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Managing the Risk-Range; Stocks, Crude, Gold | Actionable Analysis and Levels | Morning Express

E-mini S&P (December)


Yesterday’s close: Settled at 3544, up 43.25


NQ, yesterday’s close: Settled at 11,820.50, down 254.50


Fundamentals: The S&P set a record early yesterday but reversed sharply and failed to close out above its previous high as the risk-landscape digests a post-Covid world. Both Pfizer, for its vaccine, and Eli Lilly, for its antibody therapy, were granted Emergency Use Authorizations. The developments bring hope to a year-long pandemic battle, but the path to recovery is not so clear just yet. Although Pfizer’s vaccine has an above 90% success rate, questions on the length of its effectiveness persist. Furthermore, a Chinese vaccine, already used on hundreds of thousands of patients, was halted yesterday due to adverse effects and this threw cold water over the enthusiasm. President Trump promised an October surprise, but the developments came just one week removed from one of the tightest elections in history. We have been calling for a bull-run post-election, no matter who wins and as long as the country avoided a ‘blue wave’, as it removes uncertainties from the risk-landscape. Last week, the S&P’s +7.2% was its best since April when it dug out of a 36% plunge at the onset of the pandemic. Let us not forget that the tailwind continued Sunday night before the Pfizer news, on the heels of a strong jobs report. So, why the sharp reversal?

Banks, Industrials, Energies, and the hardest hit industries are holding strong, actually extending gains ahead of the bell. On the other side of the coin, Tech and Work-From-Home stocks are seeing air come out of the balloon. Has the glimmer of light at the end of the Coronavirus tunnel brought the much-anticipated shift from growth to value? Throughout the year, we protested each time this notion surfaced. However, now more than ever, post-election and with that glimmer of light, it is an optimal time to anticipate some reversion to the mean. In fact, we have written in recent weeks that our investment advisor Blue Line Capital favors adding to Banks and Energies for this very reason; yesterday’s top two performing sectors. If this shift is real, we are in store for added volatility.

It also cannot be ignored that our next resistance level, 100 points out above the previous record high, a level that stocks were pricing in the most optimal scenarios of all optimal scenarios, was too overzealous after a 7.2% surge last week and given the earnings recession. Furthermore, it is not a coincidence that risk-assets pulled in sharply as GOP leaders refused to acknowledge former Vice President Biden’s win and Attorney General Barr authorized the Justice Department to open inquiries to voting irregularities. Whether or not there is credence behind such irregularities, it prolongs the removal of uncertainties and the timeline for reinvigorating fiscal stimulus negotiations. All in all, it is another reason for added volatility.

On the economic calendar, JOLTs Job Openings is due at 9:00 am CT, there is a 10-year Note Auction at noon CT, Fed Governor Quarles speaks at 1:00 pm CT and Fed Governor Brainard follows at 4:00 pm CT.


Technicals: Yesterday, at the highs, we said, “there was an air-pocket and if you are not already long, do not chase this action. Furthermore, if you were long, think about locking in gains.” The tape has since come in sharply and Friday’s settlement coupled with the newly defined range from yesterday’s record creates a critical rare major four-star support at ... Sign up for a Free Trial at Blue Line Futures to have our entire fundamental and techincal outlook, actionable bias, and proprietary levels for the markets you trade emailed each morning.

Crude Oil (December)


Yesterday’s close: Settled at 40.29, up .15


Fundamentals: For the week ending last Tuesday, the Managed Money net-long position fell by 20% from two weeks ago. It is only fitting that yesterday’s surge higher brought the price of Crude Oil back to those levels. The tape, although firm, is battling for direction at the psychological $40 mark as risk-assets slipped late in yesterday’s session. Russia has brought a tailwind of strength over the last week as they were the first to signal their willingness to delay a production cut taper on January 1st. Saudi Arabia provided supportive comments yesterday before the Pfizer news. However, Russia’s Energy Minister Novak said this morning it is too early to talk about changes before the end of November JMMC meeting. Those comments may weigh on the complex if equity markets also trade heavy. The EIA Short-Term Energy Outlook is due this morning. Tomorrow is Veterans Day and Thursday will bring inventory data.


Technicals: We are cautious, however, very optimistic over the near, intermediate and long-term. We have held a more Bullish Bias on Crude Oil going back to last week and will continue to maintain such as long as price action holds above major three-star support at ... Sign up for a Free Trial at Blue Line Futures to have our entire fundamental and techincal outlook, actionable bias, and proprietary levels for the markets you trade emailed each morning.

Gold (December)


Yesterday’s close: Settled at 1854.4, down 97.3


Fundamentals: Yesterday, Gold had its worst day since 2013 and lost more than it on August 11th. Although price action is stable so far today, gaining more than 1%, probabilities do not favor a continued recovery before testing lower. Ultimately, the glimmer of light down the Coronavirus tunnel due to Pfizer’s vaccine and Eli Lilly’s therapy encourages speculation that the Federal Reserve will now have to do less. Even before the news, we anticipated the Federal Reserve to move up their timeline to raise rates to some time in 2022. Markets pricing this in is fine as it allows a wash out of weak hands and then lays the groundwork for a strong seasonal trade in December and into the first quarter. Furthermore, there is a lot of economic damage from the pandemic that has yet to be seen, and as horrible as it sounds, the damage will be a tailwind for Gold during that time. On Friday, we encouraged longs to pare positions. Today, we welcome lower prices as a long-term buying opportunity.


Technicals: The good news for the bulls is that yesterday’s selling held our rare major four-star support at 1845-1851 and now our momentum indicator has caught up with our Pivot at 1877.1-1880. It reaffirms this level as a battleground through today and continued action above here will lay groundwork for a rebound that could then work to repair yesterday’s massive damage. This would start with a close above 1893 and then 1907. A close below 1845-1851 though opens the door for continued selling down to ... Sign up for a Free Trial at Blue Line Futures to have our entire fundamental and techincal 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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Futures trading involves substantial risk of loss and may not be suitable for all investors.