Key Breakouts and Breakdowns

By:

President of Blue Line Futures

S&P trading into a large area of support as negative sentiment elevates, watch closely.

S&P trading into a large area of support as negative sentiment elevates, watch closely.

Silver weekly back to 2021, cup and handle playing out. Cusp of breakout?

Silver weekly back to 2021, cup and handle playing out. Cusp of breakout?

U.S.-German 10-year breakout has helped power U.S. Dollar strength.

U.S.-German 10-year breakout has helped power U.S. Dollar strength.

U.S. 10-year – 2-year spread has been quietly steepening.

U.S. 10-year - 2-year spread has been quietly steepening.

Market Activity

– Do not miss our Top Things to Watch this Week, out every Sunday.

– Europe, Hong Kong, Australia, and more closed for Easter holiday.

– Stocks slip on open last night. Crude, Gold, rates, and Dollar surge. Stocks paring losses and Crude gains at onset of U.S. hours as rest hold firm.

– Safe-havens such as Gold and Dollar on demand as Russia surrounds Mariupol and strikes Lviv, a western Ukrainian city near Polish border.

– Deluge of data from China last night. Q1 GDP topped expectations at 4.8% versus 4.4%. March Industrial Production beat at 9.3% YoY versus 8.5% expected and 12.2% for February Fixed Asset Investment beat at 5.0% YoY versus 4.5% exp and 7.5% for February. Retail Sales whiffed at -3.5% versus -1.6%. Unemployment Rate jumped to 5.8% from 5.5%. Apparent low estimates relative to February due to lockdowns.

– On Friday, markets closed but data released. NY Empire State Manufacturing for April beat at 24.60 versus 0.5% exp and -11.8 for March. Industrial Production also topped estimates.

– Core CPI for March was released last week and soft at 6.5% versus 6.6% exp, but up from 6.4% in February. +0.3% MoM versus +0.5% exp and in February, this was the most notable item.

– Producer prices are a leading indicator to consumer prices and PPI was hot, hot, hot with a headline of 11.2% versus 10.6%, a 1.4% jump MoM versus 1.1%.

– U.K. inflation last week was also hot, both CPI and PPI topped estimates across the board.

– Back on April 1st, Eurozone CPI for March surged by the most on record at 7.5% versus 6.6^ expected.

– ECB met on Thursday and left policy on its current path, planning to end bond purchases in Q3.

– Yields in Germany surged on the ECB’s patience, but were still outpaced by yields in the U.S.

– U.S.-German 10-year spread broke out on April 5th, during this time the U.S. Dollar Index has rallied 1.6% to the highest since April 2020. (chart above)

– Yen bludgeoning is also a tailwind to the U.S. Dollar. Yen held June 2015 low on a closing basis last week but broke below it overnight to lowest since May 2002.

– Bank of America topped estimates, led by consumer lending, is +1.3% ahead of the bell.

– JB Hunt after the bell, J&J, Netflix, Lockheed Martin, IBM, and more tomorrow.

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

S&P, yesterday’s close: Settled at 4387.50, down 54.75 on Thursday and 96.00 on the week

NQ, yesterday’s close: Settled at 13,893.75, down 327.75 on Thursday and 433.25 on the week

– We are maintaining a cautiously Bearish Bias as the near-term trend holds negative and rally attempts failed multiple times last week to close on session lows.

– Outside bearish daily candle in the NQ on Thursday. S&P had a higher high but did missed closing on a new low by 3.50.

– S&P and NQ finished last week at lowest close since March 16th.

– Sentiment indicators hitting at or near extreme bearishness, signaling market is near a contrarian bullish signal.

– Important to understand price action is now trading into the extreme strength of the March 15-16 reversal, a broad area of support. However, chewing through here would exude the magnitude of selling. (chart above)

– Two major levels of support were briefly exceeded, sellers will look to take tape lower with continued action below … Click here to get our (FULL) daily reports emailed to you!

Crude Oil (June)

Yesterday’s close: Settled at 106.38, up 2.59 on Friday and 8.65 on the week

– May options expired on Thursday, June futures now front month.

– Crude Oil surged ahead of the long weekend and to begin trading this week on mounting expectations the EU will issue a ban on Russian Oil.

– Outage in Libya due to protests helping underpin prices.

– There are fears of slowing China demand. Data showed refined 2% less in March YoY, lowest since October. We noted on Thursday that China refiners to cut throughput this month by 6%, weighing on Crude tape.

– Momentum indicator is rising and aligns with a floor of support this morning that helps define the immediacy of this rally at … Click here to get our (FULL) daily reports emailed to you!

Gold (June) / Silver (May)

Gold, yesterday’s close: Settled at 1974.9, down 9.8 on Friday and up 29.3 on the week

Silver, yesterday’s close: Settled at 25.70, down 0.330 on Friday and 0.877 on the week

– Gold and Silver rally after Russia surrounds Mariupol and strikes Lviv, western Ukranian city near Polish border.

– Eroding global growth and central banks tightening to battle inflation that will ultimately slow growth further remains the elephant in the room narrative underpinning this rally in Gold.

– Today’s strength across Gold and Silver exudes breakout capabilities.

– Silver has elongated cup and handle formation dating back to the early 2021 high. (chart above)

– With Thursday’s slip, Silver powered by miniature cup and handle formation within the larger one starting with the March high.

– Bulls are in the driver’s seat for higher prices across all timeframes with Gold holding out above … Click here to get our (FULL) daily reports emailed to you!

Originally Posted on April 22, 2022 – Key Breakouts and Breakdowns

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