Your Roadmap to Jobs Friday | Morning Express 05/06/22

Posted: May 6, 2022, 8:36 a.m.

- Nonfarm Payrolls for April are due at 7:30 am CT and 391k jobs are expected to have been added, a drop from 431k in March.

- Wage Growth or Average Hourly Earnings stands front and center, expected to be in line with March at +0.4% MoM and +5.5% YoY

- Much was said about Nonfarm Productivity and Unit Labor Costs data yesterday, Q1 divergence at -7.5% and +11.6% respectively, both outstripping expectations. Paid more for less.

- Despite massive relief rally Wednesday, the S&P did not clear resistance and risk-assets broadly reversed sharply.

- Rising rates and U.S. Dollar are the culprits, generally speaking. Yield of U.S. 10-year reached a high of 3.10% yesterday before settling in at 3.04%.

- Dollar and rates set in motion by Bank of England’s sloppy meeting. Hike approved by 6-3 vote, but dissenters called for 10% inflation, and shock to growth and income. British Pound lowest since July 2020.

- BoE lit a fire under the U.S. Dollar and their cautiousness stoked inflation.

- Inflation was further stocked, and thus a tailwind to yields, after it was announced the White House will be buying 60 mb of Crude to replenish SPR. Crude was already buoyant due to OPEC+ adding production they cannot. Then Senate passes antitrust bill pressuring OPEC.

- Also, cannot ignore technical failure at resistance for many assets and overall environment as institutions used the rally to take down exposure.

- We do think the door is wide open for a Goldilocks scenario today; Nonfarm not too hot, not too cold. U.S. Dollar is well off the overnight highs and staying contained at 104.00 certainly will help risk-assets.

E-mini S&P (June) / NQ (June)

S&P, yesterday’s close: Settled at 4143.25, down 152.00

NQ, yesterday’s close: Settled at 12,858.00, down 673.25

- Most volume in both S&P and NQ since March 16th. More volume in the final 30-minute bounce than first 30 minutes after bell. But selling was very steady for the first 90 minutes with heavy volume.

- Measured downside was achieved Monday, re-fishing for such will not be as easy.

- We are now outright Neutral.

- Tremendous damage created from the reversal and washout.

- High into yesterday’s close held overnight and creates steady overhead resistance at 4143.25-4150 that must be regained or selling will continue.

- Similarly, the NQ must regain and trade decisively above major three-star resistance at 12,838-12,955 or selling will continue.

- Such would open door down to 4010-4030 in S&P and 12,465-12,500 in the NQ.

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NQ (June)

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Crude Oil (June)

Yesterday’s close: Settled at 108.26, up 0.45

- Crude was pulled down with broad risk selling yesterday.

- Rebounding nicely overnight as EU’s sanctions on Russian Oil moving ahead after minor tweak allowing Hungary and Slovakia to purchase Russian Oil through 2024, instead of 2023

- U.S. Dollar Index hits highest since December 2002, before backing off.

- Yesterday’s high was 111.37, perfect achievement of our upside target of $111.

- Higher lows since yesterday’s reversal, very constructive and align with holding out above 106-107. Major three-star supports noted below.

- Bulls in the driver’s seat into the weekend and reaching for higher prices if holds out above first key support aligning with our momentum indicator at 108.80-109.20.

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Gold (June) / Silver (July)

Gold, yesterday’s close: Settled at 1875.7, up 6.9

Silver, yesterday’s close: Settled at 22.443, up 0.041

- U.S. Dollar pulling back from fresh 20 year high at 104, helping to buoy Gold and Silver.

- Yields not extending higher overnight.

- All is waiting for Nonfarm Payrolls, expectations described above.

- Gold and Silver both tested strong areas of resistance before falling yesterday. Do not want this to develop into a failure, do not want to see lower lows on the week.

- Still, strong support is underpinning each, detailed below, rebound is likely to hold if Gold can hold above our Pivot and point of balance at 1877.7-1881.

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Silver (July)

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