E-mini S&P (June) / NQ (June)
S&P, yesterday’s close: Settled at 4162.50, up 44.50
NQ, yesterday’s close: Settled at 14,014, up 215.25
Fundamentals: Everything was green yesterday, stock benchmarks, Treasuries, Gold, and even the U.S. Dollar. This is what you get amid rising geopolitical tensions and an uneven global rebound. After a healthy consolidation Wednesday, U.S. benchmarks were back at it yesterday and now look to finish a strong week at the onset of earnings season. The White House announced sanctions on Russian individuals, organizations, diplomats, closed the Russian Embassy in Washington, and banned U.S. banks from dealing with new Russian sovereign debt. The inherent geopolitical uncertainties alone would be enough to bring a steadfast safe-have bid to the U.S. Treasury complex, but the 30-year Bond gained 1.35% in the face of blow out economic data! Core Retail Sales were +8.4% MoM, the highest since last May’s record when the first stimulus checks were sent, Initial Jobless Claims hit a pandemic low, and NY Empire State and Philly Fed Manufacturing were both essentially at pandemic highs. In a normal world, yields would be making new highs. However, there are a few important facts to digest along with those geopolitical tensions. First, we have been calling the late February through early March move in Treasuries a capitulation and this is the bounce. Second, according to CPI earlier this week, inflation is contained and coupled with dovish Fed speak it suppresses yields. Also, the rest of the world is not recovering from the pandemic as quick as the U.S. (and China), nor is their vaccine rollout as good. The spread between U.S. and German 10-year yields are back to pre-pandemic levels. The Treasury auctions earlier this week were met with steady foreign buying, especially from Japan, the largest foreign holder, who just started a new fiscal year on April 1st. This reprieve in Treasury yields is just the adrenaline shot that Tech needed. The NQ is at a record high and the S&P is closing in on our intermediate-term target of 4186.
On the economic calendar, 18.3% YoY Q1 GDP from China last night disappointed. Overall, the dataset underwhelmed with GDP and Industrial Production, the two most closely watched figures, both falling short of expectations. However, Fixed Asset Investment and Retail Sales did beat, and Unemployment ticked down to 5.3% from 5.5%. In the U.S. Building Permits and Housing Starts topped expectations this morning and fresh Michigan Consumer data from April is due at 9:00 am CT.
Technicals: Yesterday was strong and price action is firm heading into the intraday session. The S&P is nearing our intermediate-term upside target of 4186 and the NQ is attempting to clear major three-star resistance at 14,035, a level that we have had for months as a headwind before the index ran out of gas in February. The beautiful thing here is that the S&P and NQ are working together; the NQ did a lot of the heavy lifting in the prior week but slowed as it neared its record high. This week the S&P’s breakout towards 4186 has done a lot of the heavy lifting and we believe a close above 14,035 in the NQ will then allow it to take the lead for another 2%. Additionally, the Russell 2000 has a near-term down-trend line going back to the March 15th high. Price action here is testing this line at 2265, and the high of the week is 2273.5 (when the line was higher); a close above major three-star resistance at 2265-2273.50 sets up for a strong move higher. We remain very Bullish in Bias but are prepared to see a healthy pullback or consolidation. Still, continued price action above 4152-4156 in the S&P and 13,964-13,980 in the NQ points to a strong session.
Resistance: 4186***, 4200**
Support: 4139.75-4144**, 4127.50-4131**, 4113.75-4119.50***, 4099.25-4101.25***, 4086.75**, 4067.25-4070***
Resistance: 14,035***, 14,274-14,286****, 14,472-14,533***
Support: 13,923**, 13,772-13,829***, 13,732**, 13,655**, 13,564-13,604***
Crude Oil (June)
Yesterday’s close: Settled at 63.51, up 0.29
Fundamentals: Crude has extended this week’s breakout to new heights despite underwhelming data from China last night. Here yesterday, we cited Crude Oil’s early underperformance being driven by uncertainties related to the White House’s impending sanctions on Russia. By some consideration, the sanctions announced yesterday were not as bad as feared. Remember, Russia wants to bring production back, but has honored its OPEC+ pact. However, it is feared that if forced by tensions with the U.S., they could raise production and hurt the price of Oil. Politically, the White House arguably wants higher Oil prices in order to drive more demand for green energy and such would erode. On the other side of the coin, Russia presence at the Ukrainian border coupled with rising tensions in the Middle East, Yemeni rebels continue to launch missiles at Saudi Oil facilities, the geopolitical case for higher Oil prices is certainly there and this could add a premium into the weekend. Lastly, the U.S. Oil Rig Count is at the highest level in a year, the Baker Hughes Rig Count data is due at noon CT.
Technicals: Price action has broken north of its month-long consolidation phase, but now faces steady overhead resistance as market participants digest a new range. Crude Oil settled right at major three-star resistance yesterday at 63.47 and strength overnight fell shy of major three-star resistance at 64.16. Ultimately, we did not expect price action to rip through these levels without some consolidation at minimum or back and fill at maximum. Our momentum indicator has now caught up with 63.47 and this can signal some exhaustion, but as long as Crude generally holds out above minor support aligning with its initial spike on Tuesday, the tape is very bullish.
Resistance: 64.16***, 64.96-65.20**
Support: 63.25*, 62.61**, 62.25**, 61.52-61.98***, 60.24**, 59.50-59.75***
Gold (June) / Silver (May)
Gold, yesterday’s close: Settled at 1766.8, up 30.5
Silver, yesterday’s close: Settled at 25.38, up 0.44
Fundamentals: Gold and Silver are extending their run into this morning, but one cannot ignore the overhead levels of technical resistance. Let’s get to the fundamentals here; Treasury strength (discussed in the S&P section) and U.S. Dollar weakness this week on the heels of contained Core CPI on Tuesday was just what the precious metals complex needed. Additionally, Gold has received an adrenaline shot on a Reuters report (confirmed by other sources) that China will now allow domestic international banks to import large amounts of Gold. China is the worlds number one consumer of Gold, but the PBOC only allows just enough to meet demand to be imported. Amid a steadfast recovery from the pandemic, demand is surging. Now, China is raising its quota to the largest level since 2019. These are the much-needed tailwinds the space was begging for.
Technicals: It is easy to get excited about the rip higher this week, but as Gold tests into our rare major four-star resistance and Silver approaches its 50-day moving average, this is where you want to make sure to capitalize and reduce your position at minimum. From here, we would expect some consolidation at minimum or back and fill at maximum. Still, price action is out in front of our momentum indicators, at 1765 for Gold and 25.95 for Silver; above here the bulls are in the driver’s seat in the near-term. However, do not forget that Gold is in an intermediate-term downtrend, although a long-term uptrend.
Resistance: 1778.4-1788****, 1800
Support: 1756.1-1759.9***, 1746.7-1747.1**, 1732.3-1734.7**, 1728***
Resistance: 26.14-26.35***, 26.89***
Support: 25.70-25.91***, 25.02-25.13**, 24.70-24.78***
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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.