E-mini S&P (June)
Yesterday’s close:Settled at 3010.25, down 175.75
NQ, yesterday’s close: Settled at 9616.75, down 470.50
Fundamentals: Yesterday, U.S. benchmarks experienced their worst day since March, allowing some air to come out of the balloon. We do not hate the recent rally nor are we perma-bears. As a reminder, we have been cautiously Bullish in Bias for many pockets of time since the March lows and our sister company Blue Line Capital is a wealth manager. However, much of the recent price action has simply been irrational (blind buying, FANGDD, Hertz, etc.) and a cleansing is required. With markets snapping back a bit this morning, was yesterday it? We do not believe so. In fact, we have told clients over the last week to expect a head fake ahead of next Friday’s quadruple witching. There is no better time for the market to experience a cleansing than a heavily focused options and futures expiration. Furthermore, there is no better time to have this cleansing following such unprecedented and historical circumstances than during the largest options expiration in history. The Call Open Interest in the S&P is at record levels, surpassing that from February. Do not forget that although Friday February 21st was not a quadruple witching expiration, coming out of the Super Bowl rally the Call Open Interest mounted to a record. These expirations cause a positioning unwind and for those who are greedy, we call it a cleansing.
Data out of the U.K this morning was dismal. GDP fell by 24.5 YoY and 20.4% MoM. April reads for Manufacturing and Industrial Production also fell by 24.3% and 20.3% respectively. All of which are record drops. Something does not seem right with the morning’s tape when the British Pound gained 0.5% on the heels of the results. From the Eurozone, April Industrial Production was less-horrid than expected coming in at -17.1% MoM. From the U.S., we look to Import and Export Price Index at 7:30 am CT and fresh June Michigan Consumer data at 9:00 am CT. Richmond Fed President Barkin speaks at 9:00 am CT, he is a voter next year.
Technicals: Price action in the S&P traded through our first two waves of major three-star support but stopped at what was the most crucial; 2995.75-3010.50 aligns multiple technical indicators with the 200-day moving average. This level has so far held, and our momentum indicator has caught up with price action at 3060. Our Pivot today will help define if the bulls regain some near-term momentum, price action above ... Please sign up for a Free Trial at Blue Line Futures to have our entire technical outlook, actionable bias and proprietary levels emailed directly. Crude Oil (July)
Yesterday’s close: Settled at 36.34, down 3.26
Fundamentals: After settling below a critical level of technical support, price action simply flushed overnight to the next (more details in the Technical section below). Most risk-assets bottomed late in yesterday’s session; stocks in particular and not just those from the U.S. Even Copper held ground from the the U.S close through the Asian open before rallying. However, the energy complex flushed out once more at the Asian open before turning sharply. On the heels of a large Crude build, fears are budding that Covid-19 infections will surge. While positioning played a key role in yesterday’s weakness, the narrative of new infections is something to keep a close eye on as it could closely align with the next positioning event; July Crude options expire next Wednesday and the futures fall off on quadruple witching Friday. Lastly, OPEC+ compliance is reported to be only 79% and this is another narrative to focus on as we head into July.
Technicals: Price action slipped below major three-star support at 36.87 and the flush ensued overnight, trading down to 34.48 and pinging our next crucial level at 34.69-35.18. Our Pivot today is 36.55-36.87 and above there, the bulls are back in the driver’s seat eyeing a move to major three-star resistance at ... Please sign up for a Free Trial at Blue Line Futures to have our entire technical outlook, actionable bias and proprietary levels emailed directly. Gold (August)
Yesterday’s close: Settled at 1739.8, up 19.1
Fundamentals: At face value, Gold had a strong session. However, this was not the whole story. With Wednesday’s FOMC Meeting announcement after Gold’s settlement, price action surged late in the session and opened higher for Thursday. That higher open stalled and finished off by nearly 1%. Gold got swept away late as cash was likely raised for margin amid the bloodbath in stocks. Still, Gold is firm today and this is very encouraging. A strong finish to the week will complete a beautiful recovery amid supportive fundamentals from last week’s failure. We look to fresh June Michigan Consumer data at 9:00 am CT.
Technicals: The metal continues to trade in large ranges, and the pullback from failing shy of 1760 traded all the way down to major three-star support at 1723-1726.8. Price action settled at our major three-star pocket, a level that now encompasses our momentum indicator; the bulls are in the driver’s seat across all time frames while out above ... Please sign up for a Free Trial at Blue Line Futures to have our entire technical outlook, actionable bias and proprietary levels emailed directly.
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