"Success is no accident. It is hard work, perseverance, learning, studying, sacrifice and most of all, love of what you are doing or learning to do." -- Pele

Brace Yourself

Market participants have braced themselves. Yes, even I am guilty. Braced ourselves ahead of this morning. A morning that seemed a lot scarier earlier in the week than it does now. The Senate Intelligence Committee posted an advance copy of former FBI Director James Comey's testimony on its website Wednesday. Guess what? No smoking gun. Nothing we did not know. Something may, or may not turn up in today's live questioning, but equity markets reacted to the posting with a bit of relief, while gold took a small breather. See the long end of the curve? The 10-year "popped", now yielding 2.191%, allowing for a 2/10 spread of 0.0869%. That in itself may seem minuscule (mainly because it is minuscule), but was encouraging enough for the financials to lead the markets, and for the banks to lead the financials. Bang the drum ... slowly.

OK, let's. Take a look at the British pound this morning. Trading at $1.2961 (last glance). That's more than a two-week high, kiddies, meaning that currency markets are feeling better about Theresa May's chances today in the U.K. election, as well as the Conservatives' chances at winning a majority. We may not have results in this space until much later in the evening, or maybe even tomorrow if the results are close, but markets seem to be telling us not to worry about James Comey or Theresa May all that much. That leaves Mario Draghi, and his band of traveling acrobats.

Traveling? The European Central Bank took its act to Tallinn, Estonia this week, which really matters little. I just think it's cool. You can expect the ECB to ratchet down headline expectations for inflation. No kidding. Who knew that energy prices impact headline inflation? The core rate is expected to be left close to untouched. The bigger deal will be what exactly is left in the central bank's forward guidance. Oh, guide away, Mario. Probably the most that policy hawks can hope for today will be in language that states that the outlook for the eurozone economy is now balanced, instead of negative. That, and the removal of any reference to further easing of policy if need be, will likely be enough to make today's three-headed monster slink off . Back into the closet. Back under the bed. Back to the land of "make believe". Oh, the markets are actually under an intense assault from another avenue of attack, that somehow due to that three-headed monster, ended up passing by more quietly than it should have. Black gold -- oil, that is.

The Real Story

See That? That Ugly Stick? The ugly stick came out yesterday, and man, it was angry. Down goes WTI, down goes Brent, down goes the whole darned energy sector, and down goes Frazier. Man, I miss Frazier. Actually, the sector got off light, taking a mere beating of 1.5% across the board, while the commodity suffered through an even uglier 4% decline. The catalyst? Well, let's not kid ourselves. There are many, but yesterday's catalyst was a surprise build for headline WTI, when the Energy Information Administration released their weekly data in the U.S. That broke an eight-week string of inventory draws, and caught markets completely off guard after the API's Tuesday night data showed numbers more in line with expectations of a ninth weekly draw in a row.

News of the bloated inventory numbers came on top of forecasts made by the same EIA that U.S. crude production will average over 10 million barrels a day by 2018, and import numbers increased from Canada, Nigeria, and Iraq. Oh, my.

Does this put OPEC under the microscope? Of course it does. The scariest item of the day for those long the oil patch might have come from Igor Sechin. Who? C'mon, gang, you know the name. Chief executive of Rosneft, Russia's largest oil company. Read what he said in an interview regarding OPEC's compliance with the cartel's own extended production freeze. "If the question is how OPEC is going to exit from these arrangements: abruptly. We will also be prepared. If something goes wrong, we will not let them occupy our markets. We'll defend ourselves." Uh, oh. Broken English? Maybe. Even so, enough gets through to sound like the rattling of a possible turf war to me.

Where do I see support for crude? Well, I bought quality (Apache (APA - Get Report) and Schlumberger (SLB - Get Report) ) in the space in small quantity yesterday based on the weakness. As I have averaged lower on this trade, I have also hedged the move by getting longer quality airline names (Southwest (LUV - Get Report) and Delta Airlines (DAL - Get Report) ). That has thankfully worked well to this point. But there are no sure things in this sport, and I would not count on this as such. It does, however, make the sport more fun. Fun (and dough) are why we tape on the foil. That's just measured discipline. I suspect that I will get the chance to buy a little more a little lower (and I will) as WTI moves into the low to mid $40s per barrel. A move into the $43/$44 range does not scare me at all. A break of $42.75 would rattle my cage a bit, as it opens a door to a very scary level around $38 a barrel. For the love of the game.


08:30 - Initial Jobless Claims (Weekly): Expecting 242,000, Last Week 248,000. The four-week moving average in this space currently stands at 238,000, which along with today's expectation is right smack dab in the middle of today's consensus range spanning from 235,000 to 245,000. The markets will let this item pass quietly, as it no longer seems to have the ability to surprise, nor impact policy in any way. You can go get coffee at 08:29 today, and not miss anything significant.

10:30 - Natural Gas Inventories (Weekly): Expecting 89 billion, Last Week 81 billion cubic feet. We expect a tenth consecutive weekly build in this space today. Natural Gas has continued to struggle to hold the $3 level. A hefty build today, let's say of over 100 billion cubic feet, could snap the level. We'll see soon enough.

Sarge's Trading Levels

These are my levels to watch today for where I think that the S&P 500, and the Russell 2000 might either pause or turn.

SPX: 2448, 2441, 2435, 2426, 2418, 2410
RUT: 1409, 1403, 1397, 1391, 1385, 1378

Today's Earnings Highlights (Consensus EPS Expectations)

Before the Open: (SJM - Get Report) ($1.72)

After the Close: (MTN - Get Report) ($4.88)

What's Hot

Apple (AAPL - Get Report) still in focus after mixed responses on Wall Street to its WWDC.

Alibaba (BABA - Get Report) shares hit a record after executives forecast much higher than expected sales.

FANG stocks -- an acronym for Facebook (FB - Get Report) , Amazon (AMZN - Get Report) , Netflix (NFLX - Get Report) and Google (Alphabet) (GOOGL - Get Report) are still hovering near records.

Apple, Facebook and Alphabet are holdings in Jim Cramer's Action Alerts PLUS Charitable Trust Portfolio. Want to be alerted before Cramer buys or sells AAPL, FB and GOOGL? Learn more now.

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At the time of publication, Stephen Guilfoyle was long APA, SLB, DAL, LUV, although positions may change at any time.