The Goldilocks narrative has engulfed the equity markets; current probabilities for an interest rate cut in March 2024 sit at 85%. Precious metals are higher, while crude battles positive territory.
TRANSCRIPT
Good afternoon, Traders. It’s Chris Chavis with Blue Line Futures, and it’s your daily midday Market minute. The Russell 2000 is outperforming here once again. We got softer than expected PCE numbers, but before we get to it, if you’re watching this video, like and subscribe. If you’re on our website, there’s also a link to direct you to YouTube, and you could subscribe that way. We’d love for you to follow us. We would love to help us build our following.
Yeah, so we got the Fed’s preferred inflation indicator this morning, personal consumption expenditures, came in at 3.2%. Estimates were calling for an increase of 3.3% year-over-year. Now, we got a one-tenth month-over-month increase. Estimates were calling for a two-tenths increase. So, you’re really starting to see this Goldilocks narrative play out. It’s really just engulfing the markets right now. Estimates, um, you know, or probabilities rather, for a March 2024 interest rate cut now sit at 85%. So, you know, you’re still seeing, um, you know, that the markets are believing, you know, that we’re going to see a cut as soon as March. You know, this is a very aggressive pace of cuts in which the market is currently pricing in.
Now, one thing I want to highlight is, as you’ve started to see, you know, uh, consumer sentiment, consumer confidence coming better than expected. You know, Atlanta Fed GDP now calling for 2.7%. You know, earlier in the month, it was 1.2%. That’s really what the markets are, you know, repricing here, is that we’re still going to see, you know, strong economic growth for the most part. You know, earnings estimates for next year are still, you know, above 11%, and right now, it’s looking like the economy is supporting that. You’re seeing disinflation, right? Inflation is coming in under expectations, and we’re returning back to that 2% target.
So, I really think the risk is, you know, if you start to see this data really heat up again, specifically inflation, you start to see consumers look a little bit more weak, that could potentially be a headwind for markets. But as of right now, it’s looking like, uh, you know, the NASDAQ and the S&P, you know, catching a bid here today. We’re going to need to clear some major overhead resistance to sustain more momentum.
Now, I want to highlight gold and silver here today, you know, really, you know, moving in positive territory. We got durable goods orders, you know, came in at the highest level post-COVID. Now, this includes transportation, which a lot of that, uh, can be attributed to Boeing and the aircraft order. So, the core numbers came in also above estimates, so fueling the metals here today. You know, we did start to see a little bit of intraday selling off of the highs. We’re going to want to pay attention to some major support levels to continue to see more momentum as well.
Now, for the S&P, 4808 and a quarter, that’s major three-star resistance. We want to see a break and close above there. We’re currently trading around that level. Now, NASDAQ, 17,12, uh, to 17,23, so that’s another three-star level. You want to see a break and close above there to see more momentum. Gold, 2057 and 2/10 to 2061 and 11/10, that’s a support pocket that we need to hold, uh, to continue to see a little bit more strength and build out some higher lows. If we close below there, we could see a little bit more, uh, you know, bullish capitulation in the near term.
And crude oil, 7243 to 72,55, that’s a three-star support level as well. You break it, close below there, we could retrace down into the 71,2 range as well. If you have any questions, reach out to our trade desk. We’re here for you. Merry Christmas from Blue Line Futures to you and yours. Have a great holiday weekend. Remember, Futures Trading involves substantial risk of loss and is not suitable for all [Music] investors