US Markets
SPX was down 0.11% yesterday, closing at 7,807, and the futures are trading 0.04% lower at the time of writing this comment. NDX was down 0.78% yesterday and closed at 30,640.
We saw a selloff in the memory market yesterday. The weakness was concentrated in memory chips. Shares fell after reports that Chinese rival ChangXin Memory Technologies (CXMT) is making rapid progress, raising the prospect of Chinese firms closing the technology gap.
A major event will define the day ahead will look like. JPMorgan, Goldman Sachs, Citigroup and Wells Fargo report Q3 earnings today. Investors want to see whether households are still paying their bills, borrowing and spending at healthy levels. Also watch net interest income, deposit costs given yields at 24-year highs, trading revenue, and credit provisions.
On the options side, we have an understanding how markets may move until Wednesday. Stocks enter Wednesday’s CPI report with the S&P 500 supported by positive dealer gamma, a positioning regime that has helped suppress market volatility despite rising Treasury yields. Despite Wednesday’s major inflation catalyst, short-dated SPX implied volatility remains relatively low. Volatility term structure shows limited near-term fear, with higher volatility priced into later expirations as investors approach additional economic reports, the Fed meeting, and November’s midterm elections.
The S&P 500 faces immediate resistance at 7,850, the record high set on 6 October. On the four-hour chart, the index has been pushing higher since Friday, trying to retest this level but so far failing to break through. On the downside, the Fibonacci retracement drawn from the 5 October low to the 6 October high puts first support at 7,776 (the 50% level). A break below this would expose 7,759, the 61.8% retracement, which we see as the key level for the near-term uptrend. On the upside, a sustained break above 7,850 would open the way toward 7,875, the 100% trend-based Fibonacci extension measured from the 5 October low, the 6 October high and the subsequent 7,730 low.
Gold & Silver
Gold declined 0.54% in the previous session but is trading 0.52% higher at $4,192/oz at the time of writing. Today’s recovery comes as crude oil prices retreat 0.75% after rising over the previous three sessions, easing inflation concerns and also leading to a 0.16% decline in the US Dollar Index. However, the broader outlook for gold remains bearish as elevated bond yields and expectations of tighter US monetary policy continue to weigh on the metal. While structural investment demand and central-bank buying have provided support, changing reserve-management strategies among some central banks could limit further upside.
Kazakhstan’s central bank, previously among the world’s largest gold buyers, plans to reduce gold’s share of its foreign exchange reserves to 75% by year end, approximately three percentage points lower than its current allocation. The adjustment will involve selling physical gold and using options, potentially adding to near-term supply pressure. Meanwhile, Cleveland Fed President Beth Hammack has called for a relatively swift move towards a more restrictive monetary policy stance, citing broader based inflation and its growing influence on corporate pricing decisions.
Markets are now focused on Wednesday’s US Consumer Price Index (CPI) and Thursday’s Producer Price Index (PPI), alongside comments from Fed Chair Kevin Warsh at the IMF’s annual meeting. A stronger than expected CPI reading, particularly in core inflation, could increase expectations of an October rate hike and trigger further downside in gold. Geopolitical tensions, including renewed Houthi attacks affecting Saudi Arabia and continued violations of the Russia-Ukraine energy ceasefire, have kept oil prices elevated, reinforcing inflation concerns and the prospect of tighter monetary policy. Although today’s decline in oil and the dollar is providing temporary relief, gold remains vulnerable to renewed selling pressure if incoming US data strengthens the case for higher interest rates.
Technically, the outlook for Gold remains bearish for today, with the view intact as long as prices trade below the immediate and key resistance at $4,217, which also marks the previous session’s high. A sustained inability to break above this level could keep selling pressure in place, with the next resistance at $4,253. On the downside, immediate and key support stands at $4,110, corresponding to a horizontal base support. A break below this level could expose the next support at $4,066, the low recorded last week. Silver is trading 0.18% higher at $60.37 at the time of writing. Immediate resistance is placed at $61.45, the previous session’s high, followed by the next resistance at $62.55. On the downside, immediate support stands at $59.42, followed by the next support at $56.62.
US Dollar Index
The dollar index is trading near 102.42, down 0.14% on the day but near the top of its rising channel after extending the four-week climb. Pricing for an October Fed rate hike has fallen from as high as 72% at the end of September to about 20% now.
The greenback has strengthened amid broad weakness across the G10 complex, with the euro weighed down by France’s ongoing political turmoil, which shows few signs of easing and has driven much of the rapid rebuild in dollar longs. This week’s inflation data is the key catalyst. Both CPI and PPI are expected to show an acceleration in September. Some Fed policymakers have signalled reluctance to hike as soon as this month, but hard evidence of rising costs would be difficult to dismiss. High oil prices remain a tailwind, with no resolution to the Middle East war in sight and hopes for a Russia-Ukraine “energy truce” fading after the Kremlin offered no confirmation.
The index is testing the upper boundary of its rising channel on the daily chart, which has contained price action since February. Resistance sits at 102.65, then 102.83. Support lies at 102.17, then 101.99.
EUR/USD trades near 1.1175, having slipped below the base of its symmetrical triangle on the 4H chart and briefly dipping under last week’s year-to-date low near 1.1161. The pair is now retesting the broken triangle, around 1.1175–1.1180. Resistance near the descending trendline near 1.121. Only a recovery back above that trendline would neutralise the bearish setup. Support can be seen near 1.115 and 1.113.
Crude Oil
Oil prices dipped slightly after three days of gains driven by concerns that a widening war in the Middle East could disrupt the recovery of supplies from the region.
Brent is trading near $107 a barrel, after rising 6% in the previous three sessions, while WTI is near $93. Diesel fell for the third day in New York after Moscow agreed to release more supplies in response to Washington’s request. Oil prices have risen 70% this year, as energy markets have been disrupted by America’s war on Iran. The attacks on Saudi Arabia came as strikes on tankers in the Strait of Hormuz escalated, leading to an increasing number of tankers moving away from the Arabian Gulf in recent days. Saudi Arabia is seeking to enhance its ability to ship oil without having to cross the Strait of Hormuz. Energy Minister Prince Abdulaziz bin Salman said that Aramco could add 1.2 million barrels per day of export capacity within seven weeks by repurposing existing gas pipelines.
This recovery has put some downward pressure on prices, but it has also made the market vulnerable to another major supply disruption. Just because the market has found ways to keep oil flowing doesn’t mean it can handle another major disruption, and that’s the risk the market may be underestimating. The real energy shock is no longer simply about a supply deficit, but a “logistics premium” imposed on every barrel that transits, as well as oil being reliably and economically deliverable.
Therefore, the main question now is not how much oil is available? but how much is it costing to move a barrel of crude oil from oil fields to refineries across the globe, costs in terms of time, shipping, insurance, threats of attacks, etc. So when we look at it, the oil crisis is not merely an oil-supply or price crisis but a compounding problem due to a hidden oil-movement crisis.
From a technical perspective, oil presents a slightly bullish bias for the day. WTI and Brent RSI is around 50, keeping enough room for movement. On the 1-hour chart, the $93.8 level remains key. A break from this level can push prices to $96.3 which is the 1st October high. On the downside, the $91 level is the first support, followed by $89. On the 1-hour chart, Brent has immediate support at $104 with an upside at $109.
