E-mini S&P (March)
Last week’s close: Settled at 3695, up 13.50 on Thursday and down 11.25 on the week
NQ, last week’s close: Settled at 12,704.50, up 53.25 on Thursday and down 8.00 on the week
Fundamentals: President Trump signed and passed the $2.3 trillion spending package nearly a week after balking at Congress for the many exorbitant earmarks they included. In the end, the government was facing a shutdown tomorrow and the $900 billion carved out for coronavirus aid was needed to extend unemployment benefits for millions of Americans. The relief package also allows for $600 stimulus checks to be sent, but the House will vote on an increase to $2,000 today. If it passes, the Senate will vote and likely shoot it down tomorrow. As for the markets, they love the maneuver; keep the Kool-Aid flowing. Three of four major U.S. benchmarks have hit fresh record highs, with only the Dow Jones lagging by a measly nine points.
In another holiday shortened week, the economic calendar is light. Today, 2-year and 5-year Treasury Notes will be auctioned. With the risk-on move across asset classes, Treasury yields are edging higher and the added supply between today and tomorrow’s 7-years could keep that trend intact. The 10-year looks to hit 1.0% for the first time since March 20th.
Technicals: Although we raised caution beginning December 18th, we explicitly said the path of least resistance is undeniably higher and kept a Neutral/Bullish Bias. Furthermore, we called dips a buying opportunity. Through this time, the S&P and NQ each never truly violated critical levels of support and the pullback allowed for the market profile to refresh and gather fresh buyers. Of course, the supportive fundamental backdrop from Washington has helped. Still, the S&P and NQ are each closing in on our respective upside targets. For the S&P, this is 3735.50-3737.50 and for the NQ, this is 12,861-12,897. Ahead of the open, the NQ is decisively out above previous resistance, this is now redefined as major three-star support; it aligns Thursday’s settlement, previous record high settlement and our momentum indicator. While out above here, the market is very bullish. As for the S&P, it is trading out above previous record closing highs and a level we defined as major three-star resistance at 3714.75-3718.75. First key support aligns our momentum indicator and a sticky area of previous resistance. While trading out above each of these levels, the tape is as bullish as it gets. Given that Monday’s should not be fought coupled with a fresh breakout, although we want to see supports continue to hold and a close that confirms, we are again outright Bullish in Bias.
Resistance: 3724**, 3735.50-3737.50***, 3756.50**, 3781.50-3788**, 3817.75-3827.50***
Support: 3704-3706.25**, 3695***, 3676-3680***, 3651-3657**, 3633-3635.50**, 3614.75-3623.25****, 3583.75-3596***
Resistance: 12,861-12,897***, 12,955-13,000***, 13,118-13,156**, 13,300-13,369***, 13,583**, 14,274****
Support: 12,704-12,751***, 12,623-12,655***, 12,572**, 12,434-12,462***, 12,368-12,388***
Crude Oil (February)
Last week’s close: Settled at 48.23, up 0.11 on Thursday and down 1.01 on the week
Fundamentals: Crude Oil is trading in the positive, but not incurring the bullish risk-on tailwinds seen by equity markets. Strong demand out of China continues to be the driving force towards $50 with data over the weekend, according to Reuters, showing imports from the U.S. hit 3.61 million tons. This is more than double their October imports of 1.625 million tons and nearly 14 times that from one year ago. The U.S. Dollar has been quietly trading at the weakest levels since mid-2018, the effects of which can be seen in such U.S. export data; a weaker Dollar makes the importing nation’s currency go further. Still, this is a China story more than a U.S. Dollar centric one. According to Reuters, China’s imports from Saudi Arabia in November were up 43% month over month. We look to Chinese Manufacturing data Wednesday evening, on the back of U.S. inventories. However, holding Crude back from fully joining the risk-on move are the continued reports, something we noted here last week, that Russia wants OPEC+ to add 500,000 bpd to the market beginning February 1st.
Technicals: With the psychological $50 barrier overshadowing what has been a magnificent recovery through 2020 and a terrific run since the November 2nd bottom that we called, it is tough for us to get behind Crude at these levels, right here, right now. We simply feel there are better asset classes to buy for the same purpose. However, there are ways to cheaply position and allow yourself upside. Please do not hesitate to contact our trade desk to discuss at 312-278-0500. Our Pivot covers Thursday’s settlement and our momentum indicator this morning; while above here, the bulls will remain in the driver’s seat across all timeframes. There are good levels of support below, but our caution does not allow for a major three-star support until $45.
Resistance: 48.66-48.88**, 49.24***, 50.00***
Support: 47.25-47.50**, 46.17**, 45.72**, 44.84-45.14***, 43.72-44.10***
Last week’s close: Settled at 1883.2, up 5.1 on Thursday and down 5.7 on the week
Silver, last week’s close: Settled at 25.908, down 0.013 on Thursday and 0.125 on the week
Fundamentals: We love nothing more than when fundamental, technical, and seasonal tailwinds work together at the same time. President Trump signed the $2.3 trillion spending package, $900 billion of which is money-printing fiscal stimulus. With the U.S. Dollar lingering at two and a half year lows, and Gold consolidating healthily just below its 2011 record high, we noted last week that bull season is underway. It is not too late to jump aboard, call our trade desk at 312-278-0500 so we can help define a trade plan for you.
In another holiday shortened week, the economic calendar is light. However, we do look to added Treasury supply as a potential headwind as it could buoy yields. However, with the news cycle more focused on that Treasury supply as a byproduct of money-printing fiscal stimulus, that narrative should take a back seat for the time being. The House will vote today on increasing direct stimulus payments for individuals to $2,000, however, it must get the Senate. Although this is a foregone conclusion, we will look to how the metals react tomorrow upon such.
Technicals: It is bull season for the precious metals complex, and they are acting according. Gold’s early overnight rip to a high of 1904.1 tested the lower sloping trend line from its August record high and retreated by $32. Silver too retreated by 0.70 after hitting our major three-star resistance ceiling at 27.12-27.28. Whereas Gold slipped below our momentum indicator that comes in at 1887 for a short period this morning, Silver has steadfastly remained above. We find this very supportive for Silver, as well as Gold’s recovery broadly supportive for the complex. We remain more Bullish in Bias, but we do want to see Gold close above the trend line and its swing high from last week at 1912 in order to attract fresh buying.
Resistance: 1878-1882**, 1890-1894***, 1915***, 1927**, 1964.7***
Support: 1883*, 1871-1873***, 1860**, 1848.2-1852.7***, 1823.5-1825***
Resistance: 27.12-27.28***, 28.01**, 29.23-29.38**, 29.91-30.36****
Support: 26.35**, 25.90-26.07***, 25.01-25.12****, 24.30***
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Blue Line Futures
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.