Central Banks, Jobs, and Semis | Morning Express

Fed Balance Sheet (in millions)

NQ, 30 min range move

E-mini S&P (September) / NQ (Sept)

S&P, yesterday’s close: Settled at 4394.75, down 20.25

NQ, yesterday’s close: Settled at 15,073.50, up 27.25

Fundamentals: U.S. benchmarks have battled crosswinds throughout the week, but as always, it is Tech underpinning the risk-environment once again. More specifically, Semiconductors have gained about 2.5%, fueled by AMD’s meme relevance on the heels of a blowout earnings report last week. Broadly speaking, the Federal Reserve wants to be able to taper assets, but the reemergence of another Covid wave has buoyed markets, specifically Tech, as it may elongate the Fed’s path. Markets faced two waves of selling early yesterday. The first came after ADP Payrolls whiffed on job creation for July at 330k versus 695k expected. The second was a one-two punch by influential Fed Governor Clarida and a record setting ISM Services read. After comments over the weekend by the two most notable doves supported risk assets, Fed Governor Brainard and Minneapolis Fed President Kashkari, Clarida reminded markets the Fed is on track to peel back asset purchases later this year and expects to meet its goals for a rate hike by yearend 2022. At the same time, ISM Non-Manufacturing roared to a record 64.1. This caused rates to rise, reversing the early crater due to the ADP miss and supposedly a fund buying to tap out of a multi-billion-dollar short loss. Though each wave was thematically conflicting the other, they have ultimately kept markets rangebound ahead of tomorrow’s pivotal Nonfarm Payroll report.

Weekly Initial Jobless Claims were in line with expectations at 385k versus 384k. The U.S. Trade Balance hit another record deficit, with both Imports and Exports rising. Comments by Bank of England Governor Bailey are also hitting the tape. He is pointing to the need to taper the central bank’s assets, adding that if the economy faces a negative shock, they could always restart purchases. By purchases, he means Quantitative Easing, yes this is your reminder that central banks are continuously easing policy and the Federal Reserve’s balance sheet increased to a fresh record of $8.2 trillion through the end of July.

Technicals: Price action remains tightly rangebound for the S&P, but the NQ has traded to the highest since last Tuesday. The S&P battled waves of selling terrifically yesterday and although it finished near the low of a tight session, this allowed for buyers to come in overnight. Our momentum indicator comes in at 4402 this morning and will help provide a point of balance on the session. At the end of the day, the S&P’s line in the sand, as we have noted, comes in at 4355.75-4359.50 and until the bears can achieve a break below here, buyers will have an easy path to take stalled selling back near record highs. In recent days, we have referenced several trend lines for the NQ; it has broken above the trend line from its highs, and this can now be seen as support near 15,000. Underneath, there is a near term trend line from last Tuesdays’ low (a 350-point range session) and the May 19th low aligning perfectly to the 14,849 low that traded this Tuesday. Upon any waves of weakness, this creates a clear line in the sand at major three-star support at 14,850-14,871. Regardless, the NQ has extended gains and is trading above our momentum indicator and point of balance 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.

Crude Oil (September)

Yesterday’s close: Settled at 68.15, down 2.41

Fundamentals: Crude Oil is trying to break a three-day losing streak and two narratives may do the trick, outside of oversold technicals. Yesterday’s EIA report posted a massive surprise draw in Gasoline at -5.292 mb. With a week on week increase in Refinery Utilization, the draw in Gasoline signals how demand remains constant despite mounting Covid fears. Also, sometimes there is no better way to turn a negative energy tape than an old-fashioned geopolitical conflict. Israel fired back at rocket launch sites in Lebanon after two rockets were fired at them yesterday. Overall, the risk-environment across equities is stable, although energies and metals have had a rough week. All things considered, this gives reason for a rebound session at the least.

Technicals: Price action is battling at our next wave of major three-star support at 67.79-68.19 and seemingly stabilizing. Previous support at 68.53 now aligns with our south-slopping momentum indicator at 68.45-68.53 and we must see a close above here today. A sign of strength could carry to major three-star resistance 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 (December) / Silver (September)

Gold, yesterday’s close: Settled at 1814.5, up 0.4

Silver, yesterday’s close: Settled at 25.461, down 0.121

Fundamentals: Gold and Silver blatantly failed to breakout yesterday. A sharp reversal in Treasuries, coupled with a U.S. Dollar bid was enough to smack each back from a pending breakout, erasing gains going back to the post-FOMC rally last Wednesday. Some are calling Fed Governor Clarida’s comments hawkish, however, we merely view them as in-line with the patient-to-taper-by-yearend rhetoric that we have been hearing. It was the record setting snapback in ISM Services that was coupled with those comments in which the reversals were sparked. With added weakness today, it seems the bulls have taken to the sidelines ahead of Nonfarm Payroll and are waiting for more clarity on jobs after ADP’s miss yesterday and an inline Initial Claims this morning.

Technicals: Price action has been disappointing at best, Gold now finds itself battling back at a critical level of major three-star support at 1801.5-1804.6. In fact, there are three strong waves of major three-star support underneath here; the next is a floor at 1793-1796 is where Gold battled at through much of July before rallying last Wednesday and the next is a ... 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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