Volatility Continues to Start a Busy Week | Morning Express
E-mini S&P (June) / NQ (June)
S&P, last week’s close: Settled at 3964.75, up 64.25 on Friday and 65.00 on the week
NQ, last week’s close: Settled at 12,966.75, up 196.25 on Friday and 122.25 on the week
Fundamentals: U.S. benchmarks roared higher into the close Friday. It was a terrific sight to see, but the story certainly had layers, and like an onion they were peeled back through the weekend. First, in Thursday’s Midday Market Minute, Bill Baruch discussed how the constructive hold of support early in that session set the stage for a friendly Friday. This undeniably brought bullish technical tailwinds due to seller’s exhaustion, short covering, and fresh buying hitting the tape. Remember, this is a bull market.
ViacomCBS had grabbed headlines through an ugly week as losses mounted. In the end, the stock finished down 50.5%. Others were Discovery -45.8%, Tencent -33.9%, and Baidu -19%. It was revealed that losses leading up to Friday forced the liquidation of position for the family office Archegos Capital Management. Goldman Sachs was at the center of massive block trades that sent ViacomCBS down by as much as 40% on Friday alone. As layers were peeled back, it became apparent that several banks holding assets for Archegos had sustained sizable losses. Credit Suisse and Nomura are the most notable, they are each down about 13% ahead of the bell. With word that additional positions are still set to be liquidated and other banks potentially on the hook, the news is broadly weighing on the financial sector. The XLF is -1.5% premarket and Goldman Sachs is down more than 2%. On the other side of the story, such a large and concentrated positions in these high-beta tech names was likely hedge by index exposure. In this case, Archegos was probably short the NQ and Friday’s surge aided by their short covering.
With a melting pot of narratives, it certainly makes for another exciting week. The White House is now expected to divide what was a $3 trillion spending bill into two parts, with the first one focused on infrastructure and announced later this week. The second will be unveiled in April and will focus on coronavirus relief. In Europe, the Covid-19 case count is growing, and German Chancellor Merkel has threatened tighter lockdowns. However, the U.K. is set to relax restrictions. The container ship blocking the Suez Canal is nearly freed and will certainly impact Oil markets. Lastly, a jam-packed economic calendar is quiet today, but builds up to Friday’s Nonfarm Payroll report during a brief holiday shortened session.
Technicals: We held a more Bullish Bias through the end of last week, but on the heels of that final hour surge, the S&P has struggled at previous record highs to follow through. From an investment perspective we remain very Bullish in Bias and believe April is setting up to be a very strong month, but from a trading perspective there is reason to be cautious through the opening hour today. We had major three-star resistance in the S&P at 3939 on Friday and still find this level critical. This morning, it aligns with our momentum indicator as a point of balance; continued action above here should pave the way for a firm session. It would be normal to see a wave of selling given current narratives, but in the case of such the bulls must respond to ... 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 (May)
Last week’s close: Settled at 60.97, up 2.41 on Friday and down 0.45 on the week
Fundamentals: The price of Crude continues to swing in a wide range. Early weakness came on the news the container ship blocking the Suez Canal will be freed upon a high tide later today. On the heels of this, Russia announced it was in favor of rolling over the OPEC+ cuts. OPEC+ meets on April 1st. Although they may ask for a small rise of their production, the comments were very timely, and Crude traded to 7-day highs. Equity markets are holding well, but fears lingering from Friday’s liquidation event has sectors like Financials on their back foot. The mounting Covid-19 case count does pose a threat, the 7-day moving average of global cases surpassed 500,000 last Thursday and that from the U.S. began to show a noticeable rise last week. However, the 7-day moving average of Covid-19 deaths in the U.S. fell below 1,000 on Friday for the first time since November 6th. Overall, Crude Oil is battling constructively at the psychological $60 mark. The two largest threats to start the week are price suppression after the Suez Canal opens and OPEC+ adding production, but once we get through these events, we see warmer weather bringing a bullish tailwind while European lockdown headwinds are already priced in.
Technicals: Price action has held above a midpoint pocket created over the last week at 59.34-59.49, there has been significant volume traded within here; continued action above here will be supportive and building for a retest of today’s high as the week unfolds. Our momentum indictor brings a point of balance 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.
Gold (June) / Silver (May)
Gold, last week’s close: Settled at 1732.3, up 7.2 Friday and down 9.2 on the week
Silver, last week’s close: Settled at 25.114, up 0.067 on Friday and down 1.20 on the week
Fundamentals: Gold and Silver are seeing fresh waves of selling this morning in what appears to be outright liquidation at the end of the month once again. Outflows across Gold and Silver ETFs as well as miners have been notable over recent weeks. Such outflows coupled with a struggle to chew through technical resistance is paving the way for added selling this morning. The U.S. Dollar is not extending gains but did gain 1% last week and pressured commodity prices. Furthermore, yields are on the mend after the opening bell and news of the White House breaking apart the next $3 trillion spending package increases the likeliness of success in passing the bill. This would add to the record supply of Treasuries; weakness here is also weighing on precious metals.
Technicals: Price action is under fire once again and Gold is at the lowest level since March 12th. It is testing into a crucial level of major three-star support at 1699.4-1706 that helps define recent strength amid rebound attempts from the March 8th low. In order to neutralize only today’s weakness Gold must settle back above 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.
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