Ahead of the Fed | Bill Baruch breaks down the Markets in our Blue Line - Morning Express

E-mini S&P (December)

Yesterday’s close: Settled at 3395, up 22.75

NQ, yesterday’s close: Settled at 11,450.25, up 183.75

Fundamentals: It is Fed Day and the committee concludes their policy meeting with a statement at 1:00 pm CT. Fed Chair Powell’s press conference follows at 1:30 pm CT. One would think the Fed could not get any more dovish, but some analysts point to the committee extending their expectations of not raising rates until August 2022 into 2023; they will now provide an economic outlook into a third year. Three weeks ago, Powell introduced a major policy shift to Average Inflation Targeting. Today, we expect him to field questions on how they plan to invigorate inflation as well as whether he thinks the shallow economic rebound is sustainable. Retail Sales data this morning disappointed, growing at a slower Core rate of 0.7% compared to 0.9% expected. However, recent economic data, although from dismal levels, has generally been upbeat relative to expectations. Globally, despite the resurgence of Covid-19 cases, there is also a light at the end of the tunnel starting to glimmer. This gives reason to believe the Fed may not meet such dovish expectations and this would encourage volatility across asset classes, especially equities, as it strengthens the U.S. Dollar. On the other hand, by peeling away any layer of their ultra-dovish rhetoric, the Fed leaves the door open to its current measures not reaching their fullest potential.

Technicals: Equity markets have steadily rebounded from Friday’s new intraday low ahead of today’s Fed meeting. Price action in the S&P has stuck its nose out above major three-star resistance at 3314; this is the high on last week’s snap back before again slipping. However, the NQ, which has been the leader up and down, remains contained by major three-star resistance at ... Please sign up for a Free Trial at Blue Line Futures to have our entire technical outlook, actionable bias, and proprietary levels emailed each morning. Crude Oil (October)

Yesterday’s close: Settled at 38.28, up 1.02

Fundamentals: Crude Oil is up sharply this morning after yesterday’s private API survey printed a surprise draw of 9.517 mb of Crude. Analysts are anticipating a build of 1.271 mb from today’s official EIA numbers. The massive discrepancy has surged Crude Oil to the highest level since last Tuesday’s selling despite a negative outlook on the IEA’s Monthly Report yesterday. API also reported +3.762 mb Gasoline and -1.123 mb Distillates. Today, analysts expect -0.16 mb Gasoline and +0.60 mb Distillates. API set the bar pretty high for today’s EIA data at 9:30 am CT, but anything in the mere ballpark of a 5 mb headline draw of Crude could be enough to sustain this early strength. Still, today’s Federal Reserve policy meeting will certainly have a broad impact on risk-assets at 1:00 pm CT. Bill Baruch joined the CNBC Halftime Show yesterday to discuss Crude Oil’s technical landscape.

Technicals: Tomorrow is option expiration for October Crude Oil and there are more than 15,000 Puts and Calls open at the $40 strike. Although this is not a historic amount by any means, it could create some gravitational pull. Additionally, 39.96 is the 50% retracement from last week’s low of 36.13 back to the 43.78 highs and 39.77 is the settlement price from the Friday before Labor Day in which we saw a gap lower when trading resumed Sunday. Yesterday, we were more concerned with resistance amid that selling created in the $39 region, especially considering the unflattering IEA Monthly Report. Our momentum indicator is rising to ...  Please sign up for a Free Trial at Blue Line Futures to have our entire technical outlook, actionable bias, and proprietary levels emailed each morning. Gold (December)

Yesterday’s close: Settled at 1966.2, up 2.5

Fundamentals: Gold has had a nice start to the session, but the fireworks come when the Federal Reserve concludes their policy meeting at 1:00 pm CT. The Japanese Yen has forged the highest level since the July 31st Fed meeting. The question here is whether the currency is doing this on safe haven demand. In Japan, Yoshihide Suga was announced as Abe’s replacement at Prime Minister and a steady economic recovery in the Asian, as seen in Chinese Yuan strength, have both supported the Yen’s move. However, the Treasury complex is also firmer today. Despite strong overnight groundwork, Gold has been unable to extend gains after an underwhelming Retail Sales this morning. In the end, it matters how the U.S. Dollar reacts to the Fed later today.

Technicals: Price action is on the verge of breaking out above trend line resistance from the August 18th high. This aligns well with our major three-star resistance at 1973-1976.6, a very sticky area for the metal. Our momentum indicator has flatlined from yesterday and comes in as first key support at 1968. However, strong support comes below at 1955.5-1958 and price action responded to this level twice over the last 24 hours; a break below here will encourage added selling. We remain very upbeat Gold over the longer-term although hold a more cautious outlook of late. If you followed our buy recommendation at the 1900-1920 area, one could consider protecting profits ahead of today’s Fed meeting. Feel free to call our trade desk at 312-278-0500 to discuss a plan tailored to you. Still, we expect $2300 in the ...  Please sign up for a Free Trial at Blue Line Futures to have our entire technical outlook, actionable bias, and proprietary levels emailed each morning.

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