E-mini S&P (June) / NQ (June)
S&P, last week’s close: Settled at 3899.75, down 6.25
NQ, last week’s close: Settled at 12,844.50, up 64.75
Fundamentals: U.S. benchmarks are all trying to point higher ahead of the opening bell. Tech is broadly leading the way and the NQ up nearly 1%. Positive tailwinds are coming from AstraZeneca’s vaccine trial results in the U.S. The vaccine was suspended throughout the EU after concerns it caused blood clots. Trials across the U.S., Chile, and Peru showed the vaccine 79% effective with no link to blood clots. This comes after the European Medicines Agency confirmed similar findings last Thursday. Despite the upbeat news, it is important to note that Bonds are higher. On Friday, the Federal Reserve announced they will not extend the pandemic exemption on Treasuries when calculating bank capital requirements. The news pressured the complex, but neither the 10-year Note or 30-year Bond took out Thursday’s low and have now traded higher than before the announcement. A reprieve in rates would be a supportive tailwind to risk-assets, but some of the strength comes on the heels of news in Turkey where President Erdogan suddenly dismissed another central bank head. This time, after he raised rates more than expected. The Dollar gained as much as 17% against the Lira as the local stock benchmark fell 9.2% and yields on the country’s debt surged. This stew of news includes a somewhat expected Fed announcement forcing the last bit of bank selling in Treasuries coupled with a fresh, yet minor, catalyst for a bid; today’s price action will be crucial in helping to form a near-term bottom.
With Treasury volatility front and center, Fed Chair Powell graces markets with his presence for three straight days. Today may be the quieter of his appearances when he speaks on central bank innovation at 8:00 am CT. Tomorrow, he begins a two-day Congressional testimony along with Treasury Secretary Yellen. If he does not make an impact today, others certainly will have a shot. Richmond Fed President Barkin speaks at 9:00 am CT, San Francisco Fed President Daly at noon CT, Fed Governor Quarles at 12:30 pm CT, and Fed Governor Bowman at 6:15 pm CT. All are 2020 voters.
More micro, Kansas City Southern agreed to merge with Canadian Pacific in a $25 billion deal. We find the fresh M&A news to be a bullish tailwind, and especially so in a sector that acts as the heartbeat to the rebound in economic activity. Elsewhere, an already tight supply network of chips took another hit over the weekend due to a fire at Japan’s Renesas. Toyota is down 2.5%, but most chipmakers are higher on the session. Disclosure: Blue Line Capital owns Kansas City Southern, Micron and Marvell.
Technicals: Friday’s weakness was met with strong support, and price action responded. This alone has encouraged us to increase our Bias to be more Bullish and give this rebound from Friday’s low to carry higher. In the S&P, price action responded from rare major four-star support at 3876.25-3886.75 shortly after the bell but did struggle to trade out above the overnight high that now aligns to create our first wave of major three-star resistance at 3919.50-3926.75. Above there is another big level at 3939. The NQ responded to two waves major three-star support on Friday, briefly sticking its neck below 12,739-12,750 and turning in front of 12,580-12,615. The constructive groundwork laid Friday will likely build if the S&P can hold 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.
Crude Oil (May)
Last week’s close: Settled at 61.44, up 1.38 on Friday and down 4.19 on the week
Fundamentals: Crude Oil’s worst week since October was well overdue and brings a discount to our bullish long-term outlook. Still, there are several factors at play that cannot be ignored. Germany, Europe’s largest bloc, joins France in tightening lockdown restrictions through mid-April and New Jersey announced it will pause reopening plans due to an increase in cases. Additionally, last week, we pointed to uncertainties geopolitically between the U.S and China, Iran and Russia. In one instance, China has imported record amounts of sanctioned Iranian Crude it what feels like a test of the new administration in Washington. Russia has wanted to bring production back online for two months, but in another instance, they may push OPEC+ harder after President Biden called Russian President Putin a ‘killer’. A shade below $70 these factors made Crude Oil overvalued, but now closer to $60, we imagine they are priced in given the information we currently have at hand. This morning, Saudi Aramco CEO reiterated their bullish take on the Oil market after announcing they will maintain their dividend despite the drop in profits. The nation’s budget is very dependent on such payments. Will Russia’s motives diverge from that of the Saudi’s ahead of the April 1st OPEC+ meeting?
Technicals: Price action continues to rebound from Thursday’s bloodbath with a higher low Friday and so far today. Our momentum indicator comes in at 61.00 and allows for a point of balance, while price action is above here, the bulls are back in the driver’s seat. Traders must remember that this is a pullback within a very strong uptrend and a close above 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.
Gold (April) / Silver (May)
Gold, last week’s close: Settled at 1741.7, up 9.2 on Friday and up 21.5 on the week
Silver, last week’s close: Settled at 26.321, down 0.03 on Friday and up 0.412 on the week
Fundamentals: Gold and Silver are both lower on the session and some of the safe-haven bid found due to potential geopolitical tensions may have been sucked out by the positive AstraZeneca news. All things considered, Gold is still holding at a good level and it is Silver that has taken the larger beating. We find the sharper drop in Silver due to its inability to clear technical resistance, whereas Gold has cleared 1730 decisively; discussed more in the technical section below. Across the space, Platinum is also down sharply, and we find it at an attractive buy area once again. The Dollar Index is near unchanged, but the Dollar has broadly gained significant ground elsewhere, the Turkish Lira. Additionally, it has strengthened against the Yuan. This could be seen as holding the metals complex back. Treasuries are trying to rebound, but a potential tailwind to metals has likely been offset by the currency landscape. Fed Chair Powell this morning has so far touched on Decentralized Finance but will certainly touch on policy during his two-day Congressional testimony that begins tomorrow with Treasury Secretary Yellen. Today, Richmond Fed President Barkin speaks at 9:00 am CT, San Francisco Fed President Daly at noon CT, Fed Governor Quarles at 12:30 pm CT, and Fed Governor Bowman at 6:15 pm CT. All are 2020 voters.
Technicals: A solid session Friday after Gold’s response to major three-star support on Thursday reinvited a cautiously Bullish Bias. The action since has been stable for Gold, but Silver has certainly disappointed. The pullback into this morning has pinned each below our momentum indicator and in order to keep momentum going from Friday, Gold must clear 1732-1736 and Silver 25.85-25.90. Even upon such, their work is cutout for them. However, a break below ... 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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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.