Are Fresh Global Growth Fears Hitting Markets?
Posted: July 5, 2023, 12:09 p.m.
E-mini S&P (September) / E-mini NQ (September)
S&P, yesterday’s close: Settled at 4492.25, up 4.00
NQ, last week’s close: Settled at 15,364.75, up 27.75
Risk sentiment deteriorated last night when China’s Services PMI missed expectations at 53.9 versus 56.2. Although it was still in expansion, it elevates fears of China’s slow recovery. Services PMI this morning was also weaker than expected from the Eurozone at 52.0 versus 52.4. As gears shift into the U.S. session and coming out of the 4th of July holiday, we look to Factory Orders at 9:00 an CT, before FOMC Minutes from the June meeting are due at 1:00 pm CT. The economic calendar really picks up tomorrow with the first look at June jobs from the private ADP survey and ISM Services before Nonfarm Payrolls on Friday.
There is currently an 86.2% probability the Fed hikes by 25bps to 5.25-5.50% at its meeting later this month, and a 49.5% probability they hold at that new level through yearend.
E-mini S&P futures have chewed through first key support at 4471.25-4474.25, a level that on Monday we noted we expect buoyant tailwinds while out above. Still, there are several levels of strong support detailed all the way down to our rare major four-star mark at 4430.75-4435.75, which aligns with an intraday gap from last Thursday. Price actinon is testing our next level at 4465. As for the E-mini NQ, it is testing first support this morning, a major three-star level that aligns multiple indicators at a shelf created at the highs on June 22-23.
Bias: Neutral/Bullish
Resistance: 4488.25-4493.75***, 4498-4500***, 4509**, 4536.50-4439.25***
Pivot: 4479.50
Support: 4471.25-4474.25**, 4465**, 4453.25-4455.50***, 4441.50-4444.75*, 4430.75-4435.75****, 4417.50-4418.75***, 4407.25-4409.75***
NQ (Sept)
Resistance: 15,337-15,374***, 15,475-15,500***
Pivot: 15,300
Support: 15,238-15,268***, 15,202-15,219**, 15,078-15,095**, 15,025-15,037***, 14,963-14,986**, 14,856-14,898****
Crude Oil (August)
Yesterday’s close: Settled at 69.79, down 0.85
Crude Oil futures are edging higher this morning in another attempt to retest what has become critical resistance at $72 and above. The strength on today’s session comes despite the weak services data from China that hit Copper significantly. The energy complex started out strong on Monday, and Crude tapped a high of 71.77, before reversing to settle back below $70. Saudi Arabia’s plan to cut output beginning this month by another 1 mbpd is certainly providing underlying strength, but it was also news of unity with Russia’s self-imposed cuts that have kept the market responsive from the $67-69 area. Still, market participants are uncertain whether Russia will abide by such cuts. For now, we will look to price action above our Pivot and point of balance at 70.60-70.73 as keeping the tape buoyant for a test into our major three-star mark at 72.43-72.65.
Bias: Neutral/Bullish
Resistance: 71.77-71.93**, 72.43-72.65***, 73.29-73.37**
Pivot: 70.60-70.73
Support: 69.93-70.33***, 69.35-69.53**, 68.93-69.03***, 66.96-67.29***
Gold (August) / Silver (September)
Gold, yesterday’s close: Settled at 1929.5, up 0.1
Silver, yesterday’s close: Settled 23.112, up 0.092
Gold and Silver futures are firm, but certainly have a lot of work to do. The deluge of economic data from U.S. in the coming days will be absolutely critical in defining the path of recovery or failure for the precious metals complex. While we look to Factory Orders at 9:00 am CT and FOMC Minutes at 1:00 pm CT today, it will be ISM Services tomorrow and Nonfarm Payrolls Friday that hold the cards. Gold cleared the 1929.4-1931.5 resistance level on Monday’s ISM Manufacturing miss, where Prices came in at 41.8, which next to December was the sharpest contraction since the onset of the pandemic, but it must continue to hold out above this level as support. However, despite continued poor data around the globe, the 2-year Treasury has responded very little, and continued Treasury price weakness will be a headwind to the precious metals complex.
Bias: Neutral/Bullish
Resistance: 1940.3-1943.4**, 1949-1949.6***
Pivot: 1936.1
Support: 1929.4-1931.5***, 1915.4-1917.7**, 1906.2-1911.6***, 1900.6-1902.3**
Silver (September)
Resistance: 23.29-23.34***, 23.43-23.49***, 23.98***
Pivot: 23.11-23.15
Support: 22.89-22.97***, 22.48-22.54***, 22.05-22.40****
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