Morning Express

E-mini S&P (September)

Last week’s close: Settled at 3059.50, down 38.50 on Friday and up 35.75 on the week

NQ, last week’s close: Settled at 9923.50, down 59.50 on Friday and up 291.25 on the week

Fundamentals: On Friday’s quadruple witching, U.S. benchmarks posted session highs at the opening bell; upon the expiration of June futures and options. After trading lower into the close, price action gapped down on the open Sunday night. In similar fashion to one week ago, negativity quickly dissipated and European hours brought a wave of buying. The S&P has traded more than 2% from its opening low.

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To end the week, fears that Covid-19 is reemerging weighed on the risk-appetite. Cases were budding in China and through the southern U.S. states. Additionally, quadruple witching was an unwinding of bullish positions and worked to exacerbate such sentiment. Coming out of the weekend, news of the virus being contained in China helped turn things. Furthermore, hopes of stimulus measures from Europe have continually lifted markets and overnight was no different. Although the DAX is still red, it is well off the opening lows. Still, headwinds persist, a continued uptick in new U.S. cases, a reemergence in Germany and a worsening situation in South America.

The week ahead is sprinkled with Fed speak. Today, we look to Minneapolis Fed President Kashkari, a 2020 voter at 5:30 pm CT. Chicago Fed National Activity turned positive this morning for the first time in three months; this was an abysmal number even before the pandemic. U.S Existing Home Sales are due at 9:00 am CT along with European Consumer Confidence. ECB and German Bundesbank members speak throughout the day. Tomorrow brings closely watched Flash PMIs, which for headline value, are beginning to normalize.

Technicals: Price action in each the S&P and NQ trekked lower into levels of key support. For the S&P this was 3023.75-3037, a wide range but our next level below major three-star support at 3062-3072.25. Friday’s intraday low essentially held that three-star and is set to be above there for the opening bell. Therefore, traders must keep a pulse on this pivotal level. Especially as price action remains steadily below our momentum indicator at 3089. For the NQ, it still has not pulled back much relative to its highs and recent ranges; the S&P has outpaced the NQ upon this healthy pullback. Price action is battling at our momentum indicator right at 10,000 and steady price action above here will help set a tone across indices despite overhead resistance levels. Overall, there is a bull-flag-like pattern developing. The positioning impact of such pattern, slight lower lows and slight lower highs creates trapped bears and fresh buying upon a move higher that fuels a breakout.

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Bias: Neutral/Bullish

Resistance: 3098-3107**, 3118.50-3120*, 3128-3130.50*, 3150.50**, 3175.50***, 3216.75-3220.50***

Pivot: 3089

Support: 3062-3072.25***, 3023.75-3037**, 2986.25-2993.75***

NQ (September)

Resistance: 10,035**, 10,073.25-10,098***, 10,140**

Pivot: 10,000

Support: 9945.25**, 9837-9845.25**, 9754.25-9788.50***, 9600-9632.25***

Crude Oil (August)

Last week’s close: Settled at 39.83, up 0.78 on Friday and yup 3.32 on the week

Fundamentals: Crude Oil snapped back from a heavy wave of selling Friday and the August contract poked its head back above $40 overnight. Risk-sentiment is broadly better and feeding off reports that new Covid-19 cases in China have been contained. On Friday, Baker Hughes reported a drop of 13 rigs and this comes on the heels of EIA estimating a drop of 600,000 bpd in production for the prior week. Headwinds continue to be OPEC+ compliance at the onset of July, the last solidified month for the pandemic cuts and a continued reemergence of virus cases in the U.S., Germany and South America that invigorate fears of a second wave.

Technicals: Friday’s sharp pullback was relatively shallow, and this has left our momentum indicator tethered near $40. Although while trading below 39.78-39.85 leaves the tape vulnerable to waves of selling, the overall pattern is very constructive. Still, Crude must close out above our Pivot to remain immediate-term constructive in painting a path of least resistance to 42.33. Only a break and close below 36.96 is negative in the near-term.

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Bias: Neutral/Bullish

Resistance: 40.69**, 42.33****

Pivot: 39.78-39.85***

Support: 39.05-39.36**, 38.51**, 36.96***, 35.79**, 34.66-35.05**, 32.89***

Gold (August)

Last week’s close: Settled at 1753, up 21.9 on Friday and up 15.7 on the week.

Fundamentals: Gold finished last week on a very strong note and continued that push early last night. Despite ping-ponging around a bit, the tape remains elevated and attempting a push above previous highs and to $1800. Silver remains a laggard but has regained $18 and has a technical tailwind developing. The reemerging virus fears have played a supportive role in the metals complex, and if the fears continue to percolate we imagine it fueling the next leg. However, in the thick of such playing out, a wave of deflation will act as a sturdy headwind. Dovish Minneapolis Fed President Kashkari, a 2020 voter speaks at 5:30 pm CT. Existing Home Sales are due at 9:00 am. Tomorrow, we look to Flash PMI data.

Technicals: The close out above major three-star resistance at 1737-1743 paves a path of least resistance higher and this now comes in as strong support. Gold traded to a high of 1776.7 early last night and pared all gains. Friday’s settlement of 1753 acted as support and constructively helped the market turn higher once again; this now brings a higher line in the sand on the session. Our momentum indicator comes in at 1758-1761 and above here the bulls are in the driver’s seat on the session. Silver is the wildcard and the 50-day moving average is creeping up on the 200-day; we expect this Golden Cross to create a tailwind higher and help fuel Gold through $1800.

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Bias: Bullish/Neutral

Resistance: 1776.7**, 1785-1800***

Pivot: 1758-176

Support: 1753**, 1737-1743***, 1723-1726.8***, 1714.2-1716.6*, 1704-1705.8***

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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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