Breakouts and Shakeouts, What to Buy | Morning Express
E-mini S&P (June) / NQ (June)
S&P, yesterday’s close: Settled at 3967.50, up 19.75
NQ, yesterday’s close: Settled at 13,089.75, up 211.50
Fundamentals: Yesterday was the session we have been waiting for; there was a Tech-driven green light across U.S. benchmarks, the NQ broke above a downtrend line from its February 16th all-time high, and the S&P settled at fresh record. U.S. benchmarks are pointing higher this morning, ahead of the bell and a long weekend. Tomorrow brings Nonfarm Payroll, but the NYSE is closed and index futures only trade through 8:15 am CT due to Good Friday.
The Semiconductor space gained about 2.5% yesterday. Micron beat earnings after the bell and has gained as much as 5% overnight. Additionally, Taiwan Semiconductor is up 2.5% ahead of the bell with news it will invest $100 billion over the next three years and President Biden said his infrastructure plan will bolster the industry. As a unit, coupled with Apple and Microsoft responding to massive levels of technical support yesterday, Tech could really bring strong leadership. Speaking of Microsoft, yesterday they won a contract worth up to $21.9 billion from the U.S. Army to produce augmented reality devices. Disclosure: Blue Line Capital owns Micron, Apple, and Microsoft.
Weekly Jobless Claims, both Initial and Continuing, came in higher than expected. Although better revisions for last week helped offset some of the miss, this coupled with yesterday ADP has encouraged a little unwind of U.S. Dollar and rate strength that came on whispers of a blowout Nonfarm Payroll report tomorrow. We now look to final March Manufacturing PMI at 8:45 am CT and the more closely watched ISM read at 9:00. Philadelphia Fed President Harker speaks at noon CT and Dallas Fed President Kaplan speaks at 3:05 pm CT; neither vote in 2021 or 2022.
Bringing a supportive wave to risk assets is the U.S. Dollar and rates, both are backing off from this week’s highs. Yesterday, President Biden unveiled his infrastructure spending plan and highlighted costs coming from tax hikes. Yesterday, we pointed to the White House’s plan to raise corporate taxes from 21% to 28% and increase the personal tax rate to 39.6% for households earning more than $400,000. There is certainly opposition, even from Democrats in New York and New Jersey who want the cap on SALT dropped. Still, for the time being, with the idea of less debt to fund spending, it has brought support to the Treasury complex. This has tightened the spread between U.S and German 10-years by about 2 basis points. Additionally, firm Manufacturing PMI from both Europe and the U.K. earlier this morning has weighed on the U.S. Dollar.
Technicals: We have ramped up our Bullish Bias as the week has unfolded and we will continue to do so, now outright Bullish. However, this will be on a short leash and we must see price action in the S&P stay out above 3963.25-3967.50 and the NQ above 13,000-13,044. Essentially, we do not want to see new session lows. Our momentum indicators are trailing the tape and come in as our Pivots; in order to be the most constructive, we must see price action through the opening hour hold above 3971.25 in the S&P and 13,125 in the NQ. Also, whereas the S&P is in a breakout at record levels targeting ... 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 (May)
Yesterday’s close: Settled at 59.16, down 1.39
Fundamentals: Crude Oil is back above $60 with the OPEC+ meeting underway. This comes after price action traded to a low of 58.85 yesterday and 58.97 today. In his opening remarks, the Saudi Oil Minister pointed to their cautious approach and unfortunately being proven right, how uncertainties persist, the recovery is far from complete, and the cartel should remain cautious until “undeniable evidence”. Crude Oil rallied from that 58.97 low to a new session high just shy of $61 on these comments, at the time of this writing. Reportedly, there are two options on the table, and both should prove supportive over the coming weeks, regardless of today’s close; they would either leave production completely unchanged or increase it by only 500,000 bpd. The small increase would assumingly be in favor of Russia. We expect volatility to continue, but long-term, we do find value here.
Energies will be completely closed for Good Friday, they will not reopen tonight.
Technicals: Price action has ripped into first key resistance at 60.97-61.25 with an early high of 60.84. Our Pivot will serve as a point of balance, as always, coming in at 59.95-60.03 and aligning multiple levels of volume, session lows through the week, and our momentum indicator this morning. Continued action above here is favorable, but Crude must close above ... 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 (May)
Gold, yesterday’s close: Settled at 1715.6, up 29.6
Silver, yesterday’s close: Settled at 24.532, up 0.395
Fundamentals: Gold and Silver have remained firm to close out the week. Remember, Metals are fully closed tomorrow and will not reopen tonight despite Nonfarm Payroll tomorrow morning. Strength in Treasuries from yesterday’s low has certainly brought a tailwind. Both rates and the U.S. Dollar have backed off from highs on the week; the run was in part due to whispers of a 1 million print on tomorrow’s Nonfarm report. However, Jobless Claims underwhelmed today, and this coupled with President Biden’s plan to fund infrastructure with tax hikes instead of more debt has continued to encourage an unwind of the U.S. Dollar’s strength and Treasuries weakness incurred through midweek. We also believe the expiration of April Gold futures brought a much-needed cleansing. All of which combined could be exactly what the doctor ordered to bring a bottom in this downtrend across the metals space.
Technicals: Both Gold and Silver are in rebound-mode, but make no mistake, their work is cut out for them. Given Gold’s double bottom and Silver’s rejection of the lows on the year, we do believe there is room to run. Gold’s recent swing high of 1756.1-1759.9 is major three-star resistance, but we do have strong key support in front of that at 1734.7 and 1745-1747.1. Silver’s resistance might be most crucial with ... 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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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.