US benchmarks were fighting waves of selling as the opening bell rang, states Bill Baruch of Blue Line Futures.
E-mini S&P (June) / NQ (June)
S&P, yesterday’s close: Settled at 3930, up 30.25
NQ, yesterday’s close: Settled at 13,071.75, up 227.25
Fundamentals: Price action has trickled lower since the S&P failed to hold above major three-star resistance going into the final hour of trade yesterday. News that AstraZeneca’s vaccine proved 79% effective buoyed sentiment for much of the session despite fresh lockdown measures imposed across Europe. Today, that narrative has flipped; late last night, a US health agency questioned the validity of AstraZeneca’s vaccine trials, saying the results included outdated data. To make matters worse, Germany followed through and announced a strict five-day lockdown over Easter. Risk assets tumbled overnight with crude oil leading the way. This morning, Dr. Fauci, who also heads the US agency that made the statement, joined Good Morning America and said, “this [AstsraZeneca vaccine] is likely a good a very good vaccine, and the press release was not quite accurate.” Although US benchmarks are off session lows, sentiment has not bought the comments.
Fed Chair Powell and US Treasury Secretary Yellen are front and center today as they begin their two-day Congressional testimony. Here, they will defend their calls for unprecedented stimulus measures while discussing the state of the US economy. The yield of the 10-year note has touched a four-day low of 1.626% amid safe haven buying and a consolidation from oversold prices. Their comments won’t be the only ones to pay attention to though as Atlanta Fed President Bostic, a 2020 voter, speaks along with St. Louis Fed President Bullard, Richmond Fed President Barkin, NY Fed President Williams, and Fed Governor Brainard follows with a speech on the US economic outlook and monetary policy.
Technicals: Price action roared higher through much of the session with Tech leading the way. The S&P stuck its nose above major three-star resistance at 3939, tapping a high of 3944.50 before slipping into the last hour. The failure to hold resistance is notable but does not neutralize our otherwise more bullish bias across all timeframes. The NQ’s strong start to the week was very constructive, and the opening bell used the 12,900-12,914 level to create a platform of support, which is now our line in the sand to define the recent strength. Still, each face a tough ceiling. The S&P is defined by yesterday’s failure; it must regain key resistance at 3919.50-3922 that aligns with our momentum indicator in order to reinvigorate yesterday’s strength but faces added resistance.
Crude Oil (April)
Yesterday’s close: Settled at 61.56, up 0.12
Fundamentals: Crude oil fell by more than a dollar at 4:00 am CT, actually a few hours after the AstraZeneca headlines and Germany’s Easter lockdown announcement. In the somewhat delayed reaction, price action was otherwise still battling in recovery mode from Thursday’s bloodbath. There are two sides to the madness though, as Covid-19 cases increase, lockdowns expand in Europe, and reopenings slow in the US. it certainly weighs on the demand landscape. However, on the other side of the coin, with the April 1st OPEC+ meeting in mind, expectations were for the cartel to give a timeline at the least to bring production back online, if not immediately. Given these mounting uncertainties, it encourages OPEC+ to keep the status quo, in turn, this is bullish crude oil.
Technicals: Thursday’s low of 58.28 has been retested with a low of 58.47 today. We do have key support at 58.28-58.36, but do not have major three-star support until 57.64. We could certainly see a bottom come in front of Thursday’s low, however, our thought was a failure from Friday’s rebound, that carried into Monday, would bring a bit higher of a probability that a new low is forged, even if price action does not stay there long. At the same time, it is important to understand the magnitude of this uptrend and that over the last eleven months, price action upon sharp drops has rarely achieved a direct hit on target support.
Gold (April) / Silver (May)
Gold, yesterday’s close: Settled at 1738.1, down 3.6
Silver, yesterday’s close: Settled at 25.769, down 0.552
Fundamentals: US dollar strength coupled with a rebound in Treasuries have provided a push and pull within the precious metals sector. Gold is holding ground, fueled by rates pulling, however, silver lost significant ground yesterday on the heels of US dollar strength since midweek last week, and as crude oil fell sharply. With the Covid-19 case count increasing, lockdowns in Europe expanding, and reopenings in the US slowing, it reinvites fears of deflation that could be an undertow to the commodity space. At the same time, it provides a Goldilocks to continued accommodative policy. Such will be front and center today as Fed Chair Powell and US Treasury Secretary Yellen begin a two-day Congressional testimony. Here, they will defend their calls for unprecedented stimulus measures while discussing the state of the US economy. The yield of the 10-year note has touched a four-day low of 1.626% amid safe haven buying and a consolidation from oversold prices.
Technicals: Gold struggled to hold in positive territory overnight and was met with first key resistance at 1744-1747. Weakness in silver has not done it any favors as silver failed to hold our momentum indicator at 25.75 and failed in front of major three-star resistance at 25.97-26.23, a level it struggled to close above last week. So far, gold has responded to first key support.
Learn more about Bill Baruch at Blue Line Futures.
