E-mini S&P (March)
Yesterday’s close: Settled at 2747.50
Fundamentals: Yesterday was a volatile session amidst new Fed Chair Powell’s congressional testimony. Though he did not deviate from the current narrative, hiking rates at a gradual pace, his strong tone and positive outlook on the economy garnered speculation that four rate hikes will be in the mix. Four rate hikes have always been in the mix, but that does not mean its likely. We have been and remain in the camp that there will be only three hikes this year. The more hawkish rhetoric put equity markets under pressure as the 10-year yield recovered from Friday’s selloff and traded to a high of 2.925.
This is below last Wednesday’s spike high of 2.957. The 2-year yield did make a new high but the complex, in general, has settled in a bit this morning. We will continue to monitor developments here, however, we believe that slightly higher yields do not pose a tremendous headwind for equity markets, it is simply when they accelerate higher as they did yesterday. Powell will continue his testimony tomorrow. Today we have the second look at Q4 GDP at 7:30 am CT and Pending Home Sales at 9:00.
Technicals: Yesterday’s session high was 2,789.75 before reversing course sharply and settling down 1.3%. Price action bled to a low of 2,742 yesterday and 2,738.50 overnight but has tried to hold ground against what was major three-star support at... Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and proprietary bias and levels.
Yesterday’s close: Settled at 63.01
Fundamentals: Crude oil retreated sharply yesterday on guess what? A stronger dollar. Yesterday morning was a perfect scenario to sell crude and we discussed this on the Midday Market Minute; while price action hit key resistance, Durable Goods data widely missed expectations and Powell’s testimony supported the Dollar. Furthermore, rising yields put pressure on equity markets. Today will be all about inventories and price action traded lower after what was arguably not a bearish API report. They showed Crude +933 kb versus expectations of +2.7 mb. Gasoline did come in at +1.914 mb.
Today’s official EIA expectations are for +2.4 mb crude, -190 kb gasoline and -709 kb distillates. Production data will be key also after a stagnant read last week. The subdued price action is signaling that longs are becoming skittish, the door is now wide open for a move back to $60 per barrel, inventories must agree though. We did a piece with CNBC discussing a tradable opportunity in regard to the price of crude oil and energy stocks, it can be viewed here: The spread between WTI vs XLE.
Technicals: Price action traded right into first key support yesterday.
Yesterday’s close: Settled at 1318.6
Fundamentals: Yesterday was not the combination that gold bulls want to see; a stronger dollar and higher rates because of more hawkish monetary policy. As we have discussed, higher yields because of ramped up fiscal policy that induces inflation is bullish gold. Though a more hawkish monetary policy serves as a near-term headwind, we believe Gold will remain constructive as it digests these possibilities.
Lost in translation yesterday was a very poor read on Durable Goods and this will weigh on first-quarter GDP. Fed Chair Powell surprised markets with a strong tone that was more hawkish and assertive than anticipated but not overall surprising. He resumes his congressional testimony tomorrow. This morning we have the second look at Q4 GDP at 7:30 am CT and Pending Home Sales at 9:00.
Technicals: Yesterday, we discussed how Gold failed to get out above first key resistance and a move below first key support.
Natural Gas (April)
Yesterday’s close: Settled at 2.683
Fundamentals: The price of natural gas stabilized yesterday as storage draw expectations for tomorrow’s report ticked up a bit. The risk remains to the upside as we truly not out of the woods for a burst of winter weather over the next few weeks; current positioning would open the door for a sharp rally above $3.
Technicals: Strong support below the market has kept waves of selling in check.