It is All About the Dollar | Stocks, Energies, Precious Metals | Morning Express
E-mini S&P (March) / NQ (March)
S&P, yesterday’s close: Settled at 3791.25, down 12.50
NQ, yesterday’s close: Settled at 12,901, down 71.25
Fundamentals: U.S. benchmarks were primed for their next bull leg, but our major three-star resistance was having none of it. Yesterday, Fed Chair Powell added a bullish tailwind during his Q&A session. He reemphasized patience through symmetrical inflation targeting and how the economy must return to full employment, both of which could take a “couple of years”. However, the conclusion did not leave markets as enthused, adding that economic conditions could normalize sooner than expected. Still, it was not Powell so much weighing on the risk-appetite, but the drama in Washington. President-elect Biden unveiled his $1.9 trillion economic stimulus plan. Many were expecting a $2 trillion price tag and the market is concerned it is only revised lower from here. The real issue though is with the House’s impeachment proceedings, as we have said all week, this steals valuable time from fiscal negotiations. Although Democrats will have a marginal majority decided by Vice President-elect Harris, some measures will require 60 votes (not just 50) and Trump’s impeachment will certainly not help.
JPMorgan, Citigroup, and Wells Fargo kicked off Q4 earnings season this morning. JPMorgan and Citigroup did not disappoint and released some money set aside for bad loans, however, the enthusiasm in the lead up to their reporting was clear.
Today’s economic calendar certainly did not fall in line with last week’s blowout ISMs. Both headline and Core Retail Sales for December missed for the third month in a row, with November being revised lower. Also, NY Empire Manufacturing has clearly stalled, the fresh January read was the fourth miss in a row. PPI also came in lower than expected. We now look to Industrial Production at 8:15 am CT and fresh January Michigan Consumer data at 9:00 am CT.
Technicals: Yesterday, we increased our Bullish Bias and gave the tape a shot to breakout to new record highs. First, the Russell 2000 roared higher gaining as much as nearly 10% on the month, this comes on the heels of an +18.4% in November and +8.5% in December. However, the tape has retreated by about 2% from yesterday’s high at the onset of U.S. hours. As for the S&P, our 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.
Crude Oil (March)
Yesterday’s close: Settled at 53.62, down 0.66
Fundamentals: Crude Oil finished at its high of the session but did not get above Wednesday’s mark; for the new front-month March contract this was the highest in a year, for the continued front-month it was the highest since February 20th. Price action has reversed by 2% as the U.S. Dollar strengthens, drama in Washington slows hopes of fiscal measures and today’s slate of U.S. economic data severely disappointed. Within today’s landscape, risk-assets are set to be broadly tied to developments in Washington and the appetite for such risk ahead of the weekend. We continued to hold the belief there is value in low-risk defined but spreads from this elevated level.
Technicals: The tape is paring back the latest leg of gains and is trading decisively below our momentum indicator at 53.15 at the onset of U.S. hours. As we pointed to yesterday and through this week, we find the tape overextended and at a minimum expect a test of our first layer 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 (February) / Silver (March)
Gold, yesterday’s close: Settled at 1851.4, down 3.5
Silver, yesterday’s close: Settled at 25.802, down 0.23
Fundamentals: A combination of strong technical resistance and disappointment in Washington is weighing on the precious metals complex. Gold and Silver gasped for air yesterday afternoon upon comments from Fed Chair Powell but slipped due to revised and unenthusiastic expectations for President-elect Biden’s new fiscal plan. The hurdles to such have become higher for several reasons, mainly due to the House’s insistence of impeaching President Trump for the second time. Although another reversal is extremely disappointing for the bull camp, we must remind ourselves of the massive amount of technical damage we have been discussing and the headwinds such presents as the fundamental landscape evolves. For now, that evolution has allowed the U.S. Dollar to continue relieving itself from oversold and over-headlined territory. The first slate of U.S. economic data this morning, Retail Sales and NY Empire Manufacturing, severely missed expectations. This paints a longer-term supportive narrative for Gold, especially after yesterday miss on Initial Jobless Claims. However, Industrial Production improved, and this should be supportive to the likes of Silver (we still need to dive into the components to confirm though). We now look to fresh January Michigan Consumer data.
Technicals: Silver is getting slammed more than Gold this morning, but generally speaking, Silver has held ground much better over the last week. Each failed at major three-star resistance yesterday and last night, for Gold this is 1859-1864.9 and for Silver this is 25.75-26.09. Our momentum indicators have yet to catch up with this morning’s plunge, but continued action below 1848 in Gold and 25.50 in Silver does not bode well in the near-term and adds pressure on the tape. The good news is Gold has so far responded to first key 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.
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