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

S&P, yesterday’s close: Settled at 4107, up 48.25

NQ, yesterday’s close: Settled at 13,100.25, up 101.75

Fundamentals: We gave you the roadmap yesterday, we hope you capitalized; ‘U.S. benchmarks were ripe for a rebound, but do not chase into resistance’. Tech may not have led, but has so far on today’s session. This week’s selling was necessary as it allowed markets to refresh, but as we have discussed, the selling across Tech has been taking place for weeks. Right when yesterday’s rally became exhausted against resistance, the CDC relaxed its mask mandate for vaccinated persons and the market responded with enthusiasm. Ultimately, the market was looking for a reason to continue yesterday’s rally through the second half of the session and that certainly gave it the juice. So, what is behind today’s continuation?

What if we told you on Monday that Core CPI was +0.9% MoM and the yield of the U.S. 10-year was only 5 bps higher, would you have believed us? Leading up to Wednesday’s data, we called it just one number, just as March’s Nonfarm Payroll was just one number. Look back at our comments yesterday as we dissect how to trade the second half of the week. Remember, the Fed must see trending data in order to force their hand in speeding up a timeline to tighten. We have always looked at three being a trend but considering the Fed’s dovish rhetoric and acknowledging they will be reactionary behind the data, four could be necessary. Of course, the market will start pricing in a taper well before the Fed acknowledges such is around the corner. Ironically, the next three months get us through dismal base comparisons for inflation last year and will allow price spikes in some assets to unwind. We have been calling for backwardation to come out of Crude Oil and some of the Ags through the summer, in what would be a great display of transitory inflation.

Today, we look to Retail Sales data for April. March’s results were hot, only behind last May’s; each correlated with government stimulus hitting people’s pockets. Today’s data was ugly, reverting back to the mean; Core was -0.8% MoM versus expectations for a small increase of +0.7% and headlines numbers were flat. Although March’s results were revised even better, equity markets did not initially react to kindly to the poor results for April. Industrial Production is due at 8:15 am CT and fresh Michigan Consumer data for May follows at 9:00 am CT. Sunday night, China releases Industrial Production, Fixed Asset Investment, and Retail Sales for April.

Technicals: Price action is firm ahead of the bell, and the S&P has stuck its nose out above our next area of resistance at 4133.75. Given the 24-hour strength, our momentum indicators are trailing the tape significantly and this opens the door for a wider trading range on the session. Yesterday’s highs bring a point of balance and continued action above 4123.25-4126.75 will encourage added strength. However, traders must be aware that overhead major three-star resistance comes in at an intraday gap from Tuesday’s close at 4146. Our rising momentum indicator has started to align with yesterday’s close at 4107 and major three-star support at 4105.25-4109; a break below here will encourage added selling. Additionally, the NQ is testing into a significant area of rare major four-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 (June)

Yesterday’s close: Settled at 63.82, down 2.26

Fundamentals: Crude Oil is in rebound mode after some downside exhaustion against strong levels of technical support. Positive news on Chinese demand is buoying the tape ahead of Sunday’s deluge of economic data that include Industrial Production. Geopolitical tensions between Israel and Palestine remain high and another reason to look for added buoyancy ahead of the weekend. As we have noted, expectations for Colonial to resume flows took air out of the market, especially after the energy space failed to come anywhere close to the Sunday night opening spike. We remain upbeat across the space and will lean on pullbacks as a buying opportunity.

Technicals: Price action tested and held major three-star support yesterday and a trend line from the April low that we referenced here. We said, look for weakness as a buying opportunity, and we have now reintroduced a more Bullish Bias while price action holds above yesterday’s low. The tape is back above our momentum indicator and the bulls are in the driver’s seat while above ... 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 1824, up 1.2

Silver, yesterday’s close: Settled at 27.059, down 0.185

Fundamentals: Gold and Silver are both higher this morning and keying off a strengthening Treasury complex. Both asset classes found added support on the dismal Retail Sales data, which as conversely weakened the U.S. Dollar from its rebound. A soft read on Industrial Production has done the same. We now look to fresh May Michigan Consumer data. The precious metals complex has proven this week that its rebound is here to stick and that its ready to put the damage from earlier this year in the rear-view mirror. This certainly invites excitement, but we cannot ignore overhead technical headwinds. At the end of the day, despite the hot CPI read, Federal Reserve officials, as expected, have confirmed the Fed’s patience. Each day this week, including today, we have written on this topic extensively in the S&P/NQ section.

Technicals: We are almost at a point to reinvite our more Bullish Bias on Gold and Silver, however, we must see Gold close out above rare major four-star resistance at 1843-1850. Yesterday’s response in front of major three-star support at 1798.4-1806 was excellent, and extremely quick, but proves that the bulls are back in the driver’s seat. While Gold again trades into this massive resistance, Silver has its own headwinds 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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