A Tech Breakout? | Morning Express| | 03-29-23 |
Posted: March 30, 2023, 9:57 a.m.
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Fundamentals: U.S. equity indices are enjoying a broad boost ahead of the U.S. open, but there is certainly heavy lifting still to be done. The E-mini S&P and E-mini NQ have rebounded to critical levels of technical resistance, garnering tailwinds from, Micron’s earnings, UBS news, and a buoyant risk-environment out of China.
Despite double misses on top-and bottom-line estimates, Micron raised guidance, gave positive comments on the end-of-year inventory cycle, and trimmed costs from capex to hiring. On the one hand, the company missed low expectations for the current quarter, but on the other, the focus has shifted to 2024, and the company’s future is very bright. The CEO highlighted the current challenges but noted “an improving supply-demand balance in the months ahead.” This truly highlights our theme of ‘haves and have nots’, those that have significantly lowered expectations, and those that have not. Micron is up by more than 2% ahead of the bell and lifting the sector, NVDA and AMD are each up 1% or more. For more details, we covered Micron in our weekly Triple Play podcast, check it out here.
Banking stocks are enjoying a firm start to the morning, with UBS +3.5% and the XLF up nearly 1%. UBS brought back veteran Sergio Ermotti as CEO, who has intricate knowledge of the company and brings leadership through this difficult time. The market is receiving this as a breath of fresh air. Alibaba surged by 14.3% yesterday on news of restructuring into six units. This lifted the Hang Seng by 2% overnight. Crude Oil and Copper are also enjoying a healthy run this week as economic pessimism fades, discussed more in their respective sections.
Do not miss our daily Midday Market Minute, from yesterday.
Pending Home Sales are due at 9:00 am CT and the U.S. Treasury will auction $35 billion 7-year Notes at noon CT.
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Crude Oil (May)
Yesterday’s close: Settled at 72.81, up 3.55
Fundamentals: Crude Oil had its best day since May yesterday on a barrage of small news-fueled excitement that was gained over the weekend on the CFTC’s Commitment of Traders data. Ultimately, traders build confidence in under-crowded trades, and Friday’s CoT data showed the lowest Managed Money Net Long position since 2016. According to UBS, the liquidation over the last two weeks was the sixth fastest pace since 2011. So, was yesterday’s move a flash in the pan, or are there legs? We cannot ignore the overhead technical resistance, highlighted in our Technical section below, but an early theme this year that has recently dissipated until yesterday was China’s reopening. The CNPC, a Chinese state think tank energy group, yesterday projected throughput to rise 7.8% in 2023, reversing a decline from last year. They further said this equates to growth in imports by 6.2%. This accompanied the most impactful news, that Turkey suspended exports from the semi-autonomous Kurdistan region through a pipeline to the Mediterranean, respecting a decision by Iraq after winning an arbitration case. This puts 450,000 bpd in question.
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Gold (June) / Silver (May)
Gold, yesterday’s close: Settled at 1990.4, up 18.9
Silver, yesterday’s close: Settled at 23.42, up 0.275
Fundamentals: Gold and Silver are enjoying a nice wave of strength but have struggled to extend those gains overnight. The U.S. Dollar is firm due to weakness in the Japanese Yen and Aussie Dollar, while rates are a little higher, and this can all hold back the precious metals complex after a nice rebound. Yesterday’s options expiration and the ensuing roll off of the April contract in Gold will help relieve some overhead pressure, forcing a cleansing of sorts after Gold gained 7% month-to-date.
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Silver (May)
Resistance: 23.98-24.15**, 24.53-24.78***
Pivot: 23.81-23.85***
Support: 23.34-23.47***, 23.05**, 22.81**, 22.41-22.60***, 22.01-22.05***
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