Overnight Tailwinds Lift the Tape

Economic data overnight was mixed, though favorable to the risk-landscape. Chinese Manufacturing eked out a beat at 49.3 versus 49.2, which is theoretically favorable to metals and energy, though Services missed at 51.5 versus 52.9. German Import Prices and Retail Sales m/m fell more sharply than expected. Eurozone CPI y/y was in line with expectations at 5.3%, and m/m disinflated at -0.1 versus +0.3% expected, in what might be the most significant print of the day. Eurozone GDP was firmer than expected at +0.6% versus +0.4% y/y, and +0.3% versus +0.2% q/q. The economic calendar is mostly quiet from the U.S. today before a jam-packed week gets going tomorrow, but we do look forward to the increasingly important Federal Reserve Senior Loan Officer Survey at 1:00 pm CT. Also, tonight the private Caixin Chinese Manufacturing release is at 8:45 pm CT and an interest rate decision form the RBA is expected at 11:30 pm CT.

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

S&P, yesterday’s close: Settled at 4606.50, up 42.25

NQ, yesterday’s close: Settled at 15,847.50, up 276.50 

What a snapback Friday. Although major stock indices were levitating post-Bank of Japan overnight, the slower-than-expected PCE, ECI, and Michigan Consumer data all helped underpin a strong finish to the week. Despite a jam-packed week of data and earnings ahead, it would seem that portfolio managers are more concerned with monthly markings than the data ahead, and this is a great thing for E-mini S&P and E-mini NQ futures.

Price action in E-mini S&P futures was again tethered to the 4606-4609.25 pocket into settlement Friday and well above there ahead of today's opening bell. Although this may act more of a support, we are treating it as our Pivot and point of balance; continued action above here will feed a bull breakout, and we are treating it as such by increasing our Bullish Bias while above here. Parallelly, the bulls are in the driver’s seat in the E-mini NQ while above 15,825. Still, do not ignore the strong resistance listed overhead, where it again failed Friday. To the downside, a break below Friday’s opening bell range and late session shakeout will be a line in the sand, in which this imminent pattern will become neutralized; this is 4588.75-4589.75 in the E-mini S&P and 15,710-15,739 in the E-mini NQ.

Bias: Neutral/Bullish

Resistance: 4625.50-4631**, 4554.75**, 4667.75-4671.75***

Pivot: 4606-4609.25***              

Support: 4595.25**, 4588.75-4589.75***, 4560.50-4565.75***, 4541.75-4545.25***, 4531-4536.75**, 4493.75-4507.50***

NQ (Sept)

Resistance: 15,856-15,895***, 15,959-16,009****

Pivot: 15,825   

Support: 15,762-15,774**, 15,710-15,739***, 15,610****, 15,571-15,610***, 15,511-15,519***, 15,444-15,475****

Crude Oil (September)

Yesterday’s close: Settled at 80.58, up 0.49

September Crude is surging to the highest level since January 23rd, and tailwinds are certainly coming from a tightening supply narrative. The supply cuts from Saudi Arabia, a bottoming out of China’s weakness, resilient U.S. and Eurozone economies, and pricing in the replenishment of the SPR have all become a tailwind.  

Price action in Crude futures broke out above major three-star resistance at 80.39-80.70 overnight, and this will now act as support. While previous tops from January and April act as key resistance at 81.44-81.75, it is major three-star resistance at 82.52-82.71 that we are eyeing most closely to be achieved upon this breakout above $80. Only a move below Friday’s shakeout level of 79.03-79.46 will neutralize this breakout.

Bias: Bullish/Neutral

Resistance: 81.44-81.75**, 82.52-82.71***                   

Support: 80.39-80.70***, 79.90-80.13**, 79.03-79.46***

Gold (December) / Silver (September)

Gold, yesterday’s close: Settled at 1999.9, up 14.7

Silver, yesterday’s close: Settled at 24.495, up 0.128

Gold and Silver futures are on their front foot this morning, though the industrial aspects of the metals complex are leading the way. Copper is +1%, Platinum 1.25%, and Palladium 2.5%. This comes after China’s Manufacturing eked out a beat last night, which paves the way for maybe an even better read from the private Caixin survey due at 8:45 pm CT. Now, we cannot ignore continued weakness in the Japanese Yen and how this will act as a direct headwind to Gold and thus Silver. Additionally, this could be end-of-the-month posturing, and we must see follow-through as the week unfolds and in the face of a gauntlet of economic data.

Gold and Silver futures retreated overnight upon the Japanese Yen falling out, but held supports and have battled back into the onset of U.S. hours. Gold futures tested major three-star support at 1983.9-1987.9 and Silver at 24.27-24.39. A firm session that stays on the front-foot is critical as Gold and Silver test into listed resistances.

Bias: Neutral/Bullish

Resistance: 2001-2002.8***, 2012**, 2019.6**, 2027-2028.6***

Pivot: 1994.5-1995.1   

Support: 1983.9-1987.9***, 1973.3-1975.8***

Silver (September)

Resistance: 24.67-24.75***, 24.91**, 25.07-25.11***

Pivot: 24.51-24.58

Support: 24.27-24.39***, 23.28-23.59***