Morning Express

E-mini S&P (June)

Yesterday’s close: Settled at 2569.75, down 41.50

Fundamentals: It’s the first day of a new quarter. U.S benchmarks are seeing renewed pressure while safe havens such as the Dollar and Treasuries are trading higher. The very relevant question right now is whether the S&P will retest last Monday’s 2174 low. Given how the recovery faded at a largely watched technical level (our major three-star resistance), mounting economic damage coupled with dissipating tailwinds from added liquidity and rebalancing, we believe this retest to be probable. As we welcome a new month, we welcome new bills. Remember, the complete economic fallout was only incurred in the back half of March and despite efforts from Washington to put cash in the hands of individuals and businesses of all sizes, it’s not enough to stave off the unpaid bills coming down the pipeline. Whether we are talking about an individual’s auto loan and credit card or a public company’s lease (Cheesecake Factory is one), the impact will be felt up and down the economy as defaults rise in April and May. In fact, at Blue Line Capital yesterday (our Registered Investment Advisor and portfolio manager) we cut all non-preferred U.S and ex-U.S REITs. Bill Baruch joined CNBC’s Worldwide Exchange this morning to discuss all of this.

Today’s economic calendar boasts an early look at jobs through the private ADP survey. The widely watched headline ADP National Employment Report overshadows a lesser discussed Small Business Report that surveys data from companies with 49 or fewer employees. Of course, there will be questions surrounding accuracy given how all of ADP’s 460,000 clients surveyed may not be reachable due to current conditions. Nonfarm Payroll is due Friday. ISM Manufacturing is due at 9:00 am CT, this closely watched gauge is expected to slip but still is unlikely to exude the true impact of such deteriorating conditions as the month unfolded. The same goes for final PMI data from Europe. Although headlines point to some of the worst data in a decade, we believe the worst is yet to come.

Technicals: For the entire morning yesterday, the S&P battled just below crucial technical resistance at 2641.50 and then failed. After falling off late in the session and settling at 2569.75, the selling kicked in for the new quarter. First key support at 2562.75 did hold late yesterday and now aligns with settlement and our slipping momentum indicator to create major three-star resistance; a line in the sand that defines renewed weakness. Similarly, major three-star resistance in the NQ comes in at ...  Please sign up at Blue Line Futures to have our entire technical outlook, actionable bias and proprietary levels emailed each day. Crude Oil (May)

Yesterday’s close: Settled at 20.48, up 0.39

Fundamentals: The energy complex remains under pressure after Saudi Arabia notified Oil companies to be ready to support output at 12 mbpd beginning today. Additionally, although there was not much excitement behind supposed talks between President Trump and President Putin to support Oil markets, those talks yielded nothing. Last night’s API data posted a headline build of 10.485 mb of Crude, +6.085 mb Gasoline and -4.458 mb Distillates. Official EIA data is due at 9:30 am CT and estimates are for +3.997 mb Crude, +1.949 mb Gasoline and +1.026 mb Distillates. Production data that was back below 13 mbpd last will become the closely watched narrative as energy companies cut spending. Today, BPO announced capex cut of 25%, more than the broadly used 20% by others. ISM Manufacturing is out at 9:00 am CT and as we pointed to in the S&P section today and yesterday as China’s Manufacturing gauge rebounded, the worst is likely yet to come. However, airline data is already showing a 93.5% plunge in passengers.

Technicals: After coming off Monday’s new swing low, price action rose to a high of 21.89 early yesterday. We have since seen that strength dissipate and battle at but not re-violate the $20 mark since noon yesterday (four tests). We stand by our cautiously bullish bias and are prepared to see $17 Crude Oil. Still, our momentum indicator comes in this morning at ...  Please sign up at Blue Line Futures to have our entire technical outlook, actionable bias and proprietary levels emailed each day. Gold (June)

Yesterday’s close: Settled at 1596.6, down 46.6

Fundamentals: Gold is stabilizing off yesterday’s bloodbath and poor open last night. The deep cut certainly squeezed out weak shorts. The options market alluded to further weakness yesterday morning at 8:30-9:30 as Call options from June through December lost another 5-10% while the price of June futures held steady at 1620. As a trader, it can be key to watch the price of options if trying to pick a bottom or top. We noted here yesterday that the Gold Volatility Index had lost 30% from last week’s peak, but it certainly did not mean it could not go lower as it lost as much as another 20% from our newsletter through last night. Gold Volatility has stabilized and could signal some value after the washout. However, a stronger Dollar, equity markets and Silver may all act as a near-term headwind. Gold is priced in dollars and liquidity could become tight upon new equity market weakness. As for Silver, we view it as a gauge of risk appetite for Gold. We detailed here explicitly on Monday that we believe Silver is vulnerable to 12.75-13.00. ADP Payrolls are due at 7:15 am CT and ISM Manufacturing follows at 9:00.

Technicals: Price action opened sharply lower last night and pinged strong support at 1575.5-1575.9 before stabilizing. Our Pivot is 1602.3-1605 and this will be a battleground for the metal; below here it remains vulnerable. In fact, now only a move and close above 1622.7 is immediate term bullish. As we noted above, Silver will be a gauge and a break below ...  Please sign up at Blue Line Futures to have our entire technical outlook, actionable bias and proprietary levels emailed each day.

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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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