistance: 3329-3330.50***, 3345**, 3353.25-3356**, 3383****, 3406.75-3410***
Support: 3287.50-3291.25**, 3273**, 3258.25-3264.50***, 3250.25**, 3231-3238***, 3172.75-3198****
Resistance: 11,225-11,250**, 11,343***, 11,457-11472**, 11,588-11,621***, 11,750-11,789***
Support: 11,095**, 11,039-11,046***, 10,829-10,891***, 10,656-10,660***, 10,489-10,558****
Crude Oil (December)
Last week’s close: Settled at 35.79, down 0.38 on Friday and 4.06 on the week
Fundamentals: Crude Oil opened Sunday night lower by more than 5% on fears of demand destruction after lockdowns were expanded in Europe. Restrictions across the region’s largest economies, Germany, U.K., France, and Italy, are a steadfast detriment to the demand picture and add layers of uncertainty for the global economic recovery. Crude Oil did trade a session low on the open and has rebounded since, notching positive territory at one point this morning. Bringing a supportive wave overnight was better than expected Manufacturing PMI for October from China to Germany. An added tailwind came on news that Russian producers will meet with the country’s Energy Minister Novak to discuss delaying the planned production taper on January 1st. We have noted here that we expect OPEC to delay but are not surprised with their patience through the U.S. elections.
Technicals: Price action sliced through a big level of support at 34.82 on the open last night but regained the mark around 3:00 am CT and has steadfastly held above since. This support will remain in place and will be critical on a closing basis. The good news is that our momentum indicator comes in at 35.08 this morning and price action is holding well above; after the surge on news from Russia, a pullback then held 35.08 as support. The session high of 35.95 has found resistance at unchanged on the session at 35.79. Although decisive action above 35.08 should lay healthy groundwork to then hold positive on the session, the real task comes in at our rare major four-star resistance at 36.80-37.06. This is a level that we must see a close above in order to neutralize this entire wave down. We believe there to be great intermediate to long-term value in this $35 area.
Resistance: 36.80-37.06****, 37.58-37.77**, 38.28-38.41**, 39.23-39.36***
Support: 35.08**, 34.82***, 33.12-33.53**, 32.57-32.77***
Last week’s close: Settled at 1879, up 11.9
Fundamentals: Gold had a health session Friday, even when risk-assets were broadly unenthusiastic. Added strength today is finding a tailwind from a broad risk-on move and a weaker U.S. Dollar. Those risk-assets are finding support from better Manufacturing data the hope of uncertainty being removed from markets Tuesday night after the election. Additionally, whereas Core PCE was lower than expected on Friday, it helps extend the Fed’s timeline before having to raise rates. Furthermore, the better Manufacturing from China, Germany and the U.S. helps offset deflationary fears tied to fresh lockdowns across Europe. We remain unequivocally long-term Bullish in Bias Gold as it digs itself out of this near-term seasonally soft time of year.
Technicals: The battle at and above previous major three-star resistance at 1887.1-1880, now key support, has encouraged a test to key resistance at 1892.5. The tape is attempting to chew through the mark which ultimately paves a path of least resistance to 1902-1906.7. Regardless of the finish, continued action above 1877.1-1880 and our momentum indicator at 1884 is constructive on the session.
Resistance: 1892.5**, 1902-1906.7***, 1915-1917**, 1933-1937***
Support: 1877.1-1880**, 1868-1871**, 1851**, 1845.4****, 1829.8***
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