Will the Bull Trend Continue?

Posted: June 6, 2023, 8:41 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

Apple introduced the Vision Pro mixed reality headset as the stock was making a new all-time high at 184.95 and surpassing the 181.36 achieved on January 4, 2022. The headset’s price tag of $3,499 shocked many, leading to a swift reversal in the stock price before settling at 179.58 and not achieving a record close. Price action was peeling off a bit before the cost announcement. We believe it is easy to criticize new technologies, especially as a potential recession clouds one’s opinion, but we certainly do not want to underestimate its potential. Most importantly, Vision Pro revenues are not baked into Apple’s current estimates, therefore we see no immediate headwind.
The Reserve Bank of Australia surprised with a 25bps rate hike overnight, bringing rates to 4.1% an 11-year high, and citing stubbornly high inflation with CPI at 6.8% y/y.
Crude reverses and surrenders rare major four-star support at $72 in ‘buy the rumor, sell the news’ jawboning. Although Saudi Arabia pledged to cut an additional 1 mbpd beginning in July and OPEC+ promised to run additional cuts through 2023, the cartels frontrunning exuded fears of global growth. Waves of selling penetrated early strength after U.S. Services data disappointed.
Markets remain emotional, “the economy is great” following Friday’s Nonfarm Payroll, “the economy is falling apart” after yesterday’s ISM Non-Manufacturing (Services).
ISM Non-Manufacturing headline still expanded at 50.3, though some believe that line of expansion/contraction is more like 52/53 in this distorted environment. Prices expanded though at slowest since April 2020, and Orders expanded though much slower than expected at 52.9 versus 56.5. All things considered, this is the exact type of report markets should have celebrated as it should keep the Federal Reserve from being aggressive.
Commodity traders must keep an eye on CNH futures which have rise to a session to hit a new cycle high at 7.128, the highest since November. This is USDCNH, strength highlights U.S. Dollar strength and Yuan weakness. A weaker Yuan and stronger Dollar is a direct headwind to commodities and typically risk-assets in general.
According to the CME FedWatch Tool, there is currently at 24.1% probability the Fed hikes by 25bps at its June 14th

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

S&P, yesterday’s close: Settled at 4281.00, down 7.00

NQ, yesterday’s close: Settled at 14,588.75, up 13.50

E-mini S&P and E-mini NQ futures each set new cycle highs through the first half of yesterday’s session before retreating into the close. Friday’s opening bell range helps define our first levels of support, highlighted in the levels below, and we believe a constructive response to these pockets through today will help underpin renewed strength. Furthermore, steady price action above our Pivot and point of balance will help pave such a favorable response. At the end of the day, the trend is bullish and a healthy consolidation should resolve in the direction of the underlying trend. A move out above first key resistance in the E-mini S&P and E-mini NQ at 4288.50 and 14,627-14,652 will help invite added buying.

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