E-mini S&P (June)
Yesterday’s close: Settled at 2787.50, up 12.50
Fundamentals: U.S benchmarks once again constructively held technical support though yesterday’s session and this coupled with the anticipation of President Trump’s guidelines for reopening America kept a steady bid under risk-assets through the last hour. Then something else happened, news that Gilead’s Coronavirus drug shows effectiveness and the tape melted higher. The S&P rallied as much as 3.5%. Upbeat headlines from the White House on steps to allow states to normalize in phases added strength. Make no mistake though, the Gilead news was a perfectly timed headline and one who’s merits are under question. GILD is up 12% afterhours, but reports have called the evidence anecdotal and the company released a statement saying, "the totality of the data needs to be analyzed in order to draw any conclusions from the trial." One focal point under question is the response to the drug across a severity scale of the virus in the patient.
Economic data from China was front and center last night. Q1 GDP year over year was worse than expectations at -6.8% (vs -6.5%), but the read across the board was arguably not too bad with March Industrial Production faring better than expected at -1.1% versus -7.3%. Still, Industrial Production plunged 13.5% in February and is still down -8.4% in March YTD. Fixed Asset Investment and Retail Sales both were worse than expectations.
On the earnings front, Procter & Gamble posted strong numbers as consumers raced to stock up ahead of shutdowns. Much of this was expected and the stock is essentially unchanged after trimming guidance. Schlumberger on the other hand is +6.5% premarket despite losing $8.09 billion or $5.32 a share. The relief rally is fueled by better results excluding onetime charges ($0.25 vs $0.24) as it tracks a broadly stronger market open.
Technicals: We remain Neutral in Bias as we find it difficult to define our expectations for the next 3-5%; we see neither value buying at these levels nor fading such strength given how constructive supports have held. There are tradable opportunities and key resistance had budded against the March 6th (the Friday before Saudi Arabia announced a price war). More strongly though is the support building from previous resistance at 2846-2854.25; this is creating a formidable floor, one in which the bears must pierce today. Our momentum indicator is rising sharply but for now aligns to create key support at 2829.75-2832 with the post-bell electronic melt up close. For the NQ, there is a landmark major three-star resistance at ... Please sign up at Blue Line Futures to have our entire technical outlook, actionable bias and proprietary levels emailed directly. Crude Oil (June)
Yesterday’s close: Settled at 25.53, down 0.51
Fundamentals: June is front-month and May has completely dislocated itself. As we noted here yesterday, May was buoyed by large open interest at the $20 put strike. With the options expiration passing, May is now a cash contract and who wants to buy Crude Oil for delivery given the deteriorated demand landscape and depleted storage capacity; for all intents and purposes, this is a fire sale. June is now absorbing some of this weakness, down 1-2%. July and contracts thereafter, however, are all higher at the time of writing.
We believe China’s data last night to actually be helping the complex to some degree. Overall, getting through the GDP number which was in the ballpark of expectations (though weaker) and an Industrial Production read that was better. Adding stability late yesterday were reports of ongoing communication between Russia and Saudi Arabia.
We remain cautiously Bearish in Bias Crude Oil but will begin looking to long strategies soon.
Technicals: We still have a downside target in June Crude of ... Please sign up at Blue Line Futures to have our entire technical outlook, actionable bias and proprietary levels emailed directly. Gold (June)
Yesterday’s close: Settled at 1731.7, down 8.5
Fundamentals: Gold pierced $1700 briefly this morning, a move that the options market again signaled. This wave of selling comes after a technical violation coupled with a race to buy equities on news of reopening the economy and a potential Coronavirus treatment (see S&P section). Yes, we have said that Gold will and can rally with equities, however, the last 12 hours has been a bit different given the metal’s retreat from nearly hitting $1800; this became a technical matter. Furthermore, it comes as no surprise, our narrative was closely aligned with seeing a test to $1700. We remain unequivocally Bullish in Bias Gold over most timelines, however, will discuss out technical cautions below.
Technicals: We have called for a retest to 1700-1710 and it is here. However, the metal did break below a trend line from March 20th that aligned to create support at 1722-1725; we must see Gold close back above here as this now acts as landmark resistance. At the same time, you do not want to see a close below major three-star support at ... Please sign up at Blue Line Futures to have our entire technical outlook, actionable bias and proprietary levels emailed directly.
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