Given the recent ranges, U.S benchmarks are sharply higher on this first day of March, writes Bill Baruch, President of Blue Line Futures.

E-mini S&P (ESH)

Yesterday’s close: Settled at 2784.75, down 10.25

Fundamentals: Given the recent ranges, U.S benchmarks are sharply higher on this first day of March gaining more than 0.5% on a more boisterous risk-sentiment. Chinese Manufacturing data over the last two evenings describes this market in a nutshell. On Wednesday night, Manufacturing Purchasing Managers Index contracted larger than expected at 49.2. However, last night the private Caixin Manufacturing PMI read conducted by HSBC contracted less than expected at 49.9.

Let’s put this into perspective, this was not an eyelash contraction on the heels of a 54 read last month, this was the third contraction in a row and the last time we saw 51.0 or better was June. In fact, we haven’t seen a 52 handle since 2014. Headlines across the globe are lauding a less severe slowdown as good news; this is today’s normal market. Furthermore, final February German Manufacturing PMI this morning confirmed the worst contraction since 2013, but this was good news because it did not get worse than the Flash read. Driving this point home, it was also good news that final February Eurozone Manufacturing PMI was a tenth better than the Flash contraction.

Federal Reserve Chair Powell spoke at a dinner last night and lifted the market’s spirits after a soft close. He reiterated that the U.S economy is in a good place, but also made a point to say, “Rising productivity leaves room for wages to increase without raising inflation concerns.”

All in all, the Fed will remain patient as the market digests the recent rate increases. Today, inflation is under the microscope with the Fed’s preferred inflation indicator, the PCE Index from December, due at 7:30 am CT. The resilience of U.S Manufacturing is also in the crosshairs with the closely watched ISM Manufacturing read due at 9:00 am CT. Final February Michigan Consumer data is also out at 9:00 am CT.

Technicals: Price action made a U-turn from yesterday’s settlement and tech seems to be fighting for a breakout. A key level of support in the NQ at 7076.25-7088.25 that aligns with the continuous 200-day moving average never gave way yesterday and it is now retesting the Monday high.

Crude Oil (CLJ)

Yesterday’s close: Settled at $57.22, up 28¢

Fundamentals: Crude Oil extended gains to the highest level since November before paring back a bit into this morning. A broadly stronger risk-sentiment on the heels of favorable comments from Fed Chair Powell and less-worse Manufacturing PMI data from China and Europe lifted the tape until about midnight. With not a lot of fresh Oil-centric news driving things this morning, traders want to keep an eye on that broad risk-sentiment. U.S ISM Manufacturing data will be closely watched at 9:00 am CT and followed by Baker Hughes rig data at noon CT.

Technicals: Price action is more than 1% from the overnight high but ultimately has not done anything wrong.

Gold (GCJ)

Yesterday’s close: Settled at $1,316.1, down $5.10

Fundamentals: The assault on safe-havens continues and gold is now at the lowest level since Feb. 14, the 10-year Note since Jan. 28 and the Japanese yen since Dec. 18. The currency market, specifically the U.S. Dollar Index, is not suppressing the safe-have sector. Instead, it is fresh less-worse news on the Manufacturing front. Despite deteriorating conditions in China and Europe for months, contractions of a less degree than expected have brought enthusiasm to global yields; the German 10-year Bund is now at 0.20%, the highest in nearly a month. Still, this is a shade above zero. The 10-year JGB is at the highest level since Feb. 14 trading to -0.003%, yes negative %. It is not a coincidence that the JGB and gold are at the same points on their respective charts at the same day. U.S ISM Manufacturing PMI will be crucial for the tape at 9:00 am CT. The final read on February Michigan Consumer data is also due then. Atlanta Fed President Bostic speaks at 11:50 am CT.

Technicals: We can no longer say that gold has done nothing wrong. Yesterday’s low pierced, before the metal closed below, a significant trend line from the November lows. This was now the fifth test and ultimately, it is true that trend lines are made to eventually be broken. Therefore, we have reduced our bullish bias because of this near-term weakness. However, gold still has a significant level of rare major four-star support.

Bill Baruch provides technical levels here on Monday. To see them throughout the week, go to BlueLineFutures.com