Where Is This Bull Leg's Line In the Sand? | Morning Express | 05/31/23 |
Posted: May 31, 2023, 9:04 a.m.
Our daily research overs the S&P, NQ, Crude Oil, Gold, Silver, Currencies, Corn, Soybeans, Wheat, Livestock, and Softs markets.
Went out to brokerage clients before the bell
- China’s PMIs whiffed last night, Manufacturing PMI at 48.8 was the second contraction in a row, missing the 49.5 expected, down from 49.2 in April, and the worst since December’s 47.0. Services PMI was much better at 54.5, but missed the 55.2 expected, and was down from 56.4 in April.
- CPI in Germany and France disinflated m/m by -0.1%, and slowed y/y at 6.1% and 5.1%, respectively. However, Italian CPI jumped m/m at +-0.3% versus -0.2% expected, though cooler y/y at 7.6%.
- Gear up for a deluge of central bank speak, that from the Eurozone is already underway, and ECB President Lagarde speaks at 7:30 am CT.
- Fed speakers include Governor Bowman at 7:50 am CT, Boston Fed President Collins at 11:20 am CT (does not vote until 2025), Philadelphia Fed President Harker at 11:30 am CT, a 2023 voter, and Governor Jefferson at 12:30 pm CT.
- JOLTs data for April will take center stage, due at 9:00 am CT.
- The debt ceiling deal is expected to hit the House for a vote today after clearing the House Rules Committee last night.
- According to the CME’s FedWatch Tool, there is a 62.9% probability the Fed hikes 25bps at its June 14th
E-mini S&P (June) / E-mini NQ (June)
S&P, yesterday’s close: Settled at 4215.00, up 1.75
NQ, yesterday’s close: Settled at 14,396.75, up 64.25
After a thrilling start to yesterday’s session, driven by E-mini NQ leadership, price action has been sluggish since the opening bell. Weak economic data from China last night certainly did not help, and although the U.S. Dollar has strengthened, Treasury rates are working a bit lower. Given last week’s magnificent run, as we always say, the market must digest the move. What becomes important is digesting such in a constructive manner. We remain cautiously Bullish, even at these levels. However, our more Bullish Bias required E-mini S&P futures to hold the 4231.50 breakout area. E-mini NQ futures, the leader, is testing into what was rare major four-star support yesterday at...
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Crude Oil (July)
Yesterday’s close: Settled at 69.46, down 3.21.
Yesterday’s break below rare major four-star support at 70.58-71.05 could only Neutralize our Bias in the short-term. Yesterday’s breakdown found selling pressures as hopes of an OPEC+ production cut continued to dissipate. Those pressures were reinvigorated last night after China’s poor Manufacturing PMI data. Although global growth fears could keep a production cut on the table, the CME’s OPEC Watch Tool is signaling a 50/50 probability the cartel either leaves production unchanged or raises it due to the shift in the Options Skew and the Implied Volatility of Puts. However, we find it very unlikely OPEC+ would actually increase production and this could create opportunity across the Options Curve. From a price perspective, we do have major three-star support at...
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Gold (August) / Silver (July)
Gold, yesterday’s close: Settled at 1977.1, up 14.0
Silver, yesterday’s close: Settled at 23.239, down 0.121
Gold is showing signs of wanting to repair some of the recent damage, helping to pull Silver out of its hole, though each has a think headwind of resistance before a clear path higher is paved. China’s PMI data last night certainly made the road a more difficult one, lifting the U.S. Dollar versus the Chinese Yuan to the highest level since November 30th. However, Treasuries are responding to the slower global growth outlook thus far, as well as a relief rally on the heels of a potential debt ceiling deal. This sets the stage for Gold, it must clear major three-star resistance at...
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Silver (July)
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