E-mini S&P (March)
Yesterday’s close: Settled at 3369.25, down 11.75
Fundamentals: U.S benchmarks bounced back yesterday to finish on solid footing. Stronger than expected February NY Empire State Manufacturing certainly soothed early worries created by Apple’s sales warning. Apple halved losses to finish -1.83% and still, other tech behemoths covered it’s back; Facebook +1.69%, Microsoft +1.01% and Amazon +0.97%. In fact, the NQ is within a whisper of setting a fresh record for the 11th session in a row. Another cornerstone story yesterday was Walmart. This is the largest retailer in the U.S and the U.S consumer is the most crucial component of not only the U.S economy but that of the globe. The company missed earnings estimates before the bell on disappointing holiday sales. After initially trading lower, the stock quickly snapped back ahead of the open and finished +1.48%.
With Apple’s warning all but ignored and yesterday’s data exuding a recovering manufacturing sector, all is well. Not so fast. As investors chase risk-assets in a yield-hungry stupor, safe-haven assets are signaling a different narrative. Yesterday, the yield of the 10-year Note finished below the yield of the 3-month Bill. This inversion absolutely does not signal all is well. Additionally, the 30-year Bond yield is trading below levels from January 31st – February 3rd, when the Coronavirus panic was hitting near-term pinnacle. By the way, the 30-year is 10 basis points from a record low. Then there is Gold which has gained more than 1.5% already this week.
As hopes of additional Chinese stimulus continue to prop-up risk-assets, don’t worry, Fed officials are here to help us understand. The Minutes from the January meeting are due at 1:00 pm CT. Cleveland Fed President Mester, a 2020 voter speaks at 7:30 am CT along with Atlanta Fed President Bostic. Minneapolis Fed President Kashkari, a 2020 voter, speaks at 10:45 am CT. Dallas Fed President Kaplan, a 2020 voter, is at 12:30 pm CT. Richmond Fed President Barkin follows at 3:30 pm CT. We also look to PPI and Housing Starts at 7:30 am CT.
Technicals: The tape is again firm and the NQ is again eyeing a fresh record high. We view the S&P levels as more crucial through today’s session in helping dictate whether yesterday’s late strength is the beginning of the next leg and one that would lead to 3412. First key resistance is ... Please sign up to receive our entire technical outlook, actionable bias and proprietary levels by email each morning.
Crude Oil (April)
Yesterday’s close: Settled at 52.29, down 0.03
Fundamentals: Crude Oil is at a two and a half week high as hopes of additional Chinese stimulus, a sharp drop in European storage and a strong NY Empire State Manufacturing read yesterday lift price action. Despite the Covid-19 death toll topping 2000, uncertainty lingering and the market losing 3 mbpd of Chinese demand - a slowing pace of infections and hopes that China makes the correct moves to offset such demand destruction are driving a bullish wave. Yesterday, Crude Oil tested $51, but sentiment quickly began to turn after the manufacturing read and on reports that China may grant tariff exemptions on U.S Oil and LNG. Inventory data will quickly be added to the picture and early estimates are for a build of more than 3 mb of Crude with the products doing very little to offset that addition. Refinery Utilization has been below 90% for three weeks running now and given such, builds in Crude that are not followed by draws in the products echo that demand destruction.
Technicals: Buyers stepped in on the inability of Crude Oil to chew through first key support yesterday at 51.07. The reversal and strong finish to the session has ignited a near-term bullish tailwind that is now being met by strong major three-star resistance at ... Please sign up to receive our entire technical outlook, actionable bias and proprietary levels by email each morning.
Yesterday’s close: Settled at 1603.6, up 17.2
Fundamentals: Gold is surging higher and we believe quietly in the driver’s seat is the yield curve inversion. In the face of a rising Dollar, the Dollar Index poked its head to the highest level since 2017, we find the 10-year Note yield trading below the 3-month Bill yield as fueling Gold. We’ve discussed the many times before how we find the yield curve inversion narrative as a very powerful bullish signal for Gold. Furthermore, the metal has stretched higher in the face of stronger than expected NY Empire State Manufacturing. Today, we have PPI and Housing Starts at 7:30 am CT and a deluge of Fed speak to accompany the Minutes from January’s meeting released at 1:00 pm CT. Cleveland Fed President Mester, a 2020 voter speaks at 7:30 am CT along with Atlanta Fed President Bostic. Minneapolis Fed President Kashkari, a 2020 voter, speaks at 10:45 am CT. Dallas Fed President Kaplan, a 2020 voter, is at 12:30 pm CT. Richmond Fed President Barkin follows at 3:30 pm CT.
Technicals: Gold broke out above major three-star resistance at 1594.7-1598.5 yesterday to settle above 1600 for the first time in nearly seven years. We find Gold to be very Bullish above 1604, however, do not suggest chasing the metal into major three-star resistance at ... Please sign up to receive our entire technical outlook, actionable bias and proprietary levels by email each morning.
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