Pre-Market Brief

Good morning. Futures are moderately higher, sp +7pts, we're set to open at 2096 - back over the 50dma of 2090. Metals are a little higher, Gold +$2, with Silver +0.4%. Oil continues to soar, +2.6% in the $62s.


sp'60min

Summary

*ADP jobs: 169k, vs 205k expected... a clear miss, and again, indicative of softness in the economy. Naturally, the market might take this as 'bad news is good news', as chances of a rate hike at the FOMC of June 17'th are now surely close to zero.
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Opening gains are not entirely surprising... however, there is high opportunity for the equity bears to turn things lower after the morning turn time of 11am. A second consecutive net daily decline looks very viable.

Next downside target is the recent low of sp'2077. After that.. there really isn't much until the 200dma in the 2020s.

However, with the jobs data this Friday, I expect another up cycle into late May/June, that might end up tagging the upper bol' on the giant monthly cycle... currently in the sp'2160/80 zone.

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I have eyes on Gold... it looks vulnerable into end of the week. Price structure is a large bearish wedge.

GLD, 60min

Broader downside target remains Gold $1000.. which would cut GLD down to $95.
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Doomer chatter.. Hunter with Fitts


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Have a good Wednesday!
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8.38am... It is notable that China overnight fell -1.6%... @ 4229... well on the way to the psy' level of 4K. Such a decline would certainly help the US equity bears a little.

Oil breaks into the $60s

Whilst the broader market saw increasing weakness across the day, there was notable strength in WTIC Oil, which saw a net daily gain of $1.38 (2.3%) @ $60.40. Continued upside into the summer looks due, with Oil set to battle into the secondary target zone of $67/75.


WTIC, weekly'2

Summary

So, WTIC Oil has now broken through the psy' resistance of $60. Most now recognise that the mid/upper $60s are due by late May/early June.

For me, the only issue is whether Oil gets stuck around $67.. or can briefly break into the $70s.. .before the next rollover.

Whether Oil can eventually take out the March low of $42.41 is very difficult to guess.

What is clear.. we've already seen over half of the expected bounce/retrace.
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China... a clear break lower

The Tuesday net daily decline of -4.1% @ 4298 is very decisive, and opens the door to a likely test of the psy' level of 4K.

Things really only get interesting if 4K is lost... next support would be the multi-year breakout zone of 3500/400s. Regardless of any near/mid term weakness, the giant 5K threshold looks a given this year.

*I will consider going long China around 4K.. via the ETF of FXI.
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Looking ahead

Wed' will see ADP jobs, productivity/costs.

*Amongst a number of Fed officials on the loose tomorrow, most notable will be Yellen speaking in the early morning.
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Goodnight from London

Daily Index Cycle update

US equities closed significantly weak, sp -25pts @ 2089. The two leaders - Trans/R2K, settled lower by -1.6% and -1.4% respectively. With the loss of the 50dma, next soft support is the recent low of 2077. Core support is the 200dma of 2027/28.. and then the giant 2K threshold.


sp'daily5

R2K

Trans

Summary

*the R2K has notably taken out the recent low, and looks headed for the 1200 threshold. A hit of the 200dma will not be easy though.
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Little to add.. broader price action remains very choppy.. but we do have the two leaders - Trans/R2K, leading the way lower.. with the Nasdaq following.

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a little more later...