Will Monday's Bull Tone Carry?
Posted: Aug. 15, 2023, 8:38 a.m.
The tone across markets this morning is much different than the one in which yesterday’s session finished. Last night, the People’s Bank of China cut its one-year interest rate by 15bps, surprising markets ahead of an ugly slate of economic data. Things across asset classes held quiet into early this morning when U.K. wage growth surprised to the upside (despite jobs disappointing) and sparked another selloff across bond markets. This brought markets into U.S. hours on their back-foot at best. Home Depot topped earnings estimates, but sales slowed as consumers tightened their wallets. Retail Sales for July then crushed estimates at +0.7% versus +0.4% m/m with June being revised from +0.2% to +0.3%. However, it begs the question, are consumers spending more to get less? Also, out this morning was NY Empire State Manufacturing which missed widely at -19.00 versus -1.00 expected, and Canadian CPI came in hotter than expected. This sets the stage for risk-assets. Can Bond yields key off the slower U.S. CPI from last week, and improving inflation expectations (Michigan and NY Fed surveys), or will China’s eroding economy and Congress’ fiscal oblivion take hold?
E-mini S&P (September) / E-mini NQ (September)
S&P, yesterday’s close: Settled at 4506, up 25.25
NQ, yesterday’s close: Settled at 15,270.25, up 174.50
Today brings another failed rally attempt. Although breadth was poor yesterday, E-mini S&P and E-mini NQ futures surged into the close. Semiconductors outperformed after Morgan Stanly Reiterated NVDA as its top pick. Banks getting bullish after this correction is a theme to keep a close eye on because it could be one of the catalysts reinvigorating the immediacy of this bullish trend.
Major three-star support in the E-mini S&P is back in play at 4467.25-4473.50 and we have listed supports below here to navigate a break. Price action rallied from this level upon the opening bell yesterday before spending a large portion of the session trading below key resistance at 4500.75-4501.50 and at what is now first key resistance at 4488.25-4492.50. If we see strength within the first hour, the bulls must begin repairing the tape through here. If this were the case, tech could again become a leader upon clearing major three-star resistance at 15,247-15,280.
Bias: Neutral
Resistance: 4488.25-4492.50**, 4500.75-4501.50**, 4506-4509.25***, 4517.50-4522.25**, 4537.75-4544.75**
Pivot: 4480.75-4483.75
Support: 4467.25-4473.50***, 4459**, 4444.25-4447***
NQ (Sept)
Resistance: 15,219**, 15,247-15,280***, 15,325*, 15,354-15,370***, 15,430-15,443***
Pivot: 15,172-15,188
Support: 15,144**, 15,095**, 15,035-15,063***, 14,856-14,870***
Crude Oil (September)
Yesterday’s close: Settled at 82.51, down 0.68
Crude Oil was under slight pressure overnight, and this has carried into the onset of U.S. hours. China’s weak economic data last night was preceded by a surprise rate cut. Regardless, the broad negativity around China is weighing on sentiment today, but the focus will shift to U.S. inventories as today’s session unfolds.
Significant support in September Crude Oil futures remains at the 80.39-80.73 pocket. While we expect buyers to defend this support, there is certainly an undertone of very near-term exhaustion within this bull rally, and this could lead to profit-taking ahead of inventory data. Look for price action to regain the 81.76 low from yesterday and stay above here in order to invite additional buying.
Bias: Neutral/Bullish
Resistance: 82.43-82.57**, 82.91**, 83.09-83.19***, 83.53-83.81***, 84.30-84.65***
Pivot: 81.76
Support: 81.03-81.08**, 80.39-80.73***, 79.90**, 78.16-78.69***
Gold (December) / Silver (September)
Gold, yesterday’s close: Settled at 1944, down 2.6
Silver, yesterday’s close: Settled at 22.708, down 0.035
Gold and Silver have been lifeless the entire month of August and there is not much else to say. We can point blame at the Bond fallout or Chinese Yuan weakness, as we have, but at the end of the day it has simply been an ugly bleed out, a rare move to see on the heels of such a constructive July. Price action in Gold has chewed through rare major four-star support at 1938-1939.2 into this morning. While we remain very hopeful for a reversal from such oversold conditions, we are just that . . . hopeful.
Bias: Neutral/Bullish
Resistance: 1944-1946.6**, 1953.6-1954.2**, 1961.6-1963.5***
Support: 1938-1939.2****, 1930.7-1933.2**, 1903.6-1906.9***
Silver (September)
Resistance: 22.89-22.96**, 23.12-23.14**, 23.28***, 23.42-23.49**
Support: 22.55-22.72***, 22.05-22.34***
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