Managing Markets Reaction to Powell

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

S&P, yesterday’s close: Settled at 5625.25, up 3.75

NQ, yesterday’s close: Settled at 20,659.75, up 39.00

E-mini S&P and E-mini NQ futures settled at a fresh record highs to kick off a long week that begins heating up today. Fed Chair Powell visits Congress for his first of a two-day testimony at 9:00 am CT, before July CPI data is due Thursday. There is additional comments around that time from the Fed Vice Chair of Supervision Barr and Treasury Secretary Yellen, but most interesting is Fed Governor Bowman due to speak at 12:30 pm CT. She is known as the most hawkish voice at the Fed, and it begs the question, is she planned to balance a more dovish Fed Chair Powell? Certainly, we would believe comments from Powell hold more weight.

After a consolidation off early morning highs yesterday, price action in E-mini S&P and E-mini NQ futures ramped in the final hour, led by tech. This is easily distinguished from the E-mini Dow’s silence. We highlight major three-star support aligning that late afternoon low with unchanged on the week at 5619.25-5621.50 in the E-mini S&P and 20,617-20,621 in the E-mini NQ. Furthermore, price action is firm above our near-term momentum indicator detailed as our Pivot and point of balance below. We believe continued price action above here as the day unfolds stokes higher prices.

Bias: Bullish/Neutral

Resistance: 5640.50**, 5673.25***

Pivot: 5630

Support: 5625.25-5626**, 5619.25-5621.50***, 5615**, 5605-5608.25**, 5585-5590.25***, 5574.50-5576.75**, 5563.75-5569.75****

NQ (September)

Resistance: 20,770**, 21,000-21,016****

Pivot: 20,685-20,694

Support: 20,617-20,621***, 20,588-20,600**, 20,496-20,523***, 20,411-20,428***, 20,373**, 20,216-20,274****

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Crude Oil (August)

Yesterday’s close: Settled at 82.33, down 0.83

WTI Crude Oil futures violated the first of a series of major three-star supports early this morning at 82.04-82.46 but have so far responded to the next pocket in proximity at 81.66-81.71. Despite the constructive nature of recent price action, we are reducing our more Bullish Bias in order to see this near-term consolidation play out. While we remain bullish, at these elevated levels, we fear April’s technical resistance, a near-term ‘sell the news' on Hurricane Beryl, eroding economic data, a narrative of rising production, and domestic political headwinds. The EIA’s Short-Term Energy Outlook is due at 11:00 am CT, the private API survey is released at 3:30 pm CT, and inflation data is expected from China at 8:30 pm CT.

Bias: Neutral/Bullish

Resistance: 82.82-82.86**, 83.16-83.45**, 83.69-83.88***, 84.38-84.52***, 85.27***

Pivot: 82.04-82.46***

Support: 81.66-81.71***, 80.97-81.21***, 79.90-80.18****

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Gold (August) / Silver (September)

Gold, yesterday’s close: Settled at 2365.5, down 34.2

Silver, yesterday’s close: Settled at 30.913, down 0.776

Gold and Silver were bludgeoned to start the week. One could argue they went too high, too fast during a holiday week. Although volume in Silver was nothing to write home about, volume in Gold on Friday hit the highest since the June roll on May 28^th. Unfortunately, yesterday’s sell volume nearly matched this feat. One could also argue news that China did not add to its Gold reserves for the second month in a row was a sell trigger. However, price action largely held in the hours after the news broke, and India added 9 tons to its Gold reserves, the most in two years, topping the nearly 2 tons China added in April and the 5 tons it added in March. You have to go back to February, when China added 12 tons of Gold to its reserves to top India's purchases. In 2023, China added 225 tons to its Gold reserves, an average of 18.75 tons per month. We do believe that China is not done adding to its reserves, but the likely scenario is the PBOC is attempting not to drive prices while allowing other BRICS nations to accumulate at a faster rate. India increased its 2024 purchases by 32% in June.

Fed Chair Powell visits Congress for his first of a two-day testimony at 9:00 am CT, before July CPI data is due Thursday. There is additional comments around that time from the Fed Vice Chair of Supervision Barr and Treasury Secretary Yellen, but most interesting is Fed Governor Bowman due at 12:30 pm CT. She is known as the most hawkish voice at the Fed and it begs the question, is she planned to balance a more dovish Fed Chair Powell? Certainly, we would believe comments from Powell hold more weight.

While price action finds itself on the backfoot this week, traders can lean into strong seasonality in the month of July, and that price action has so far had a constructive response to Friday’s Nonfarm Payroll whipsaw low. This aligns to create rare major four-star support in Gold at 2353.1-2358.3 and a series of major three-star supports in Silver detailed below. Still, we must reduce our more Bullish Bias given that overnight price action failed at yesterday’s scene of the crime.

Bias: Neutral/Bullish

Resistance: 2374.8**, 2379.2-2381.8***, 2397.7-2401.5***

Pivot: 2371

Support: 2362.2-2365.5**, 2353.1-2358.3****, 2341.6-2343.7***

Silver (Sept)

Resistance: 31.37-31.53***, 31.69-31.80***, 31.98**

Pivot: 31.20-31.25

Support: 30.91-30.99***, 30.68-30.84***, 30.45-30.54***, 30.34**, 30.00-30.17****

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Micro Bitcoin (July)

Yesterday’s close: Settled 56,755, up 70

Bias: Neutral/Bullish

Resistance: 58,130-58,845***, 59,825-60,390***

Pivot: 56,755-57,200

Support: 54,455-55,190***, 53,215-53,205**, 51,687-51,750****, 47,770-49,430***

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Originally Posted July 9, 2024 – Managing Markets Reaction to Powell