E-mini S&P (June) / NQ (June)
S&P, yesterday’s close: Settled at 4193, up 7.50
NQ, yesterday’s close: Settled at 13,700.25, up 44.00
Fundamentals: U.S. benchmarks are holding stable ground ahead of a deluge of economic data. We look to April Durable Goods, Jobless Claims, and revised Q2 GDP, all at 7:30 am CT. The back half of this week will prove pivotal ahead of the Memorial Day holiday weekend. What type of month-end flows will we see? How does this setup for June? Plus, the data gauntlet also includes the Fed’s preferred inflation indicator, the Core PCE Index, tomorrow. The U.S. Dollar began firming yesterday. Does this move have legs, is it more than a month-end rebound? If so, it would bring a headwind to this rally.
Update on data: At first look, Durable Goods and GDP were each mixed. Whereas Initial Jobless Claims set a new pandemic low of 406,000, Continuous Claims missed a new pandemic low only due to better revisions for the prior week.
Earnings will also have an impact on the broader sentiment. NVIDIA beat both top and bottom estimates after the bell, with sales growing 84% YoY. The stock stumbled at first but has turned green ahead of the bell. Bank of America released a price target of $750 per share, the stock closed Wednesday at $628. Best Buy crushed earnings this morning and has added 2.5% ahead of the bell, after gaining 2.22% yesterday. After the close, we look to earnings from Salesforce and Costco, among others. (Disclosure: Blue Line Capital owns NVIDIA and Salesforce)
Technicals: Some may find this week boring or unenthusiastic, but we see the market planting seeds. Although the S&P and NQ stayed tethered to, but constructively above, critical areas of technical support yesterday, the Russell 2000 rallied by 1.89%. The Russell has laid a series of higher lows on the week, responding to trend line support, and rejecting large waves of selling in a manner that tells us it wants to go higher. Right when it was counted for dead, it may have become the leader the S&P and NQ need while digesting their gains. We believe a steady ship, and continued action of higher lows would lead to 2300. A steady ship does depend on the S&P and NQ continuing to build their respective construction. For the S&P, this quiet month-end period is turning into something potentially very positive. Coming off Monday’s final leg of the rip higher, there has been slight lower highs and slight lower lows. You know we love to see bull flag-like patterns, and we do not even care if they are sloppy; it is about the market profile sucking in shorts and using the ‘boringness’ to lose the bulls’ interest. However, in today’s case, this is a very nice bull flag developing; a move and close above what is now major three-star resistance at 4208.75-4210, aligning with Tuesday’s opening bell high, should bring a tailwind of buying, bringing the S&P back to its record and rare major four-star resistance at 4238.25-4241.50. Now, the slight lower lows do provide flexibility for the S&P to take out major three-star support at 4183.50-4186 intraday without any harsh consequences, such as encouraging a consolidation lower to major three-star support at 4150-4154, but we still do not want to see a close below ... 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 66.21, up 0.14
Fundamentals: Crude Oil’s fundamental landscape remains more focused on the Memorial Day holiday run-up, rather than the headline threat of Iranian exports hitting the market. Risk assets have also been stable through much of the week, and this underpins Monday’s surge higher. Yesterday’s EIA report was broadly supportive and encouraged the highest close since May 17th. Coupled with inventory draws across the board was a larger increase in Refinery Utilization than expected. Overall, yesterday’s data, the stable risk-landscape, and a new pandemic low in Jobless Claims this morning continues to support the reopening and driving season rally into Memorial Day. Furthermore, as you well know, we have been less enthusiastic than most on Iranian Crude hitting the market, saying it will be less than anticipated. In fact, we further believe, even simply a more known situation could bring a bullish tailwind in the coming weeks.
Technicals: We discussed the bull flag development in U.S. equity benchmarks in the S&P/NQ section in great detail. Speaking of bull flag developments, look at Crude Oil; it has also displayed slight lower highs, and slight lower lows since Monday’s surge. Major three-star resistance overhead 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 (August) / Silver (July)
Gold, yesterday’s close: Settled at 1903.8, up 3.3
Silver, yesterday’s close: Settled at 27.795, down 0.082
Fundamentals: Gold and Silver disappointed yesterday, but when you back out of the forest to see the trees, we must ask ourselves, was it really a disappointment at all? At yesterday’s high of 1915.6, Gold is up 14% from its March 31st low, and as of yesterday’s close is up about 8% in May alone. Furthermore, the doubters, those calling to sell Gold yesterday above 1900 are the same prognosticators who have been trying to fade the bounce since 1750. We are not always bullish Gold, but we do enjoy seeing it exude strength. All things considered, whether Gold finishes the month at 1920, 1900 or 1880, this run has certainly not been a disappointment.
Weighing on Gold is a rebound in the U.S. Dollar and a firming of rates. Is this a month-end rebound? Today’s slate of economic data was overall mixed, but Jobless Claims are a headline, setting new pandemic lows. An improvement across the jobs landscape brings a further tailwind to the U.S. Dollar and rates, and could easily keep a lid on this Gold rally for the time being.
Technicals: As noted above, we enjoy when Gold exudes strength, but we are not always bullish. We have been Bullish for this run, dialing back our Bias when we expect consolidation periods. This is setting up to be one of those periods. Yesterday’s action failed at major three-star resistance at 1914.3 and quickly slipped. So far, price action has been constructive at previous resistance, now support, at 1893-1894.5. We have notated this as a major three-star support because continued action above here keeps the landscape very bullish and signals a consolidation may not be necessary. For us, we are planning for the consolidation and find it most constructive while above new 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.
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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.