E-mini S&P (June) / NQ (June)
S&P, yesterday’s close: Settled at 4179.50, up 8.00
NQ, yesterday’s close: Settled at 14,011.50, up 84.50
Fundamentals: U.S. benchmarks are little changed ahead of the bell, but the S&P set a fresh record high overnight. Today unfolds into tomorrow’s Federal Reserve policy decision with a deluge of earnings and a busy economic calendar. Tesla reported earnings yesterday and the stock is down about 2% premarket. Although the company beat expectations, the numbers were watered-down by regulatory credits and profit on Bitcoin. This morning, UPS crushed expectations and has gained 7%. Raytheon topped EPS estimates, but revenues fell short. Still, the stock has gained more than 1% on better guidance and an increased buyback plan. HSBC beat top and bottom estimates and the stock looks to set a tone for the Financial sector, up +3.5%. BP also beat earnings this morning and announced it will resume share buybacks; the stock is up 1.5% and looks to set a tone across the Energy sector. Eli Lilly missed both and GE fell short on revenues, they are down ahead of the open. All eyes will be on Microsoft and Alphabet after the bell. Among others, Visa, Texas Instruments and AMD also report this afternoon. (Disclosure: Blue Line Capital owns UPS, RTX, Microsoft, and Google)
The Federal Reserve begins their two-day policy meeting today. Yesterday, we opened our discussion on the potential of signaling willingness to taper this year. Click here for yesterday’s post. Bill Baruch will be joining the TD Ameritrade Network at 1:30 pm CT today discuss stocks and the picture heading into tomorrow’s Fed decision.
On today’s economic calendar, we look to the Case Shiller Home Price Index at 8:00 am CT and Consumer Confidence at 9:00 am CT along with Richmond Fed Manufacturing. Dallas and Texas Services data follows at 9:30 am CT. Yesterday’s 2-and 5-year Note auctions, totaling $121 billion, saw overall average demand, but it is today’s dreaded $62 billion of 7-years that must be watched closely. In February, investors showed little demand for this intermediate-term debt, sparking a broader market selloff as yields surged to January 2020 levels and the closely watched 10-year hit a high of 1.56%. March’s 7-year auction showed little improvement.
Technicals: Price action across indices continues to press steadily higher. Still, there has been a clear pause at and around what was our intermediate-term upside target in the S&P at 4186. We find this level not only significant daily but for this week’s close. A clear close out above here will help confirm the next leg to 4256.50. We view 14,035 in the NQ similarly, which paves a way to 14,274-14,286. Our momentum indicators are tracking the steady rise and come in as our Pivot and point of balance for each; in the S&P this is 4180, and for the NQ this is 13,990. Pullbacks face strong levels of technical support and first key support for each brings Friday’s settlement with opening ranges or intraday lows from yesterday’s session. Although we are taking a more cautious approach after being very Bullish in Bias for a long period of time, the bulls are clearly in the driver’s seat while out above these first supports. However, a break below these supports could lead to tests of 4153.50 in the S&P and 13,750-13,776 in the NQ. Stay nimble.
Resistance: 4186***, 4200.75**, 4211.25**, 4220-4228***, 4256.50***
Support: 4171.50-4173.25**, 4163.75**, 4153.50***, 4142.75-4146.25**, 4127.75**, 4118-4120.50***
Resistance: 14,035***, 14,144-14,196**, 14,274-14,286****, 14,418**, 14,472-14,533***
Support: 13,902-13,927***, 13,840-13,865**, 13,750-13,776***, 13,700**, 13,604-13,641***, 13,505***
Crude Oil (June)
Yesterday’s close: Settled at 61.91, down 0.23
Fundamentals: Crude Oil climbed out of an early hole yesterday, underpinned by strong levels of technical support and a buoyant risk environment across commodities (Copper and Agricultures). Price action has extended gains back to the highest level in a week with tailwinds also coming from BP’s confidence in the space by announcing share buybacks and as geopolitical tensions remain high after reports that Saudi Arabia foiled a potential attack off Yanbu. Added strength also comes as OPEC+ technical experts raised their demand forecasts ahead of the JMMC, which comes before tomorrow’s official OPEC+ meeting begins. The improved forecast is two-sided and would bring a bullish tailwind if OPEC+ decides to delay production increases. Remember, as we noted here yesterday, virus uncertainties remain high in India and Japan, the number three and four consumers of Crude Oil. Although this could warrant a delay, Russia may have other plans. U.S. weekly inventory data will begin to hit the tape through today with the private API survey at 3:30 pm CT.
Technicals: Price action responded yesterday to first key support aligning with the lows from last week and in front of a crucial level of major three-star support at 60.00-60.24. Although sharp weakness early invited caution, the market’s resilience continues to prove our “buy the dip” mentality until a close below 60.00-60.24. Our momentum indicator is tracking the tape at 61.95 and aligns to create first key support with 61.74; the bulls are in the driver’s seat on the session while out above here but do face strong resistance out above the $63 mark.
Resistance: 62.49-62.70**, 62.94** 63.43-63.47***, 64.16***
Support: 61.74-61.95**, 60.61-60.83**, 60.00-60.24***, 59.69*, 58.77-58.96***, 57.29-57.75***
Gold (June) / Silver (May)
Gold, yesterday’s close: Settled at 1780.1, up 2.3
Silver, yesterday’s close: Settled at 26.209, up 0.134
Fundamentals: Gold and Silver are being buoyed by the broader commodity move, a relatively weaker U.S. Dollar over the last week, and a steady to higher trade in Treasuries. The Federal Reserve begins their two-day policy meeting today. Their steadfast rhetoric of patience until full employment and symmetrical inflation targeting certainly has helped precious metals and the aforementioned markets supporting them. As always, the Fed’s rhetoric will be dissected every which way tomorrow. However, for us, we trust the Fed will stay their course, and this pins a tremendous emphasis on job growth over the coming months, beginning with April’s report next Friday. For the metals, we may not get a fundamentally defining move tomorrow. Instead, it may be the expiration of Silver options today that helps lift the lid on price action. Keep an eye on this broader commodity environment, Copper, Platinum, Crude, and Agricultures. Another strong session today would likely be followed by added strength in Silver tomorrow. Also, traders should keep a close eye on today’s Consumer Confidence at 9:00 am CT and the 7-year Note auction at noon CT; if rates start moving higher, Treasury weakness, it will weigh on Gold and Silver.
Technicals: The rebound in recent weeks has been terrific, but the struggle in extending gains exemplifies the overhead damage created through February and March that both Gold and Silver must work through. Each is facing first resistance levels this morning and must continue to trade above our momentum indicators, aligning as our Pivots below, in order to find a path of least resistance higher on the session and invite added buying. For Gold, major three-star support at 1763.5-1769.8 has been critical in holding and building for the next leg, whereas the 50-day moving average aligns to bring strong support in Silver at the round $26 mark; we must not see a break below here.
Resistance: 1785-1787*, 1796.3-1800**, 1817.6-1822**, 1832.2***, 1865***
Support: 1763.5-1769.8***, 1752.7-1756.1****, 1736.3-1737.9***
Resistance: 26.47**, 26.74-26.89***, 27.63-27.68***
Support: 26.00-26.07***, 25.79**, 25.45-25.59***
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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.