Omicron’s transmissibility ravages the globe and sparks fear to start the week, states Bill Baruch President of BlueLineFutures.com.
Here are some other things we are watching this week.
- There is a deadlock in Congress on Build Back Better. Manchin stiffs President Biden and drops support on $1.75 trillion plan. The agenda in doubt and impact on the markets cannot be underestimated during this virus vulnerability.
- Markets stabilized from its worst levels through the first hour of the Europe open after Moderna said third shot boosts antibodies against Omicron.
- China’s PBOC cut lending rates for the first time since April 2020 in attempt to stabilize battered property sector.
- Developments on potential virus-related restrictions and Biden’s agenda in Congress will drive sentiment to start the week.
- Crude -5% on loss of demand due to virus. Lookout for comments on production plans for January fourth meeting. So far, Russia said too early to tell.
- Fed out of the blackout period. Fed Governor Waller was very hawkish on Friday. Keep an ear to impromptu interviews and potential developments in policy in response to Omicron.
- Part of the issue between the Fed and Omicron becomes the Fed fearing supply chain related inflation. Something the virus impact can worsen, thus muting potential policy response.
- On Friday, ARK Innovation ETF (ARKK) gained 5.8% as beaten down names rebounded. Is it a dead cat bounce or new market leadership? JP Morgan Chase & Co. (JPM) seems to believe there is ashort-covering rally likely. Many names are stay-at-home related.
- The yield curve is steepening today. Bonds (long-end) reversed from session highs and there is a short-end holding a slight bid.
E-mini S&P (March) / Nasdaq 100 (NQ) (March)
S&P 500 (SPX), yesterday’s close: Settled at 4555.00, down 55.00 on Friday and 93.50 on the week.
NQ, yesterday’s close: Settled at 15,788, down 78.75 on Friday and 543.50 on the week.
- S&P loses 4.5% from early Thursday high, back to where rally was staged two weeks ago.
- The market is still in an uptrend and we remain optimistic from these levels, but viability being tested. We need to see some pockets of stability through today or a deeper correction can become likely.
- Price action did stabilize off major three-star support at 4524.75-4531.25, it must become a pillar on the session.
- Selling blew through big area of support at 4576.50-4584. Now look to this as resistance and a close above can begin to neutralize worst of selling.
- If NQ can reclaim Friday’s low and trade above 15,690, sentiment could shift, and price action can begin to neutralize selling.
Resistance: 4576.50-4584, 4596.25-4602, 4610
Support: 4524.75-4531.25, 4498-4502.50, 4485.75, 4470-4478
Resistance: 15,655, 15,690, 15,734-15,788, 15,847-15,886, 15,940-15,956
Support: 15,495, 15,277-15,284, 15,000
Crude Oil (February)
Yesterday’s close: Settled at 70.72, down 1.43
- Selling on the open as Omicron ravages demand in near-term.
- Russia’s Energy Minister Novak, too early to tell if virus derails production plans.
- Market still in an uptrend and we remain optimistic from these levels, but viability being tested. Must begin showing some pockets of stability through today or deeper correction can become likely.
- Opening low of 68.75 aligns with previously marked support at 68.98. Rally attempt slipping from here. Must trade and close back above to begin neutralizing damage.
- Look for stability at 200-day moving average at 67.72.
- Strong major three-star support at 66.10-66.62; Friday, December third settlement and Monday, December sixth gap bring.
Resistance: 68.75-68.98, 69.21-69.52, 70.72
Support: 67.72, 66.10-66.62, 65.37-65.54 64.82, 64.16, 62.43-62.50
Gold (February) / Silver (March)
Gold, yesterday’s close: Settled at 1796.5, up 6.7 on Friday and 20.1 on the week
Silver, yesterday’ close: Settled at 22.533, up 0.048 on Friday and 0.338 on the week
- Gold and silver were winners amid last week’s volatility. However, losing ground this morning.
- Bonds have reversed from session highs and yield curve slightly steeper.
- US dollar has given up late Friday strength, should work to buoy weakness.
- Gold clear outside bullish week last week, silver nice reversal but did not settle above previous week’s high.
- Is metal’s weakness from Friday’s early highs a back and fill or another budding failure?
- We are now at the onset of a very seasonally bullish time of year for gold and silver.
- Must see a response to major three-star support at 1791.7-1794 in gold and 22.20 in silver.
Resistance: 1804.9, 1811.4, 1815.7-1819.3
Support: 1791.7-1794, 1781-1786.3
Resistance: 22.63-22.70, 22.99-23.05, 23.48-23.50
Support: 22.20, 22.03-22.05, 21.89-21.91, 21.00-21.46
Learn more about Bill Baruch at Blue Line Futures.