E-mini S&P (June)
Last week’s close: Settled at 2524, down 84.00 on Friday and up 235.50 on the week
Fundamentals: All four U.S benchmarks turned positive overnight after gapping lower on the open. Those from around the world are also working off the worst levels of the session. Coming on the heels of fiscal and monetary bazookas launched last week by the U.S ($2.2 trillion package and QE-infinity), other central banks and governments are ramping up efforts to combat the impact of the virus and complete economic shutdown. The S&P recorded a swift 3% surge last night on news the People’s Bank of China injected 50 billion yuan or $7 billion and slashed the rate it charges banks for loans. In Japan, there are calls for a fiscal package totaling 60 trillion yen or more than $550 million. Australia announced a fiscal pledge of 130 billion AUD or $80 billion to rescue jobs and stimulate the economy. Last week, Germany passed a 750 billion euro or $810 billion package as GDP is expected to contract by 5% this year. The measures are certainly mounting around the world, will it be enough? Our early opinion is no, it will not be enough. In fact, each government has been fairly transparent that added measures are coming down the pipeline as needed. This raises the concern on whether the market is pre-pricing the “whatever it takes” motto and in the end, implementation will have only a reduced result.
On the bright side, despite record drops in March Eurozone Business and Consumer Confidence, the results were better than feared. Tonight, we get Chinese Manufacturing PMI for March. Analysts believe China worked through a recovery in March with expectations for a bounce back to 45.0 versus a record low of 35.7 in February. In December 2008, Chinese Manufacturing dropped to 38.8, the following month was 41.2. We tend to lean a bit more negatively and even if this month bounces back, the rest of the world was debilitated; the effects should linger, if not for March, then for April. Yesterday, President Trump backed down from hopes of restarting the economy by Easter, instead extended guidance on social distancing to April 30th. Tomorrow, we look to German Unemployment data and U.S Consumer Confidence. Later this week, we have ISMs and Nonfarm Payroll.Please sign up at Blue Line Futures to have 1 or all 6 of our daily futures and commodities research emailed directly.
Technicals: Price action slipped sharply into the close Friday and extended the drop on last night’s open. However, the tape is in recovery mode after surging into midnight and again stabilizing on a pullback early this morning. Our Pivots align our momentum indicators at 2524-2527 in the S&P and 7595 in the NQ. First key resistance levels are created by that overnight spike at 2567.50 in the S&P and 7670-7690 in the NQ. However, more important levels come in at 2605-2608 in the S&P a level in which in failed late Friday; sellers stepped in front of the 2641.50 .382 retracement, a massive level that all traders and investors alike are eyeing; a close above here would create a tailwind of at least 100 points. For the NQ, we have major three-star resistance at 7805-7844. Last night’s early drop creates first key support at 2445-2458 in the S&P, however, the NQ has several layers in order to stay constructive after a more than 300-point range. Still, we define the floor as 7310.25-7326.50 with a similar level in the S&P coming in at 2386.50-2404. A break below these levels will likely create a windfall of selling.
Resistance: 2567.50**, 2605-2608**, 2641.50***, 2729-2785****
Support: 2445-2458**, 2386.50-2404***, 2346.50-2350*, 2316.75***, 2220.50***, 2174-2198.75**, 2031.50*** NQ (June)
Resistance: 7670-7690**, 7805-7844***, 7893.50*, 7992***, 8140**, 8205-8233*** Pivot: 7595
Support: 7568.50**, 7492*, 7410.25-7425**, 7365*, 7310.25-7326.50***, 7261**, 7111.75**, 6969-6984***, 6812.50*** Crude Oil (May)
Last week’s close: Settled at 21.51, down 1.09 on Friday and 1.12 on the week
Fundamentals: Crude Oil fell below $20 briefly last night, the lowest since February 2002, and is still battling at the psychological benchmark this morning. We continue to hold a cautiously negative bias as we do not believe the damage to be finished. One week ago, we even explained how the price of Crude, most vulnerable regionally, could actually dip into negative territory due to storage constraints and logistics. Bloomberg published an article over the weekend discussing how Crude Oil is already being sold for less than $10; Oklahoma Sour at $5.75, Nebraska Intermediate at $8, Wyoming Sweet at $3 and Western Canadian Select as low as $4.51. In 2019, global oil demand stood around 100 mbpd. This is expected to be slashed by as much as 20-30%.
Technicals: We have gone on record saying to be ready for Crude Oil at $17-18 and we believe the November 2001 low of 17.12 to be in play. Price action opened lower last night and quickly chewed through strong support aligning previous low settlements at 20.52-20.83. There is clear buying interest at the 20.00 level working to buoy the tape. Our momentum indicator comes in at 21.07 this morning and we believe the bears to have an edge while below here.Please sign up at Blue Line Futures to have 1 or all 6 of our daily futures and commodities research emailed directly. Bias: Neutral/Bearish
Resistance: 21.07-21.51**, 22.63**, 23.10-23.36***, 24.09**, 25.19***
Support: 20.52-20.83***, 20.00**, 17.12**** Gold (June)
Last week’s close: Settled at 1654.1, down 6.2 on Friday and up 166 on the week
Fundamentals: “You don’t’ want to be buying Gold when everyone is screaming for it, you want to be capitalizing on Gold you already own.” We say this a lot but look at last week; Gold quickly gained 14% on the week by early Tuesday morning. If you chased priced action Tuesday though you found yourself in a hole. The metal is under additional pressures today as the U.S Dollar is strengthening but consider that the Dollar had its worst week since the Great Financial Crisis and Gold could not break out. Listen, we remain unequivocally bullish the metal over the long-term and especially so now given the massive amounts of liquidity and low rates that will remain in place for the foreseeable future, but we want to see it build a base at the $1600 mark as a buying opportunity in the near to intermediate-term.
Technicals: Price action is consolidating and for all intents and purposes, this is healthy on the heels of a massive power surge. The tape will remain the most constructive above first key support at 1630.1-1630.7, however we find it vulnerable to 1597.9-1605 given the oversold nature of the U.S Dollar in the near term. We view $1600 as a buying opportunity. What traders must also keep an eye on is Silver. In October 2008, Silver reached a low of 8.40 and surged to 11.61, a gain of nearly 40%. Silver just gained about 30% from its 11.62 low. Like this fallback, in December 2008 Silver lost 15% before basing and ripping higher within the same month, never looking back to this level until now. Ironic how 11.61/11.62 was revisited. A 15% pullback in Silver takes us to 12.73, traders must be on the lookout for $13 Silver that could hold back Gold in the near-term.Please sign up at Blue Line Futures to have 1 or all 6 of our daily futures and commodities research emailed directly. Bias: Neutral/Bullish
Resistance: 1661**, 1691.7-1700****, 1710.9**, 1722**
Support: 1630.1-1630.7**, 1609**, 1602.3***, 1575.9**, 1548.7**
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