A Jekyll and Hyde Federal Reserve | Morning Express

E-mini S&P (September) / NQ (Sept)

S&P, yesterday’s close: Settled at 4236.25, up 22.50

NQ, yesterday’s close: Settled at 14,258.25, up 128.25

Fundamentals: U.S. benchmarks have continued their rebound from last week’s healthy pullback. After a quiet overnight session, the S&P is staring down the barrel at its 4258.25 all-time high, only 0.25% away. However, the NQ has already set a fresh record for the second straight session. Federal Reserve committee members have brought a sense of calm over markets the last two days and the U.S. Dollar has weakened, in turn lifting risk-assets. NY Fed President Williams spoke on Bloomberg yesterday morning, he reiterated the patient policy stance stated on Monday, “data has not progressed enough to warrant a shift”. Also, he reminded viewers of the committee’s maneuver to Symmetrical Inflation Targeting last year, which ultimately buys added patience on inflation. San Francisco Fed President Daly said, “the Fed’s policy should remain steady”. Although she pointed to a potential tapering of MBS purchases late this year, she emphasized the importance of the data through autumn. Rounding out the day was Fed Chair Powell’s Congressional testimony. He too emphasized the bank’s patience in removing policy support and further soothed markets by saying he still expects the recent jump in inflation to be transitory. Adding he believes “it’s very, very unlikely to be a repeat of 1970’s style inflation”. This all plays well into our Jekyll and Hyde narrative, where the Federal Reserve was more hawkish last week in order to probe the market’s resolve, they will now appear more dovish. This morning, Atlanta Fed President Bostic was noted in saying, “the Fed should avoid prematurely declaring a win in the jobs battle”. Next, we look to Fed Governor Bowman for direction at 8:10 am CT, she is viewed as a centrist and here comments will be pivotal given the voting seat.

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Data-wise, we look to Flash PMIs at 8:45 am CT. Those from Europe this morning were stronger than expected, helping to weaken the U.S. Dollar. Atlanta Fed President Bostic is on the schedule again, speaking at 10:00 am CT and will be followed by ECB President Lagarde at 11:00 am CT. There is a 5-year auction at noon CT. Last, we look to a speech from Boston Fed President Rosengren at 3:30 pm CT. He is a 2022 voter and viewed as more hawkish.

Technicals: Given the clear break above rare major four-star resistance yesterday, we have become increasingly Bullish in Bias. We have upped our Bias to outright Bullish, but under the context that traders should not be chasing price action here. All in all, we are already long, and this is a confirmation that we want to maintain longs. We never suggest chasing price action, and especially so given the overhead technical resistance that remains. For the S&P, it settled right at our major three-star resistance at 4236.50-4241, and despite trading to a high of 4248.25, still faces major three-star resistance aligning with the previous record at 4258.25-4260. What we must see is continued action above our momentum indicator at ... Sign up for a Free Trial at Blue Line Futures to have our entire fundamental and technical outlook, actionable bias, and proprietary levels for the markets you trade emailed each morning.

Crude Oil (August)

Yesterday’s close: Settled at 72.85, up 0.27

Fundamentals: Crude Oil is padding gains ahead of today’s EIA inventory data, due at 9:30 am CT. There has been a path of least resistance higher this week after an Iran Nuclear Deal seems to be delayed following the election of hardliner Raisi as President, and ahead of the July 1st OPEC+ meeting and. With little fresh news flow today, the emphasis will be on inventory data and Gasoline stocks. Last night’s private API survey boosted price overnight, when coupled with a weaker U.S. Dollar, after it posted a surprise draw of 7.199 mb. However, it also posted a build in Gasoline of 0.959, but a draw in Distillates of 0.992. Overall, API was a very bullish report with a composite draw of 7.232 mb versus expectations of -3.942 mb Crude, +0.833 mb Gasoline, and +1.083 mb Distillates, a composite draw of 2.026. As one could see, a small build in Gasoline is ok, but something larger could derail the rally. Furthermore, a larger pickup in Refinery Utilization than the +0.5% expected could help justify such a build.

Technicals: August Crude settled at our major three-star resistance yesterday but has decisively clear the market this morning. Still, it will remain our Pivot and point of balance as it aligns with our momentum indicator and until we see such a decisive close, however, while above here the path of least resistance points to our rare major four-star resistance at ... Sign up for a Free Trial at Blue Line Futures to have our entire fundamental and technical outlook, actionable bias, and proprietary levels for the markets you trade emailed each morning.

Gold (August) / Silver (July)

Gold, yesterday’s close: Settled at 1777.4, down 5.5

Silver, yesterday’s close: Settled at 25.857, down 0.168

Fundamentals: Gold and Silver remain lethargic, and this is a byproduct of the immense overhead damage. However, there is a sense across the metal space that buyers are ready to step in. This began yesterday after China announced how much from their Copper and other metals reserves, they plan to sell. Copper and Platinum have gained 5% from their lows to Silver’s 2% and Gold’s 1.5%. The U.S. Dollar is trading lower again this morning and this should continue to boost the metals space, but Gold and Silver must wake up or face overhead supply that will come down to meet them. As we discussed in the S&P/NQ space, Fed speakers have been less hawkish/more dovish this week. Today, we look to Fed Governor Bowman at 8:10 am CT, Atlanta Fed President Bostic at 10:00 am CT, and Boston Fed President Rosengren at 3:30 pm CT. Flash PMIs are due at 8:45 am CT, and there is a 5-year auction at noon CT. We are also eager to hear comments from ECB President Lagarde at 11:00 am CT.

Technicals: Price action was stable overnight and both Gold and Silver are above our momentum indicators, denoted as our Pivots below. Continued action above here is supportive for a Copper/Platinum-like rebound that can bring Gold near ... Sign up for a Free Trial at Blue Line Futures to have our entire fundamental and technical outlook, actionable bias, and proprietary levels for the markets you trade emailed each morning.

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