Do not miss yesterday’s Midday Market Minute, covering CPI and how to plan going forward.
Producer prices are a leading indicator of consumer prices, and the June PPI report is due at 7:30 am CT. Expectations are for:
- Headline at +0.2% m/m, up from a disinflationary -0.3% m/m in May, and +0.4% y/y down from +1.1% in May.
- Core at +0.2% m/m, unchanged from May, and +2.6% y/y, down from 2.8%.
Initial Weekly Jobless Claims are also due at 7:30 am CT, and traders should keep an ear to the ground for Fed speak. Fed Governor Waller is expected to speak at 5:45 pm CT, in probably the most closely watched Fed comments of the week, before the blackout period begins Saturday.
Last night, China’s Trade Balance data disappointed on both Exports (-12.4% y/y versus -9.5%) and Imports (-6.8% y/y versus -4.0%). Commodity and currency markets took this in stride, and rates continued to alleviate.
Breaking: PPI was softer than expected with headline at +0.1% m/m and +0.1% y/y, while Core was +0.1% m/m and +2.4% y/y. However, Initial Jobless Claims were lower than expected and a six-week low at 237k versus 250k.
E-mini S&P (September) / E-mini NQ (September)
S&P, last week’s close: Settled at 4507.50, up 34.00
NQ, last week’s close: Settled at 15,444.75, up 184.75
The slowest headline CPI since March 2021 has opened the door for E-mini S&P and E-mini NQ futures to begin the next bull leg higher. Although today’s PPI data was slower than expected, highlighted above, the job market remains tight, with Initial Claims coming in lower than expected. Although we believe the job market is close to loosening and by some arguments, it has begun, Fed speakers, such as Fed Governor Waller tonight, can use this narrative to remain hawkish through the expected hike later this month. Remember, due to the market’s reaction function, the Fed cannot lift its foot off its hawkish rhetoric until the exact moment they are ready.
Both E-mini S&P and E-mini NQ futures have yet to trade yesterday’s settlement price on today’s session, which exudes a bullish undertone. From a price standpoint, the line in the sand is clear, an imminent breakout is underway while the S&P remains above major three-star support at 4507-4509. Furthermore, a move out above major three-star resistance at 4536.50-4539.25 would pave a path of least resistance to 4603-4606. As for the E-mini NQ, yesterday’s intraday pullback perfectly held previous resistance at 15,337-15,374, now officially major three-star support at 15,344-15,374. Similarly to the E-mini S&P, while it holds above yesterday’s settlement an imminent breakout is underway.
Bias: Neutral/Bullish
Resistance: 4536.50-4539.25***, 4572.75**, 4585-4588.75***, 4603-4606***
Support: 4507-4509***, 4497-4500**, 4483.75-4488.25***, 4471-4476****, 4454-4458.75**, 4439-4444***
NQ (Sept)
Resistance: 15,581-15,653***, 15,762***, 15,979-16,009***
Pivot: 15,000-15,007
Support: 15,444-15,556***, 15,344-15,374***, 15,309-15,314**, 15,250-15,276****, 15,157-15,191**, 15,109**, 15,025-15,063****
Crude Oil (August)
Yesterday’s close: Settled at 75.75, up 0.92
Crude Oil futures tested the highest since May 3rd despite a much larger build of inventories than expected; Crude Oil +5.946 mb versus +0.483 mb, Gasoline -0.003 versus -0.727 mb, and Distillates +4.815 mb versus -0.262 mb. However, in line with what the EIA’s Short-Term Energy Outlook called of, estimated production fell by 100,000 bpd and Net Imports accounted for a 4.1 mbpd increase.
The bulls are clearly in the driver’s seat while price action holds out above the breakout zone, now defined as major three-star support at 75.10-75.16. If this level is surrendered, the bull trend is not negated, but it would encourage a bullish consolidation that could test as low as major three-star support at 72.34-72.65.
Bias: Neutral/Bullish
Resistance: 77.87-78.23***
Pivot: 75.70-75.75
Support: 75.10-75.16***, 74.67-74.83**, 73.92-74.15***, 73.40*, 72.97**, 72.34-72.65***
Gold (August) / Silver (September)
Gold, yesterday’s close: Settled at 1961.7, up 24.6
Silver, yesterday’s close: Settled 24.31, up 1.029
Gold and Silver futures surged on the heels of yesterday’s cooler than expected CPI data, discussed in our Midday Market Minute. Today’s slower than expected PPI certainly helps brings added tailwinds, but Initial Jobless Claims came in lower than expected at 237k, and the labor market continues to be a headwind.
Gold finds itself back to a very critical level of resistance at 1971.2, with rare major four-star resistance above there at 1977.6-1980.4. A move above here will repair the damage created through the end of June and reemphasize Gold’s intermediate to longer-term bull trend. As for Silver, the $24 handle is back. It is working to chew through a significant area of resistance at 24.49-24.51, but the bulls may have turned the tables and regained the edge while holding above major three-star support at 24.06-24.15.
Bias: Neutral/Bullish
Resistance: 1971.2***, 1977.6-1980.4****, 2000.7-2001.4***
Pivot: 1961.7
Support: 1955.7**, 1949-1949.6**, 1944.5-1946.3**, 1938.7-1942.9****
Silver (September)
Resistance: 24.49-24.51***, 24.72-24.83**, 25.00***
Pivot: 24.31
Support: 24.06-24.15***, 23.87**, 23.53-23.59***, 23.37***
—
Originally Posted July 13, 2023 – Must-Know Inflection Points Across Markets
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