Get the Dollar Correct; Stocks and Commodities | Morning Express
E-mini S&P (June) / NQ (June)
S&P, last week’s close: Settled at 4176.25, up 13.75 on Friday and 56.75 on the week
NQ, last week’s close: Settled at 14,029.50, up 15.50 on Friday and 200 on the week
Fundamentals: Last week gave us everything we could have asked for; contained inflation, a firm start to earnings season, strong economic activity, and our intermediate-term upside targets being achieved. This week’s economic calendar will not test last week’s supportive footprint until Friday’s Flash PMIs, but we dive headfirst into earnings season, and hear from both the Bank of Canada and the ECB ahead of next week’s FOMC meeting. Coca-Cola beat earnings expectations this morning, saying demand had returned to pre-pandemic levels, and IBM releases theirs after the bell (Blue Line Capital owns IBM). Tomorrow, six companies with a market cap of over $100 billion report, including Netflix. Now, there are some lingering negatives from last week. First, although the 7-day moving average of new cases has dropped for four straight days in the U.S., and likely will not drop for a fifth due to the weekend loll, case counts in India and other parts of the world continue to surge. The recovery is certainly uneven throughout the globe, but this has also brought a tailwind to the Treasury complex and thus Tech’s rebound to fresh records. Secondly, China’s economic data, although firm, both GDP and Industrial Production fell shy of expectations. This, in and of itself, does not yet call for concern, but must be monitored. All things considered, coupled with a contained Core CPI at 1.6% YoY, this affirms the Federal Reserve’s ultra-accommodative policy.
Technicals: The S&P achieved our intermediate-term upside target of 4186, and the NQ a crucial level of technical resistance at 14,035. We are certainly not turning Bearish in Bias on this historic uptrend, that is for brokers and inexperienced traders who have been calling for tops since S&P 3000 or sooner. However, we do believe a short-term pause makes sense. Such would allow the market to refresh its profile and attract fresh buying at better levels. In short, that has been the technical roadmap for months. Furthermore, if we do not book profits upon such upside targets being hit, then we are not traders, and instead passive, non-nimble investors. Price action this morning, for each the S&P and NQ, is below our momentum indicator. For the S&P, this is the first time since last Wednesday’s pullback ahead of the close. This signals some near-term exhaustion, and we are welcoming a pullback of 1-2%, and preparing for a pullback of 3-5%. The first big battleground major three-star supports now come in 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 (June)
Last week’s close: Settled at 63.19, down 0.32 on Friday and up 3.84 on the week
Fundamentals: For the third day, Crude Oil is consolidation at the very upper end of its Wednesday spike. Despite headwinds from a rising global Covid case count and Baker Hughes reporting seven added U.S. Oil rigs Friday, price action remains firm. The call for Crude from refiners and geopolitical premium are key factors underpinning the complex. Refinery Utilization ahead of the Texas freeze was steadily climbing from a tepid 2020 and has rebounded terrifically over the last six weeks following the freeze; refiners using Crude to create Gasoline in anticipation of strong summer demand. As for the geopolitical premium, there are many sides to the coin. Yemeni rebels have been firing missiles at Saudi Oil facilities, but there are rumors that Saudi Arabia and Iran have held secret diplomatic talks. Furthermore, there is noted progress in Iran nuclear talks. Still, tensions between Iran and Israel are assumingly running high. Additionally, the diplomatic impasse between Russia and the U.S. leaves many uncertainties. Lastly, with U.S. production steadily climbing, we are likely to see OPEC+ itch to bring production back online. Regardless, we find the landscape for the Oil market very supportive through summer.
Technicals: Crude’s rangebound consolidation at the upper end of Wednesday’s spike is extremely healthy. Although price action has struggled to settle out above major three-star resistance at 63.47, pullbacks have held first key support at 62.61, which comes in front of 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.
Gold (June) / Silver (May)
Gold, last week’s close: Settled at 1780.2, up 13.4, on Friday and 35.4 on the week
Silver, last week’s close: Settled at 26.105, up 0.141 on Friday and 0.78 on the week
Fundamentals: Gold extended its range to a high of 1790.4 this morning, but Silver has been more contained. This has been surprising for Silver given the broader move across commodities over the last week and a half. However, Industrial Production data from both China and the U.S. last week can help explain its underperformance. Still, news that we wrote about Friday, where China will increase import quotas of Gold and Silver for banks should prove supportive over the intermediate-term at the least. A steady bid in Platinum, Copper and Palladium to start the week is a healthy sign for the complex, but again, one that Silver has shaken off. The Dollar Index is down about 0.5% to start the week and the Chinese Yuan has gained 0.22% to trade at one-month highs. This, coupled with a steady trade in Treasuries and geopolitical concerns, brings broad support to precious metals.
Technicals: Gold briefly stuck its nose above rare major four-star resistance, a level that we have edited to now align with last week’s high at 1784.7-1788. The ensuing pullback is now battling at our momentum indicator at 1778-1780.2 and a decisive trade below here after the opening bell could easily pave the way for profit taking and a pullback into what is now major three-star support at 1756.1-1759.9. At the same time, although we do not expect a straight line, a close above rare major four-star resistance will allow Gold to begin repairing this year’s damage. As for Silver, it is lagging and struggling in front of major three-star resistance at 26.14-26.35. This level also happens to align with the 50-day moving average; if you have read our stuff over the years, you know we find the 50-day moving average extremely significant in Silver. Price action must chew through and close above this resistance, it is clearly battling waves of selling from bears who are defending such. Our momentum indicator comes in at 26.05 this morning; continued action below here will weigh on the tape. We are and have been Bullish Platinum and closely monitoring 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.
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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.