Actionable Research for Equities, Oil, and Gold with Bill Baruch's Morning Express

E-mini S&P (December)

Yesterday’s close: Settled at 3393.50, down 58.50

NQ, yesterday’s close: Settled at 11,492.25, down 171.25

Fundamentals: U.S. benchmarks are stable and edging higher ahead of the bell. Although risk-assets remain vulnerable, yesterday’s bludgeoning did not finish at its worst and this opens the door for repair. It is easy to point to Washington’s inability to pass a Coronavirus Aid bill as the main catalyst, however, we never expected the added stimulus before the election. Furthermore, if it were passed, our fear was it would underwhelm the market. Whereas the impasse certainly played a role, we look to SAP’s earnings, Chinese sanctions, and the virus resurgence as equal catalysts in piercing support and opening the door to pent up selling ahead of the election at a technical air pocket.

Software’s resilience through the pandemic has given it an indestructible notion and this was a chink in the armor. SAP lost 23% yesterday, Salesforce lost 3.4% but was down as much as 5%, and IGV, the iShares Tech-Software ETF, lost 2.5%. Yesterday, Salesforce CEO Benioff called SAP’s troubles “unique to them”. He criticized their cloud execution and blamed a CEO shuffle as the root of their problems. Salesforce is up about 1% ahead of the bell.

Yesterday’s board was a sea of red, but Industrials next to Energy was the worst performer. We noted here yesterday that China said it will impose sanctions on Boeing’s defense unit, Lockheed Martin and Raytheon after the U.S. approved arms sales to Taiwan. Those names were down 3.9%, 1.5%, and 2.8% respectively.

Energy and Materials together were the most beaten down sectors. As Covid-19 cases hit record numbers in the U.S. and Europe, restrictions and lockdowns have expanded. This is a direct hit on demand forecasts and at a time where wind was already being sucked out of the sails upon deadlock in Washington.

Lastly, Treasuries rose with safe-havens in demand. Lower yields and broad fears weighed on Financials which lost a composite 2.2%. Although every sector finished lower yesterday, it is important to note that some of the leadership did not; Apple +0.01% and Amazon +0.08%.

In conclusion, traders should continue to have nothing but a cautious near and intermediate-term outlook. Patience heading into the election will open the door to buying at better levels or after a more solidified bullish confirmation.

Today’s economic calendar brings the Case Shiller Home Price Index at 8:00 am CT. At 9:00 am CT we look to Consumer Confidence and Richmond Manufacturing.

Technicals: The S&P broke below major three-star support at 3406.75-3410 and as we noted, such would cause added selling. Ultimately, there was an air pocket below here and we did not have another major three-star support until 3353.25. Yesterday’s low was 3356. In fact, our next support at all below 3406 was 3369.50. Given the NQ’s break below major three-star support at 11,539-11,574, the selling was broadly controlled. Apple and Amazon holding ground certainly played a major role. Now, the headwind is previous support which is now resistance at 3406.75-3410 and 11,539-11,574. Overnight rally attempts have been very well contained by such. Our momentum indicators will play a crucial role in helping to identify whether the tape is attempting to stabilize. This comes in at ... Sign up for a Free Trial at Blue Line Futures to have our entire fundamental and techincal outlook, actionable bias, and proprietary levels for the markets you trade emailed each morning.

Crude Oil (December)

Yesterday’s close: Settled at 38.56, down 1.29

Fundamentals: Risk-assets are showing signs of wanting to stabilize and Crude Oil is holding ground in positive territory. Although the landscape is certainly vulnerable, the energy space is garnering tailwinds from a storm disruption in the Gulf to help offset demand fears tied to the resurgence of Covid-19 and increasing restrictions. API is due after the bell and early estimates are for a headline build of Crude of 1.1 mb, although this is expected to be offset by draws of about 2 mb is each Gasoline and Distillates. Hanging in the balance are OPEC’s plans of production cut taper at the turn of the year, any indication of delay would be very supportive.

Technicals: Like the S&P, previous support is now resistance, for Crude this 39.33-39.36. An overnight attempt was contained, and price action is battling at our 38.76 level which aligns closely with our momentum indicator; the tape must hold above here in order to build for another attempt to chew through resistance and finish constructively. Continued action below 38.76 will open the door to added selling down to ... Sign up for a Free Trial at Blue Line Futures to have our entire fundamental and techincal outlook, actionable bias, and proprietary levels for the markets you trade emailed each morning.

Gold (December)

Yesterday’s close: Settled at 1905.7, up 0.5

Fundamentals: Gold has done a terrific job holding ground in the face of deflationary fears and selling of risk-assets. With fresh lockdowns and restrictions announced across Europe and the U.S. coupled with Washington’s inability to pass fiscal measures, it has reinvigorated the deflation narrative. However, we do not subscribe to this and believe more stimulus is coming after the election. Furthermore, inflation will continue to show up. Gold’s constructive battle at its 2011 record high is tremendous given how seasonally soft this time of year is and the fact we do not expect continued strength to reappear until December. U.S. Consumer Confidence is due at 9:00 am CT.

Technical: Gold once again held major three-star support at 1902-1905 and has broadly held this point of balance on today’s session. Still, rally attempts have stalled at 1915-1917 and we must see a close above here in order to encourage added buying back to 1933-1937. Traders should be prepared for a move of 2-3% in either direction and such will continue through November. More importantly though, the swings of ... Sign up for a Free Trial at Blue Line Futures to have our entire fundamental and techincal outlook, actionable bias, and proprietary levels for the markets you trade emailed each morning.

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Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.

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