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S&P and Silver, Resolutions Imminent

Posted November 22, 2021 at 10:30 am
Bill Baruch
Blue Line Futures

S&P rising triangle pattern. Resolution likely higher, but probability fades if not soon.

S&P rising triangle pattern. Resolution likely higher, but probability fades if not soon.

Silver cup and handle developing out of inverse head and shoulders.

Silver cup and handle developing out of inverse head and shoulder

Gold back and fill. Retesting previous resistance, now rare major four-star support.

Gold back and fill. Retesting previous resistance, now rare major four-star support.

Probability of a Fed hike by June is now 72%. On heels of Clarida comments Friday.

Probability of a Fed hike by June is now 72%. On heels of Clarida comments Friday.

Market Activity

– Global equity markets mixed to flat, but U.S. equity benchmarks extend gains led by Tech. Fresh record highs in the NQ for the third straight session.

– S&P had a soft finish from highs Friday after hawkish comments from Fed Vice-Chair Clarida; taper timeline can be reevaluated at the December meeting.

– People’s Bank of China left rates unchanged but dropped hawkish verbiage from statement, alluding to willingness to stimulate if needed. PBOC has been adamant about controlling inflation.

– Austria enters full lockdown. Violent protests breakout across Europe against Covid lockdowns.

– Risk-assets had moved lower early Friday on Europe lockdown fears, but German Foreign Minister said full/broad lockdown unlikely and losses were quickly pared.

– We have been highlighting case counts in Germany for weeks, this will be ever important. Rise in cases subdued over the weekend, typical though.

– White House is throttling out SPR, asking Asian nations to join. Japan indicated willingness to follow.

– Chicago Fed National Activity due at 7:30 am CT and Existing Home Sales follow at 9:00 am CT.

– Europe and U.S. Flash PMIs tomorrow, as well as 7-year Note auction.

E-mini S&P (December) / NQ (December)

S&P, yesterday’s close: Settled at 4694.50, down 7.00 on Friday and up 16.25 on the week

NQ, yesterday’s close: Settled at 16,575, up 93.75 on Friday and 382.25 on the week

– S&P and NQ working to define higher floors. The S&P solidified 4667-4669 last week on two tests. Recurring level 4684.75-4685.50 would be next in line. The NQ is detailed with rare major four-star support in the levels below.

– Price action in the S&P holding steadily above 4701-4705, previous resistance, now aligns with momentum indicator as our Pivot and point of balance.

– Higher price action overnight in the S&P struggled through the open last week, but stabilized to finish well.

– Week 3 option expiration in the rearview mirror, and no bats of true volatility given elevation. Remember 50 points in the S&P is now 1%! However, weakness now may find less footing from dealers defense.

– S&P currently playing out a rising triangle pattern (chart above), typically resolves higher and the direction of the underlying trend. However, rising triangles that drag out can become rising wedges. These have a higher probability of resulting in a reversal. Key takeaway; the sooner the resolution, the more likely it is a bullish one…. Click here to get our (FULL) daily reports emailed to you!

Crude Oil (January)

Yesterday’s close: Settled at 75.94, down 2.47 on Friday and 3.75 on the week

– China alluding to liquidity support helped underpin and overnight rally from rare major four-star support but stalled at first key resistance at 76.67-76.98 perfectly.

– Expect SPR discussion to evolve. We have said and maintain, we view extensive action as capitulatory, resulting in a more intermediate-term bullish rally. Remain cautious until such.

– Managed-Money net-longs down by 10% for week ending last Tuesday. This is welcomed.

– Momentum indicator is our Pivot; continued action below Click here to get our (FULL) daily reports emailed to you!

Gold (December) / Silver (December)

Gold, yesterday’s close: Settled at 1851.6, down 9.8 on Friday and 16.9 on the week

Silver, yesterday’s close: Settled at 24.781, down 0.119 on Friday and 0.565 on the week

– Day in and day out, we have highlighted how well Gold and Silver have held ground despite U.S. Dollar strength (DX highest since July 2020) and a broadly lower Treasury complex (last week until the Friday rally). This supports a longer-term continuation of the newfound strength into Q1.

– Back and fill is important. How is it received?

– Gold Managed-Money Net longs, highest since April 2020, built out of Covid consolidation and into record summer rally. Silver, highest since June 2021 fallout.

– Comments from Vice-Chair Clarida on Friday, reevaluating pace of taper, hit Gold and Silver. Remember, very dovish November meeting, basically net-zero taper, was a bullish catalyst.

– China less hawkish, may dovish, supportive to Silver overnight.

– Silver bullish cup and handle developing out of inverse head and shoulders, holding neckline. Descending wedge handle can be very powerful.

– December option expiration today, can open up trading ranges.

– Major three-star support in Silver has been defended very well at 24.51-24.58.

– Extremely bullish upon close above major three-star resistance at… Click here to get our (FULL) daily reports emailed to you!

Originally Posted on November 22, 2021 – S&P and Silver, Resolutions Imminent 

Charts Source: Trading View

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