Good morning traders,
The ES futures contract stopped just above the 2980 level on Sunday night (your Monday cash equity session) but has not tested that level in the regular session. The energy sector was up
+3.36% on Monday and offset mild losses in everything but the real estate and utilities sector. NYSE A-D lines were neutral for most of the session and finished at
+247 while NYSE breadth left off at
+1.34:1. NASD breadth finished at
+1.24:1.
ES futures and SPX: With an SPX close of 2997.96, the ES regular session is a classical bell shaped profile with a well-defined point of control at 3000.25. Mid-week short interest is still heavy around 3000 and that makes sense given the impending FOMC decision and press conference on Wednesday. They often drift sideways into what becomes a roller coaster ride or non-event. Right now the obvious heavy contingency support is near 2950 and 2900. Nothing much has changed as far as upside resistance.
Last week's US Core CPI number got quite a bit of press coverage over the weekend. Inflation speculation is circulating and adds an element of interest to gold that has been helped a little by the US calling out Iran on the recent drone strikes and both Saudi Arabia and the US saying they are ready for retaliatory strikes. Some think this is another tactic of diversion from the US administration's impending domestic problems, but they do have the capacity to cause some damage to Iranian interests if Iran decides to test them.
The bond market had bounce today on flight to safety. The 2-year lost 3 basis points of yield to leave the cash session at 1.76% while the 10-year lost 6 bps and went back to 1.84%. The 30-year bond lost 7 bps to leave the cash equity session at 2.31%. ZN 10-year note treasuries are positive at the moment. This is still pretty far from where they were a week ago. One problem in assessing the massive selling in bonds last week is that there is this idea that it’s not as much a reversal of the recent flight to safety as it is an indicator of inflation fears that never seem to materialize. The FOMC presser could shed more light on this if the Chair bites the loaded questions that might be asked. They usually don't bite.
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