E-mini S&P (June) / NQ (June)
S&P, last week’s close: Settled at 4225.25, up 31.00 on Friday and 51.75 on the week
NQ, last week’s close: Settled at 13,709.75, up 112 on Friday and down 140.25 on the week
Fundamentals: Friday’s jobs report, or lack thereof, was a surprise to everyone. Many could have predicted a bad number, but not by nearly 900,000 jobs. Yes, when you combine April’s whiff and March’s revision, Friday’s Nonfarm Payroll report was the largest miss in history, by 858,000 jobs. What does it mean? It certainly signals there is more work to do in this recovery than thought one week ago and overshadows hopes of a larger stimulus that deters individuals from needing to work. More than anything, for now, it certainly suppresses the taper talk. Although Treasuries struggled to hold gains and the 30-year Bond actually finished in the red due to the expectations of risk-on, the U.S. Dollar Index plunged by 0.75%. With the prospects of a Fed taper now on hold, U.S. Dollar weakness remains one of the most relevant themes. For the last 12 months we have coined the U.S. Dollar as the sacrificial lamb to the global economic rebound. Is this the start of a fresh leg lower for the U.S. Dollar? The next couple days will help bring answers and we are eager to hear how the Fed is digesting Friday’s report.
Chicago Fed President Evans, a 2021 voter, is scheduled to speak at 1:00 pm CT. We may hear chirps from others off schedule today, but tomorrow brings a longer list of scheduled speeches. This includes NY Fed President Williams and Fed Governor Brainard, as well as other 2021 voters.
Technicals: The Dow has set a fresh record for the fourth straight session and the S&P its second. However, the NQ is trailing and stuck within a consolidation pattern after failing at major three-star resistance at the end of April at 14,035. Constructively, the NQ has held major three-star support and the breakout point from March 31st at 13,304-13,336. At the onset of a new week, this divergence is front and center. Can the Dow maintain its pace of gains without Tech joining the party? Regardless, with the NQ trading exactly in between 14,035 and 13,336 this morning, we do not think this 700-point, or 5% range will stick for long. Major three-star support does come in before the 13,336 level, at 13,570-13,597; this aligns Thursday’s close and a gap that has not been covered intraday, while out above here the NQ will build a constructive floor. Still, price action is below our momentum indicator aligning at first key resistance. The S&P is following the Dow in building its next bull leg. We now have major three-star support at previous resistance, at 4200.75-4203.25; while out above here we will begin reintroducing our Bullish Bias as the bulls are in the driver’s seat and pointing to 4256.50
Resistance: 4228-4232**, 4245.50*, 4256.50***, 4267**, 4301.50***
Support: 4211.25**, 4200.75-4203.25***, 4194.25-4195.50**, 4180-4186**
Resistance: 13,696-13,722**, 13,790-13,803***, 13,850**, 13,947**, 14,035-14,064****
Support: 13,631**, 13,570-13,597***, 13,462-13,490**, 13,304-13,336***, 13,090***
Crude Oil (June)
Last week’s close: Settled at 64.90 up 0.19 on Friday and 1.32 on the week
Fundamentals: Crude Oil opened higher last night on news of a ransomware attack on the largest fuel pipeline in the U.S. The attack took place late Friday and Colonial, the operator, has been working to restore activity. The timeline is still uncertain, but the attack comes at the onset of high summer demand and when commodities from Corn to Copper are surging. Gasoline for June opened higher by about 4% but quickly pared gains and settled in +1-2% overnight. Traders are cautious, fearing a speedier timeline to restore activity could also quickly crater prices, but headlines over the weekend pointed to the country being on the verge of $3 Gasoline for the first time since 2014. For now, the government has lifted restrictions to help move fuel supplies and this has also subdued the impact. This narrative, coupled with the broader commodity rally, will certainly drive the tape through today.
Technicals: Through last week’s wave of weakness, in the utmost constructive fashion, price action never settled below major three-star support at 64.41-64.55. Crude did trade to a low of 63.90, but buyers defended it in front of another big level at 63.43-63.69. All things considered, the strong close to the week exudes the broader uptrend. Price action has been contained by first key resistance and a big level overhead at 66.45-66.60 that rejected last week’s initial rally attempt. Still, while holding out above support and furthermore, our momentum indicator at 65.10, the bulls are clearly in the driver’s seat and we remain Bullish in Bias.
Resistance: 65.63**, 66.45-66.60***, 67.98**, 70.00***
Support: 64.41-64.55***, 63.43-63.69***, 62.91-63.04**, 62.47***
Gold (June) / Silver (July)
Gold, last week’s close: Settled at 1831.3, up 15.6 on Friday and 63.6 on the week
Silver, last week’s close: Settled at 27.477, unchanged on Friday and up 1.604 on the week
Fundamentals: Friday’s Nonfarm whiff added fuel to Gold’s best week since November, at +3.8%. Silver’s gains were muted on Friday, but it still notched its best week since December. Essentially, the jobs picture is right where we thought it was after the March report, an 8 million jobs deficit since the onset of the pandemic. It also mounts uncertainty to the trajectory of the recovery and thus suppresses the taper discussion. Gold and Silver will and have certainly been a benefactor here, but as we discussed in the S&P section, we are eager to see what the Fed thinks. After all, they have done a terrific job in driving and mapping this economic rebound. Today, Chicago Fed President Evans speaks at 1:00 pm CT, but tomorrow brings a deluge of speakers.
Technicals: Price action is firm, but we cannot ignore the thick area of resistance that Gold is running into. First, Gold surged through 1832, and this coupled with Friday’s settlement brings key support. Additionally, our rising momentum indicator at 1835 is our point of balance and the bulls are in the driver’s seat while above here, however, a move below both of these levels will signal some near-term exhaustion. Overhead, there is a trend line from the record high set last August coming in at 1850. Furthermore, the .618 retracement from that range comes in at 1843. Gold must close out above this in the next session or two, or faces waves of profit taking. Silver has cleared its next level of resistance at 27.63-27.68, this will act as a point of balance today and the bulls are in the driver’s seat while out above here.
Resistance: 1843-1850****, 1881**, 1894.5***
Support: 1831-1832.2**, 1817.6-1822**, 1796.3-1800***
Resistance: 28.47-28.55***, 29.36***
Support: 27.47**, 27.24**, 26.68-26.89**, 26.10-26.16**, 25.92-25.97***
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