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China's Trade 'imBalance' | Actionable research for Equities, Metals, and Energies | Morning Express

E-mini S&P (December)


Last week’s close: Settled at 3698, up 33.50 on Friday and 61.50 on the week


NQ, last week’s close: Settled at 12,526, up 63.75 on Friday and 268.50 on the week


Fundamentals: Risk-assets are starting the week on their backfoot as the U.S. Dollar strengthens and Treasury yields rise. Other than a continued rise in Covid-19 cases, the two major factors driving the Dollar are fiscal stimulus and Brexit. Congress is expected to reveal the details of its $908 billion Coronavirus aid bill later today. Nonfarm Payroll data on Friday was not awful per se; the Unemployment Rate did drop to 6.7% and Average Hourly Wages jumped by 0.3% MoM. However, job creation is dwindling without added stimulus and fell short of expectations for the third month in the last four. Furthermore, the Unemployment Rate was bubble wrapped with a Participation Rate that fell from 61.7% to 61.5%. All things considered, Nonfarm Payroll exuded the need for Washington to pass a fiscal package and pressures Congress to act as they iron out a spending bill ahead of the December 11th deadline. As for Brexit, the four and a half year rollercoaster faces the Transition Period deadline at yearend. Reports that talks between U.K. Prime Minister Johnson and the EU Commission have again stalled are weighing on sentiment and weakness in the Pound is lifting the U.S. Dollar.

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U.S. benchmarks have worked themselves off the worst of the overnight session. On a positive note, data from China last night showed a surge in Exports; 21.1% YoY versus 12% expected. For face value, this embodies a global economic rebound which should only be a positive. Not so fast, Imports by China came in at 4.5% versus 6.1% YoY and the Trade “imBalance” reached a record of $75.42 billion. This reinvigorates trade war worries just as the White House plans to impose sanctions on Chinese officials tied to actions with Hong Kong.


Technicals: The strong technical landscape is undeniable; in unison, all four major U.S. benchmarks traded to and closed at a record high on Friday. Furthermore, each set a fresh record last night before retreating. This is what a bull market looks like. Although those breakouts occurred on the weekly close, we still must see them solidified through the start of this week. How will this take place? Continued strength of course. Major three-star support in each the S&P and NQ brings a floor at 3662-3664.50 and 12,450-12,462. These levels are close to the market and continued action above here remains immediate-term healthy, paving the way for a continued strength. The S&P has overhead resistance at Friday’s settlement of 3698 and then 3706 which capped the overnight rally, however, such aforementioned construction points to a near-term target of 3729.75-3731.75. With all of this said, we are conscious of a gap in the S&P at 3623.25 that has not been filled.

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Bias: Bullish/Neutral


Resistance: 3698**, 3706**, 3729.75-3731.75***, 3749**, 3768**, 3829.75****


Pivot: 3687


Support: 3662-3664.50***, 3655**, 3642**, 3623.25***, 3612.50**, 3606.75**, 3588-3592**, 3576***

NQ (December)


Resistance: 12,540*, 12,754**, 12,861***, 12,968***, 13,314****


Pivot: 12,510


Support: 12,450-12,462***, 12,397-12,408**, 12,334-12,350**, 12,249-12,277***, 12,152**, 12,062-12,098***

Crude Oil (January)


Last week’s close: Settled at 46.26, up 0.62 on Friday and 0.73 on the week


Fundamentals: Crude Oil retreated from Friday’s settlement along with other risk-assets as the U.S. Dollar strengthens. China’s Import data threw cold water over the risk-landscape as it reinvigorates trade war worries between the U.S. and China just as the White House plans to sanction Chinese officials tied to actions in Hong Kong. All was not negative amid China’s November Trade Balance given the surge in Exports and furthermore data that showed China imported 11 mbpd of Crude Oil compared to 10 mbpd in October. Price action has also battled to hold ground terrifically on the heels of OPEC+ announcing last week it will add 500,000 bpd in production at the turn of the year.


Technicals: The overnight low in Crude Oil pinged major three-star support at 44.97-45.30 with a low of 45.36. So far, price action has responded in a very healthy manner. Friday’s high was 46.68 and major three-star resistance at 46.42 kept a lid on the rally, but if price action can regain our momentum at 46.00 today it sets the stage for continued gains in the near-term and a push through resistance as Crude eyes the psychological $50 mark. We remain Bullish in Bias across all timeframes as long as today’s early low and major three-star support hold.

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Bias: Bullish/Neutral


Resistance: 46.42***, 48.66-48.88**, 50.00***


Pivot: 46.00


Support: 44.97-45.30***, 44.57-44.60**, 43.33-43.83***, 42.15-42.42***

Gold (February)


Last week’s close: Settled at 1840, down 1.1 on Friday and up 51.9 on the week


Fundamentals: Last week was magnificent for Gold and we may sound like a broken record, but the washout could not have been scripted any better. All things considered, it was a rational and controlled washout. When markets move like they did earlier this year in March or August (metals and stocks) that is irrational and the probabilities favor continued losses or gains, therefore we get exacerbated moves. Gold’s move two and three weeks ago was not that irrational and last week’s rebound proved such.

The U.S. Dollar was paramount last week in aiding Gold’s recovery. Whereas continued losses for the Dollar will lift Gold through resistance, traders want to be on the lookout for a breather. A consolidation for the Dollar right as Gold retests the scene of the crime resistance will be pivotal through the star of the week.

Phillip Streible’s Friday metals article, Gold/Silver: the fork in the road.

Bill Baruch laid out a trade in Gold on CNBC’s Futures Outlook on Thursday, a buy a 1825.


Technicals: Gold’s overhead resistance is very known, this previous support, now resistance, rare major star level comes in at 1843-1854. This is a wide range and Gold must close above here in order to begin true repair of the damage that took place two weeks ago. The near-term range is defined, major three-star support comes in at 1820-1825 and aligns the 200-day moving average with other technical indicators. This level was pinged early, and Gold responded. We must see a close outside of these two levels in order to have a near-term directional move. We are intermediate to long-term Bullish in Bias at these levels but remain cautious for now.

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Bias: Neutral/Bullish


Resistance: 1843-1854****, 1870-1878***, 1890-1894***


Support: 1820-1825*** 1810.5**, 1801.1-1803***, 1788.1-1793***, 1767.2-1770****


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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.

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