E-mini S&P (March)
Yesterday’s close: Settled at 3065, up 114
Fundamentals: The recovery is underway, or is it? U.S benchmarks muscled another late surge yesterday. The tape has broadly held ground overnight and even poked its head higher. Furthermore, the S&P is out above a key technical level at 3050-3060 which in our mind paves a path of least resistance higher. Still, we are at an inflection point. How much of this is central bank driven? How much is a dead cat bounce? Or did the panic exacerbate the downside just as much as FOMO overshot true value and price action is simply finding an equilibrium. To be honest, it’s a bit of all three.
G-7 Finance Ministers and central bankers meet today to discuss an appropriate policy response to stave off a global recession. The Reserve Bank of Australia responded last night by cutting 25 basis points. ECB officials have all made headlines with their preferences. Yesterday, ECB President Lagarde said the bank is ready to act as necessary (mirroring Fed Chair Powell). France’s Finance Minister leaned on a fiscal response in comments this morning. As for the U.S Federal Reserve, it’s not a matter of if they will cut, it’s a matter of when and by how much. Odds are tethered to a 100% probability they cut 50 basis points by their March 18th meeting. The odds of another 25 bp follow-up cut in April have dissipated just slightly to a two thirds probability. Do we hear something from the G-7 meeting today? We aren’t expecting so, although we do expect jawboning. However, ISM Non-Manufacturing is due tomorrow. We’ve already voiced how we believe the Services PMI on February 21st was the straw that broke the camel’s back. A worrisome read might just be enough to force them act.
UPDATE: The G-7, as expected, did not announce any coordinated measures. More importantly; “They are monitoring the impact of Covid-19 and ready to use all appropriate policy tools to achieve strong, sustainable growth and safeguard against downside risks.”
Today, Cleveland Fed President Mester, a 2020 voter, speaks at 1:50 pm CT. Chicago Fed President Evans, not a 2020 voter, speaks at 5:50 pm CT.
Technicals: Price action is stable and for each the S&P and NQ, holding firmly out above crucial technical markers. For the S&P, this was major three-star resistance, now our Pivot, at 3051-3061.25. Our momentum indicator comes in below at 3037-3040. For the NQ this is now major three-star support at ... Please sign up at Blue Line Futures to receive our entire technical outlook, actionable bias and proprietary levels each day by email.
Crude Oil (April)
Yesterday’s close: Settled at 46.75, up 1.99
Fundamentals: As we noted here yesterday, the risk is to the upside in Crude Oil as risk assets firm on hopes of central bank easing and an OPEC+ production cut, but do not forget strong technical resistance. Yesterday’s ISM Manufacturing brought a sense of calm and allowed the two aforementioned narratives to play out. Analysts are expecting OPEC+ to cut the previously discussed 600,000 bpd with Saudi Arabia cutting an additional 400,000 bpd on their own. Ultimately, the total of a 1 mbpd cut is becoming priced in, whichever way you want to slice it. However, the wildcard becomes a continued sense of calm which then cools these production cut hopes by the end of the week. Amid this news, let’s not forget that inventory data will quickly come into the picture as this session unfolds.
Technicals: The overnight action is strong, gaining more than 2% and holding firmly out above our momentum indicator aligning to create first key support at 47.09-47.23. Furthermore, for the most part price action has held out above previous major three-star resistance at ... Please sign up at Blue Line Futures to receive our entire technical outlook, actionable bias and proprietary levels each day by email
Yesterday’s close: Settled at 1594.8, up 28.1
Fundamentals: Gold is trading healthily this morning and back above the psychological $1600 mark. Although risk-assets are gaining ground, Gold and safe-havens are attempting the same. Treasuries, are lower on the session, but are also well off the overnight lows in a sign of inability to move lower with continued uncertainty as to the impact of Covid-19 freshly lingering. Keeping such a bid under safe-havens is the 100% probability that the Federal Reserve will cut rates by 50 basis points by their March 18th meeting and the inaction by the G-7, as we expected, has not deterred such odds. The Reserve Bank of Australia did act last night by cutting 25 basis points. As today winds down, tomorrow brings the first glimpse of jobs through the private ADP survey but more importantly an absolutely massive read on ISM Non-Manufacturing.
Technicals: Gold is gyrating around the 1598-1600 mark and faces strong major three-star resistance overhead. This pocket of resistance aligns multiple technical indicators and encouraged traders to bring a heavy wave of selling early in Monday’s session. Our momentum indicator has remained stagnant to start the week and aligns perfectly with ... Please sign up at Blue Line Futures to receive our entire technical outlook, actionable bias and proprietary levels each day by email
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