Jobs and the Fed's Message | Morning Express

E-mini S&P (June) / NQ (June)


S&P, yesterday’s close: Settled at 4194.25, up 34.25


NQ, yesterday’s close: Settled at 13,597.75, up 106.75


Fundamentals: Jobs, jobs, jobs. Today’s Nonfarm Payroll report at 7:30 am CT will help us extrapolate the Federal Reserve’s message last week and could provide some insight in tightening a timeline for taper talk. Expectations are for 978,000 jobs created in April. This comes on the heels of 916,000 in March, which still marked an 8 million job deficit since the onset of the pandemic. We have discussed this at length; given reopenings and summer hiring, it is reasonably expected to see 1 million jobs added for each of the next four months, but this still leaves the economy in a deficit of 4 million. The Fed has done a terrific job navigating the pandemic and with a soft landing so far. They certainly do not want to surprise the market with a taper. One of our themes is the Jekyll and Hyde test balloon. The committee’s message last week was as dovish as it could have been without introducing new policy measures. Like 2013, known hawks who do not vote this year will test the market’s resolve by probing it with a taper discussion. Dallas Fed President Kaplan did exactly that this week, he does not vote until 2023. U.S. Treasury Secretary Yellen, who does not make monetary policy, added that “rates may have to rise to keep the economy from overheating”. Boston Fed President Rosengren and Cleveland Fed President Mester, voters next year, both also acknowledged the coming inflation. Fed Governor Brainard pointed to excessive leverage, market vulnerability and elevated valuations. What we are getting at is the conversation has already started, it is the data that will speed things up. Fed Chair Powell, in his dovish comments last week, said he expects the Fed to be behind the curve and will react to the data. This is exactly why today’s report becomes so critical; a hot number well above 1 million jobs added, totally within the realm of possibility, when coupled with rising asset prices and the anticipation of inflation, “transitory or not”, signals the Fed may already be behind the curve.


Technicals: A strong close yesterday for U.S. benchmarks signals the next bull leg may be upon us. For the Dow, it has already begun; the index is eyeing its third straight record close. The S&P finished above 4186 and excessive negativity in the NQ seems to be dissipating after the bulls responded to major three-star support at 13,304-13,336, a level aligning with the March 31st breakout, for the second day in a row. A strong close today will open the door to 4256.50 in the S&P, if not already achieved, and retest to rare major four-star resistance in the NQ aligning our 14,035 level with the 14,064 record. The S&P settled at 4194.25 and this will bring first key support, but what matters most is the area in which it has spent most of the overnight. Major three-star resistance at 4200.75-4203.25; continued decisive action above here through the first hour of trade is bullish, and this will help signal whether a move to ... 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)


Yesterday’s close: Settled at 64.71, down 0.92


Fundamentals: Crude Oil has not traded as enthusiastically as other commodities on the heels of China’s Trade Balance data. Whereas Copper surged to a new record on data showing massive Iron Ore imports, that for Crude Oil was down 19% MoM in April. Additionally, Covid cases in India surged to a new daily record undermining a theme the curve there was plateauing. Still, Crude has so far posted a terrific week and a constructive consolidation at these levels should pave the way for added gains during this seasonally strong time of year. Jobs data will also be front and center. Although a rise in rates has not impacted Crude like other asset classes, traders should keep a pulse on the boarder risk-environment closing out the week.


Technicals: Price action is battling at major three-star support at 64.41-64.55 and this will be crucial in defining the immediacy of the new bull leg. Although a close below here does not damage the intermediate and long-term bullish prospects, it will encourage a longer dated consolidation into additional strong layers of technical support just below. Our momentum indicator comes 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.

Gold (June) / Silver (July)


Gold, yesterday’s close: Settled at 1815.7, up 31.4


Silver, yesterday’s close: Settled at 27.477, up 0.955


Fundamentals: Yesterday, Gold and Silver achieved the fresh leg breakouts we have been waiting for, but will today’s critical jobs data help support or reject the move? Nonfarm Payroll is due at 7:30 am CT and 978,000 jobs are expected to be added. Visit our S&P section to better understand the significance of today’s report and how it impacts the Fed’s timeline for tapering their bond purchases. As it pertains directly to Gold and Silver, if more than 1 million jobs were created in April, we are likely to see each pare a bulk of yesterday’s gains. It must be noted that strong Import data out of China via today’s Trade Balance does underpin strength across the metals space and Copper achieved a new record high overnight.


Technicals: Gold and Silver each moved to new swing highs since the March low but have tested into the next layer of technical resistance. Today’s very fundamental session will either support or reject the technical move. For Gold, there is still work to be done with key resistance at 1817.6-1822 capping the rally, and then rare major four-star resistance overhead 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.

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