The US dollar rises on inflation and rates ahead of Powell, states Bill Baruch of Blue Line Futures.
Here’s what we are watching:
- Rising rates weighing on tech sector, NQ -1.5%
- Rates rise on global central bank hawkishness, reopening post-Delta, reflation of the reflation trade, supply disruptions and energy crunch.
- Energy crunch stokes inflation; Crude oil +3% on the week and nearing a high of year 76.98, Natural gas is +10% today and 22% on the week.
- DX is at its highest since August 20th.
- Fed speak continues. Congressional testimony from Fed Chair Powell is front and center. He is expected to “float the balloon” and inflation may not be as transitory as first thought.
- Deadlock in Congress creating fear as we face a government shutdown on Friday, aiding the Treasury snowball.
- St. Louis Fed President Bullard said inflation is likely to run at 2.8% through next year. “Large shock needed to throw off start of bond taper”. Expect two rate hikes in 2022. He was showing some signs of concern in speech. He is a 2022 voter.
E-mini S&P (December) / NQ (December)
S&P, yesterday’s close: Settled at Settled at 4433, down 12.75
NQ, yesterday’s close: Settled at Settled at 15,194, down 124.00
- Price action down sharply in overnight. S&P and NQ both failed at big major three-star resistance levels at 4474.50-4477.25 and 15,326-15,360
- S&P testing through big levels of technical support, now facing 4282.75-4484 and 4371.75. Break below here opens door to 4337-4343.25.
- NQ Pivot is previous support at 15,009-15,033, must close above here or faces continued selling.
- S&P 100-dma at 4325, NQ 100-dma at 14,600
Crude Oil (November)
Yesterday’s close: Settled at 75.45, up 1.47
- Crunch continues and energy extends
- Brent hits high of 80.74 and took out front month high of year at 77.83 yesterday
- WTI high of 76.67, front month high of year at 76.98
- US crude stocks at 3-year lows and expectations for -2.33 mb on this week’s report
- Rising momentum indicator at 75.70
- Friday’s settlement aligns to create rare major four-star support at 73.58-73.98
Gold (December) / Silver (December)
Gold, yesterday’s close: Settled at 1751.4, down 40.7
Silver, yesterday’s close: Settled at 22.679, down 0.228
- Different day, same story – US dollar and rate strength weighing directly on precious metals.
- Continue to hold a negative near-term outlook, but a flush should bring a nice buy through Q1 2022.
- Gold testing into next shelf of major three-star support at 1731.7-1737.4, no early bounce wearing on bulls.
- Similarly, silver testing into 22.02-22.35 major three-star support
Learn more about Bill Baruch at Blue Line Futures.