E-mini S&P (June) / NQ (June)
S&P, last week’s close: Settled at 4151.75, down 2.50 on Friday and 17.25 on the week
NQ, last week’s close: Settled at 13,405, down 81.50 on Friday and up 18.00 on the week
Fundamentals: U.S. benchmarks are pointing higher ahead of Monday’s opening bell, but our rare major four-star ceiling won Friday’s battle and again overshadows today’s early strength. On Friday, the S&P failed to breakout above a critical level of resistance at 4183-4186 and pared the session’s gains into settlement. We will discuss the significance of this level in more detail in the Technical section below. For now, a rebound in Energy and Crypto have soothed sentiment, whereas an international incident is evolving due to a false bomb threat that diverted a commercial jet. Crude Oil has gained as much as 2% after Iran Nuclear talks have cooled. Last week, China doubled down on closing loopholes, restraining Crypto trading, and mining. The sector was hit badly with CME Bitcoin futures finishing down 28% and losing as much as 40%. With many Tech companies now holding Bitcoin on their balance sheets and providing services facilitating use or storage, it has become more widely expected that such moves create an undertow for the broader market. At the onset of a new week, there is some stability across the space and the NQ has used that to its advantage early. Lastly, but certainly not least, a Ryanair flight was flying over Belarusian airspace and was forced to land in Minsk due to a false bomb threat. A fighter jet took to the air, leading the diversion and allowing Belarusian officials to detain opposition journalist Roman Protasevich. The incident has sparked immediate international condemnation and the EU is expected to respond. However, Russian officials have defended the maneuver.
The economic calendar is quiet today, but we look to speeches from Fed Governor Brainard at 8:00 am CT and Atlanta Fed President Bostic at 11:00 am CT. Both are 2021 voters.
Technicals: Unlike directional Friday’s that struggle at their next resistance and leave near-term froth, price action came in sharply ahead of settlement. Yes, it was another failure at our rare major four-star resistance in the S&P, but such weakness on Friday did not crack major three-star support at 4150-4154 and despite a tiny whipsaw on the open last night, it still has not been violated (decisively). Therefore, we will continue to hold a more Bullish Bias, but maintain the guidelines set forth on Friday; price action must hold above 4150-4154 in the S&P and above 13,346-13,388 in the NQ, as well as breakout above rare major four-star resistance at 4183.50-4186 in the S&P. This critical area of resistance, for us, defines the next leg higher in a path to 4600. First, 4186 is the 100% extension of a crucial range that was set through the February and March volatility; we believe continued action above here builds for a move higher. Secondly, upon the post-Nonfarm Payroll reversal two Monday’s ago, there was a gap settlement left at 4183.50 from Tuesday’s open. Yes, this gap was covered on Friday, but was quickly rejected, the third such rejection. However, it becomes more likely that a second intraday attempt after such a steady rebound from Friday’s reversal has a high likelihood of breaking out above. Additionally, the S&P will have help from Tech leadership. The NQ broke out above its rare major four-star resistance last week at 13,346-13,388 and has held a retest of this as now support, perfectly. Even better, the trend line from the 14,064 highs we pointed to as resistance, has slopped into what is now major three-star support at 13,346-13,388 and price action held this perfectly Friday and last night. The table is set for higher prices.
Resistance: 4183.50-4186****, 4202-4208.75***, 4226.75**, 4238.25-4241.50****
Support: 4150-4154***, 4123***, 4109-4111**, 4077.25-4081.50***
Resistance: 13,543**, 13,625-13,657***, 13,790-13,818***
Support: 13,455-13,486**, 13,346-13,388***, 13,245-13,281***
Crude Oil (July)
Last week’s close: Settled at 63.58, up 1.64 on Friday and down 1.78 on the week
Fundamentals: Crude Oil has gained as much as 2% today and rebounded by as much as 5% from Friday’s fresh swing low. We have pointed to over-enthusiasm for potential of a new Iran Nuclear Deal as a buying opportunity amid a much broader uptrend. At the least, we have said Iran will be slower at bringing back exports with 2 mbpd being the high side, compared to calls from Iranian state officials saying they have capacity for as much as 4 mbpd. In news that further weighed on the tape last week, Asian refiners have been preparing for Iranian Crude. Now, the news flow has turned and a deal right here, right now, is less likely. Iran’s parliament approved a bill late last year that suspended a pact with the UN to inspect its nuclear facilities if no deal was in place to remove sanctions by February. They then struck a three-month extension that expires this month. With talks dragging out, the UN would be unable to monitor Iran’s sites, which in turn damages the likelihood of a deal at all. Today, Iran and the UN agreed to extend this pact by one more month, but this is an ever-present reminder of the fickle situation and how the news flow was over-enthusiastic too soon. All things considered, we remain upbeat Energy at the onset of a strong demand season and amid reopenings in the U.S. and Europe. However, we are conscious of the run-up to such a season, and a near-term top that can come through the Memorial Day holiday.
Technicals: Price action has climbed constructively since forming a new low and quick reversal early Friday morning. Friday’s settlement aligned closely with our 63.65 area and this will bring a line in the sand to define this renewed near-term strength. Our momentum indicator is trailing the tape and comes in as our point of balance at 63.95. Still, overhead major three-star resistance does come in at a wide range at 64.93-65.36 and will work to keep today’s strength contained.
Resistance: 64.93-65.36***, 66.45-66.70***
Support: 63.58-63.65***, 62.94-63.10**, 62.40**, 61.74-61.94**, 60.19-60.94****
Gold (June) / Silver (July)
Gold, last week’s close: Settled at 1876.7, down 5.2 on Friday and up 38.2 on the week
Silver, last week’s close: Settled at 27.486, down 0.581 on Friday and up 0.121 on the week
Fundamentals: It was Gold’s time to shine last week, it gained 2%, and reinforced its leadership within the precious metals space. It capitalized off a weaker U.S. Dollar, strength across the Treasury complex and at Bitcoin’s expense. Silver was less enthusiastic, and Platinum was hit hard on Friday, but still across all possible charting metrics Gold forged a technical breakout above a resistance line from last August’s record high. We point to this here in the fundamental section, because nothing can be more fundamentally important than leadership within the space and while that leadership is doing everything it is supposed to; capitalizing on the Dollar, Treasury, and Bitcoin drivers. Still, there are headwinds and China, after clamping down on Crypto trading and mining, is attempting to intervene and drive froth from base metals by warning of “excessive speculation”. Iron Ore and Steel prices lost ground overnight, as did Copper, but all have pared the worst of their losses and Copper has turned positive. Prices of base metals turned sharply lower last week, and certainly weighed on Platinum and Silver.
Technicals: Gold has officially broken its downtrend but is not in the clear. We must continue to see constructive action above first key support at 1875-1877 or it faces waves of selling back to major three-star support at 1843-1850. Friday certainly exuded some technical struggles as Gold’s latest rally attempt was rejected. All in all, Gold still must breakout again, this time above a ceiling forming at what has been our major three-star resistance at 1894.5. Silver has lagged, but construction against strong levels of technical support is helping build for longer-term strength. For now, continued action above 26.94 is ok and keeps the intermediate to long-term prospects very bullish. Gold certainly could use Silver’s help, and Silver would if it can close above 28.47-28.55.
Resistance: 1894.5***, 1900**, 1925-1935***
Support: 1875-1877**, 1862-1864** 1843-1850***
Resistance: 28.47-28.55***, 29.36***, 30.00
Support: 27.63-27.68***, 27.36***, 26.94***
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