E-mini S&P (March) / NQ (March)
S&P, yesterday’s close: Settled at 3878, up 4.50
NQ, yesterday’s close: Settled at 13,192, down 32.25
Fundamentals: U.S. benchmarks rebounded from yesterday’s early bloodbath and the S&P finished positive. In fact, most sectors, led by Energy and Communication Services, gained ground. It was the behemoth Tech sector that dragged on sentiment, losing 0.25%. However, the NQ lost as much as 3.5% upon testing our rare major four-star support at 12,727-12,767 and given the snapback has only pared this week’s losses in half, markets are still vulnerable until they close above major three-star resistances described in the Technical section below.
Fed Chair Powell began his Congressional testimony yesterday with U.S. benchmarks at their worst, just following the opening bell. He reassured that policy would remain accommodative and the Fed is committed to using their full range of tools. He added that inflation is soft and price pressures are not a threat. Furthermore, the uptick in rates point is due to an improved economic outlook and there is strong demand for the short end. For now, we believe this rhetoric works; the Fed is willingly allowing the curve to steepen. As we noted here yesterday, investors will have to decide between expensive tech stocks and risk-free return. Economic activity has surged in recent months and will continue to do so within the melting pot of added fiscal stimulus, warming temperatures, a precipitously falling Covid count, and the vaccine rollout. There will soon come a time when short-term rates improve along with the belly and longer-end, creating added headwinds. Fed Chair Powell continues his testimony today.
Asian markets were not immune to the selling as China’s Shanghai Composite lost 1.99% today and Hong Kong’s Hang Seng 2.99%. President Biden is expected to sign an executive order to review U.S. dependence on China, this narrative along with inflation and regulatory concerns in Hong Kong are weighing on the region. The overnight low in the S&P came just ahead of Europe’s open and a better read on QoQ GDP for Germany in Q4 at +0.3% versus +0.1% expected has helped lift sentiment. In the U.S., Fed Chair Powell begins his second day on Capitol Hill at 9:00 am CT, EIA inventory data is due at 9:30 am CT, and Fed Governors Brainard and Clarida speak at 9:30 and noon CT.
Technicals: Yesterday, the NQ sliced through the 50-day moving average at 13,095 for the first time since trading back above it on November 4th. The afternoon snapback secured a close above and a bullish tailwind has ensued. For the S&P, the rebound pins it down less than 0.5% on the week, but provides a line in the sand major three-star resistance that would reinvigorate a bullish tape across all timeframes, major three-star resistance at ... Sign up for a Free Trial at Blue Line Futures to have our entire fundamental and technical outlook, actionable bias, and proprietary levels for the markets you trade emailed each morning.
Crude Oil (April)
Yesterday’s close: Settled at 61.67, down 0.03
Fundamentals: Crude Oil staved off the early undertow coming from equity markets, then used their rebound as a fresh bullish tailwind from elevated levels. However, API data after the bell dampened the mood. Yesterday, we noted analysts’ early estimates for today’s official EIA data that mounted to a composite 13 mb draw. The private API survey did not agree at +1.026 mb Crude, +0.066 mb Gasoline and -4.489 mb Distillates. Price action slipped by as much as a dollar overnight to a low of 60.97 before ripping higher this morning and back through $62. Fears that shutdown production due to the freeze across Texas will take longer than expected to come back online has certainly brought bullish tailwinds. Furthermore, the distortions created within last week’s data make is much less relevant today. Overall, strong demand from Asia and the global reopening trade have aided this path of least resistance higher and such remains heading into OPEC+ next week, with a floor developing at $60, barring any unforeseen outliers.
Technicals: With a low of 60.67 early yesterday morning and a higher one overnight, first key support at 60.75-60.88 is bringing a near-term floor in front of the psychological $60 mark. This is a bull market and chewing through levels of strong overhead resistance dating back to the January 2020 Iran spike pre-pandemic. Furthermore, it is back to the scene of the crime when it incurred the impact of China beginning its lockdowns. Although this is a bull market, for these reasons, and others, we find it hard to buy at these levels and believe patience will prove rewarding... Sign up for a Free Trial at Blue Line Futures to have our entire fundamental and technical outlook, actionable bias, and proprietary levels for the markets you trade emailed each morning.
Gold (April) / Silver (May)
Gold, yesterday’s close: Settled at 1805.9, down 2.5
Silver, yesterday’s close: Settled at 27.688, down 0.397
Fundamentals: All things considered, Gold held tremendously yesterday; it failed at major three-star resistance early and finished marginally in the red after swinging to both ends of its range. However, Silver’s failure above $28 was the disappointment between the two. Coming into today, the U.S. Dollar is edging higher after building a floor above Monday night’s low in the Dollar Index. Also, with the snapback in equities, the Treasury complex is again on its backfoot. This is a bad combination for both Gold and Silver, but one that we know has been hindering the complex. Fed Chair Powell begins his second day on Capitol Hill at 9:00 am CT, and Fed Governors Brainard and Clarida speak at 9:30 and noon CT. These will certainly impact the Dollar, Treasury and Gold landscape.
Technicals: Gold and Silver are holding a constructive groundwork per what we described here yesterday; upon the risk-off undertow Gold must respond to major three-star support at 1790-1796, which it did, and Silver cannot break below major three-star support at 26.91-27.01, which it did not. However, both are trading on the underside of our momentum indicators this morning at ... Sign up for a Free Trial at Blue Line Futures to have our entire fundamental and technical outlook, actionable bias, and proprietary levels for the markets you trade emailed each morning.
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