E-mini S&P (March)
Yesterday’s close: Settled at 3693.75, up 6.75
NQ, yesterday’s close: Settled at 12,670.75, up 74.75
Fundamentals: The Federal Reserve delivered yesterday. Although they did not announce some new robust stimulus program, their absolute and total commitment to highly accommodative monetary policy until the economy is fully recovered was exactly the reassurance risk-assets needed. Or, for the U.S. Dollar to complete its swan dive. The S&P, NQ, and Dow have all set fresh record highs today and the Russell 2000 already did this week. Times like this we must ask ourselves, with the U.S. Dollar broadly -7% on the year and at the weakest levels since Q2 2018, are assets getting more expensive, or is the currency used to value such assets simply eroding? This is a discussion for another time, but it does put into perspective the road we are traveling.
Added tailwinds are also certainly coming from lawmakers closing in on a $900 billion bipartisan fiscal package, just as Friday’s budget deadline looms. Traders must keep an ear to the ground on these developments. Given today’s landscape, and the Fed’s green light in the rear-view mirror, this narrative is the tallest hurdle. Other hurdles include antitrust lawsuits against Big Tech gaining steam and Brexit talks.
Jobs data this morning was mixed. Weekly Jobless Claims increased for the second week in a row and missed expectations for the fourth out of five. However, Continuing Claims hit a new pandemic low of 5.508 million, beating expectations for four weeks out of the last six. Still, Philly Fed Manufacturing fell to 11.1 from 26.3, well below expectations at 20.0. This comes on the heels of NY Empire State Manufacturing on Tuesday.
Technicals: We have said we expect new record highs before the end of the week, how about before Thursday’s opening bell. The overnight elevation brings two floors. Of course, major three-star support aligns with yesterday’s settlement, for the S&P this is 3691.50-3693.75 and for the NQ this is 12,635-12,670; while above here the path of least resistance is higher across all timeframes. Still, we would not be surprised to see a back and fill. For the S&P, the previous March record is 3707.50, our Pivot, while above here the market is in surge mode. So far, resistance aligning a technical indicator with the front-month record has capped the rally. If the landscape continues as we described, our targets are ... 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 (February)
Yesterday’s close: Settled at 48.00, up 0.22
Fundamentals: With tailwinds from yesterday’s 3.135 inventory draw and steadfast ultra-accommodation from the Federal Reserve, Crude Oil and the energy complex is extending gains with $50 in sight. Yesterday’s weekly supply numbers kicked off the drawdown of the massive 15.189 mb build, something we expect to continue over the next couple weeks. Exports bounced back and Imports dissipated. Furthermore, with the U.S. Dollar continuing its path lower, it paves the way for foreign countries to find U.S. Crude Oil even more attractive. Yesterday’s Retail Sales number were certainly a disappointment, but with Washington on the verge of a $900 billion bipartisan fiscal package, individuals and small business should snap back from a slowing fourth quarter. This narrative is being priced in as we speak.
Technicals: Price action has been in full breakout mode and we caught the ride. As the tape runs into the next key resistance, it is important to understand the psychological $50 mark aligns many technical indicators and as we close in on that level, the easy money has already been made. Still, our momentum indicator comes in at 48.18 and while the tape is above our Pivot, the path of least resistance is higher across all timeframes. However, the value will be seen in the ... 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.
Yesterday’s close: Settled at 1859.1, 3.8
Fundamentals: What a busy morning, in the thick of managing long positions amid this surge we are reminded how amazing the November pullback really was. Today, the U.S. Dollar Index is forging new lows, the lowest since April 2018. Against the Chinese Yuan it remains the weakest since June 2018. In November, the Dollar simply stopped going lower, some uncertainties were removed after the Presidential election, technicals were broken, and there were questions around fiscal stimulus. Today, many of those doubts have been reassured and bubble-wrapped by a dovish Federal Reserve. The narrative, in and of itself, will continue to erode the U.S. Dollar. However, it is not these reassurances that are the most bullish Gold, we already knew these. What is most bullish Gold is how scripted the November pullback was as we now embark on the most seasonally bullish time of year for Gold and Silver; December options expiration, December futures expiration, the cleansing and Gold has rallied nearly 7.5% since.
Technicals: Today’s rally has achieved $1900, trading out above our next major three-star resistance at 1890-1894. This level should be a battleground today with Gold already up more than 2% on the session given yesterday’s late rally. Providing a massive tailwind is Silver’s breakout above a downtrend line from the August highs. The strength paves a path for Gold to test its similar downtrend line at 1915-1920. Our sharply rising momentum indicator does not come in until 1870-1878 and aligns with previous major three-star resistance; traders should be prepared for some swings as we move into resistance. For Silver, 26.14 is its 50% retracement from the August highs. Next resistance 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.
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Blue Line Futures
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.