E-mini S&P (June) / NQ (June)
S&P, yesterday’s close: Settled at 4111.50, down 11.50
NQ, yesterday’s close: Settled at 13,233.50, up 21.50
Fundamentals: Despite a highly volatile session yesterday, U.S. benchmarks finished little changed. The bulls have, once again, so far, proven to be resilient, this time through a pre-FOMC Minute’s air pocket. The committee noted the economy was still far from their goals but has become open to discussing a taper of bond purchases as early as their next meeting. This narrative is well within the range of expectations and although the Dollar and yields strengthened, the S&P finished 1.3% from its session low, a higher low than that from last week. In fact, all four major U.S. benchmarks set a higher low than last week. We have been steadfast in our caution of late, and there certainly is still unfinished business at 4010-4020, but our Bias has turned a corner per our discussion in yesterday’s Midday Market Minute.
Today’s economic calendar brings weekly Jobless Claims and Philly Fed Manufacturing at 7:30 am CT, two economic indicators that have steadily improved in recent weeks and months. Both Initial and Continuous Claims are expected to hit fresh pandemic lows and Philly Fed Manufacturing is expected to recede slightly from two of the hottest reads since 1973. We also look to a 10-year TIPS auction at noon CT.
Equities are not the only asset class experiencing wild swings. Extreme volatility in Crypto and Energy are in the spotlight today, after Bitcoin lost as much as 30% before rebounding and Crude Oil is still down more than 4% this week. Each provides a tail risk, and if not for the asset itself, for what such price action is telling us. For Crypto, is this the beginning of less risk taking broadly? For Energy, would this be the early signs of a stalling global economic rebound and mounting Covid fears in India and Southeast Asia? For now, we do not share such concerns, we bought both Bitcoin and Crude Oil yesterday, but we must stay vigilant. Of course, there are idiosyncratic risks that pose the same rippling effect; China’s clampdown on Crypto sparked the selling and officials inching towards a Nuclear Deal with Iran has weighed on Crude Oil.
Technicals: We have now taken a more upbeat tone but remain cautious. All things considered, both the S&P and NQ are still rangebound. Yesterday, they simply reminded everyone the range has a wider bottom half. For the S&P, as we noted above, there is still unfinished business at rare major four-star support at 4010-4020, with strong layers of support in front of that. For the NQ, the bulls stepped in once again to defend rare major four-star support at 12,871-12,900 and price action held ground tremendously in front of here yesterday; it forged a higher low than last week, although the S&P was seemingly outpacing it to the downside early on. Still, the range is defined by our rare major four-star resistance in each. For the S&P, this is ... 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 (July)
Yesterday’s close: Settled at 63.35, down 2.15
Fundamentals: Despite closing 2.2% from its session low, Crude Oil is not in the clear just yet. Iran has taken the reigns in telegraphing the brink of a Nuclear Deal that includes the U.S. Iran has said they could bring back 4 mbpd, this number is closer to 2 mbpd. Still, given such fickle supply-demand circumstance amid a vulnerable economic rebound from the ongoing pandemic around the globe, the additional barrels whether 2 or 4, are certainly weighing on the market. In fact, Asian refiners are preparing for Iranian Crude Oil. The broader risk-landscape has rebounded and yesterday’s inventory data was broadly supportive. In fact, each Crude, Gasoline, and Distillates either added less or drew down more than expected. Furthermore, Refinery Utilization was expected to slip WoW, and actually picked up coming out of the pipeline debacle. As Phillip Streible, our Chief Market Strategist, noted in his Bloomberg interview yesterday, we believe less Oil from Iran than anticipated will hit the market in the near-term. Overall, we maintain that dips are a buying opportunity.
Technicals: Late last week and early this week, as Crude was trading into our major three-star resistance ceiling, we took a more cautious approach. This paid off because it allowed flexibility to buy the dip. Price action did not quite get to our wide range, rare major four-star support, at 60.19-60.94, but did respond to key support at 62.10. Just as importantly, it did not settle below major three-star support 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 (June) / Silver (July)
Gold, yesterday’s close: Settled at 1881.5, up 13.5
Silver, yesterday’s close: Settled at 28.025, down 0.308
Fundamentals: Gold and Silver had very interesting sessions yesterday. Gold was the clear leader and extended gains to new swing highs, Silver did not. Both experienced extreme volatility but were extremely constructive technically amid what could have been a fundamental undertow of disappointment post-FOMC Minutes. Late afternoon, on the heels of those Minutes, the Dollar and yields spiked (the Dollar has since pared a bulk of those gains). Although the metals lost somewhat significant ground, they did not break support. Remember, we discussed the impending Basel III transition earlier in the week, and although we noted it as having a longer-term bullish impact, we expect continued volatility. If you have traded Gold for any number of years, you must be quite aware as to how it loves to shake out weak hands before moving higher; this is exactly what we expect and those who chase the tape will find themselves mounting losses. Lastly, we find it significant to point out that Gold’s early spike yesterday, came amid Bitcoin’s 30% selloff. Today, Gold is down just shy of 1% and Bitcoin is up about 5% on the session. We expect both higher over the longer-term, but we expected continued gyrations between the two.
Technicals: In some respects, Gold has broken out above a trend line from its record high and in others, it is still working through it. First and foremost, we have said here time and time again, the weekly close matters most to us. Next, the breakout is taking place in the June contract, however, as for the continuous contract, this trend line from the record high last August comes in at about 1875. This brings a critical landscape over the next two days and Gold must finish strongly. Regardless, line in the sand support was reaffirmed yesterday at 1843-1850 and the bulls are in the driver’s seat while above here. Still, major three-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.
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