E-mini S&P (March) / NQ (March)
S&P, last week’s close: Settled at 3834.25, down 11.75 on Friday and up 72.00 on the week
NQ, last week’s close: Settled at 13,361.50, down 34.00 on Friday and up 559.25 on the week
Fundamentals: The S&P and NQ are each pointing higher ahead of the open, however, it was the NQ and Russell 2000 that set fresh record highs overnight. Whereas the NQ is clinging to gains of about 1%, the Russell 2000 has turned lower on the session. As we look to the week ahead, froth certainly exists in some corners of the market, but as we have discussed many times, one cannot predict the market is broadly a sell just because it “feels” frothy. Of course, hurdles that could quickly exhaust the tape are lurking and it is our job to stay vigilant.
First and foremost, President Biden’s $1.9 trillion fiscal plan is seeing increased opposition. The new administration wants to establish leadership across Washington and is reaching for the 60 votes required in the Senate to pass major legislation. Mitt Romney, a Republican Senator, called the price tag “shocking”, especially directly after the $900 billion fiscal package in December. Even Democrats are requesting details to justify the monumental spending bill.
On Wednesday, the Federal Reserve concludes a two-day policy meeting. Although there is currently a zero percent probability the Fed even thinks about raising rates through June, the thought of tapering their unprecedented pandemic bond purchases did poke its head two weeks ago. This thought aided the last leg of the 10-year Treasury yield’s push to 1.18%, an eleven-month high. Rising yields could quietly and quickly become one of the stickiest headwinds for this market as 2021 unfolds. Bill Baruch joined CNBC’s Futures Outlook on Friday to take a look at the 10-year Treasury Note.
Lastly, the pandemic has slowed economic activity around the world; current and potential restrictions remain a clear headwind. However, on Friday, Flash PMI data from the U.S. handedly topped expectations. Still, the U.S. jobs picture has certainly deteriorated in recent months and many questions overshadow both the U.S. and Eurozone recovery. This morning German Ifo Business Climate and Expectations data all fell short of estimates.
The earnings and economic calendar are both more quiet to start the week but pick up as it unfolds. ECB President Lagarde speaks at 10:00 am CT and there is a 2-year Note action at noon CT. Tomorrow, we look to U.S. Consumer Confidence data and a deluge of earnings Microsoft, Johnson & Johnson, Starbucks, AMD, and more.
Technicals: Price action is firm with the NQ outperforming. Upon the sharp rise ahead of last Tuesday’s bell, we began the rhetoric that the NQ will rise 5% and test our next upside target of 13,523-13,538. With an overnight high of 13,508, our upside target has been achieved. In fact, this overhead resistance is slowing the tape and forcing the S&P, Dow, and Russell 2000 to consolidate back from overnight highs to unchanged and lower on the day. On Friday, the S&P checked and held major three-star support at 3817.75 and turned higher upon the opening bell. This level, coupled with 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.
Crude Oil (March)
Last week’s close: Settled at 52.27, down 0.86 on Friday and 0.15 on the week
Fundamentals: On Friday, Crude Oil held another test of major three-star support. Although this certainly invited buyers to pare the 3.2% loss, fundamentally, the market found tailwinds from blowout Flash PMIs and a virus curve that is beginning to turn lower. Such tailwinds certainly did not come from Friday’s surprise build of 4.351 mb of Crude, however, another sharp jump in Refinery Utilization has kept the market buoyant; the call for Crude has crushed expectations now for four weeks running. As we noted in the S&P section, there are certainly potential headwinds, and the most crucial is President Biden’s fiscal plan seeing rising opposition; traders must stay vigilant as the week unfolds.
Technicals: Crude Oil is going through what seems to be an elongated consolidation on the daily, however, if you look a bit closer through a weekly or scrunch up the daily, the slight lower lows and slight lower highs could be building a bull-flag-like market profile, trapping sellers at lower levels. Ultimately, major three-star support has refused to give, but we do maintain that there is exhaustion and we feel the market has little to no value at this level. Still, we will remain on the lookout for a bull-flag-like breakout. The bears must keep rally attempts contained 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 (February) / Silver (March)
Gold, last week’s close: Settled at 1856.2, down 9.7 on Friday and up 26.3 on the week
Silver, last week’s close: Settled at 25.556, down 0.298 on Friday up 0.69 on the week
Fundamentals: Gold and Silver are both gaining ground into U.S. hours and finding a tailwind from a higher Treasury complex (lower yields). However, the U.S. Dollar is stable, gaining ground both Friday and today. The Chinese Yuan fell 0.50% against the Dollar on Friday. On the economic calendar, strong Flash PMI encourages two narratives to collide; Gold will benefit if more stimulus is needed, but if the economy is stabilizing, it opens the door to inflation and for increased activity, thus demand of Silver and Platinum. In the week ahead, the Federal Reserve concludes a two-day policy meeting on Wednesday and will pin the Dollar and Treasuries front and center, opening the door for a potentially sharp move across the metals space.
Technicals: Although last week finished on a sour note, Gold and Silver have pared Friday’s losses. However, those losses rejected the potential outside bullish weekly candles. Furthermore, Gold never decisively closed above major three-star resistance at 1859-1864.9 and Silver never above 25.99-26.07 and we believe this ultimately left the door open for such late week selling. For Gold, this resistance level aligns with both the 50- and 200-day moving averages. We have adjusted this pocket to now hold last week’s high close. The good news is that today’s firm tape has price action out above our Pivots 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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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.