E-mini S&P (June)
Last week’s close: Settled at 2829.50, up 48.75 on Friday and down 40.50 on the week Fundamentals: Another fun and exciting week is underway as we look forward to a laundry list of central bank meetings, economic data and earnings reports. The Bank of Japan cut its meeting short by one day as a precaution due to the pandemic and announced overnight to expand stimulus measures. They removed a self-imposed cap on bond purchases and promised to buy unlimited amounts to suppress borrowing costs. They further expanding guidelines for purchases. These unprecedented times call for unprecedented measures; one might take these measures a bit more seriously if Japan hasn’t been battling unprecedented times for decades. Wednesday is the most pivotal session on the calendar. The Federal Reserve concludes its two-day policy meeting at 1:00 pm CT. Ahead of that, both Alphabet and Starbucks report after the bell Tuesday and the first look at U.S Q1 GDP is due Wednesday morning. Later that evening, April PMI data is released from China. We then look to the ECB and inflation data Thursday. Sign up at Blue Line Futures to have 1 or all 6 of our daily futures and commodities reports emailed directly. U.S benchmarks are pointing higher on enthusiasm after New York Governor Cuomo announced a plan to reopen the state in phases beginning in the second half of May. Construction and manufacturing will start first May 15th. Italy also announced a plan to lift restrictions and Spain eased the lockdown further; the two nations were the hardest hit across Europe. Technicals: Momentum from a strong finish Friday has carried into this week. Ahead of the bell, the S&P is at the highest level in a week. Our momentum indicator is rising but lagging price action at 2824. This aligns with Friday’s settlement to bring first key support. We do have a minor level in front of that at 2836.75, the spike high from Thursday. Similarly, the NQ has this first key support at 8755-8786. Yes, it is vulnerable to pull back to this level with the bulls still holding the edge on the session. Still, the S&P closed above 2806.50 Friday and the momentum is undeniable technically, despite that we do not agree with it fundamentally over the intermediate-term. To the upside, we do have major three-star resistance in the S&P at 2860.75-2870. This level encompasses the Friday April 17th settlement in which the S&P gapped lower from and the intraday high of 2860.75 that Monday. Above there is 2887.75, a level that stood previously, the swing high was 2885. For the NQ, it is the law of round numbers aligning at a crucial area of previous failure, two now, at 9000-9038.Sign up at Blue Line Futures to have 1 or all 6 of our daily futures and commodities reports emailed directly. Bias: Neutral Resistance: 2860.75-2870***, 2887.75**, 2907.25**, 2930-2953.75**** Support: 2836.75*, 2825-2829.50**, 2806.50-2811.75***, 2882.50-2887** NQ (June) Resistance: 9000-9038***, 9200-9239.25*** Pivot: 8819.25-8846 Support: 8755-8786***, 8692-8707.75**, 8583**, 8498.25-8511.75*** Crude Oil (July) Last week’s close: Settled at 21.22, down 0.22 on Friday and 8.20 on the week Fundamentals: Crude Oil for June, July and across the curve is sharply lower this morning. Of course, the damage softens as you move farther out. The demand destruction and the resulting surplus is leading price action lower and ultimately again pins negative prices for the front-month as a real possibility. Clearing houses across the industry have set June to liquidation only to battle such immense volatility and to keep inexperienced traders from harming themselves and in turn the house. However, if someone wants to have a conversation with us regarding trading the June Crude we are certainly here to help and have some clients active in the contract currently. Here, on Friday, we discussed a 35% drop in Oil rigs according to Baker Hughes ahead of the data which showed another 60 shaved off. This now marks a 50% drop in Oil rigs since the end of February. At 378 active rigs, we might see the 2016 low of 316 taken out Friday. One thing to keep in mind though is production does not stop immediately. In 2015, production peaked in June, about four to six months after the rig count began to sharply decrease. In some cases, it can take up to 12 months to result in significantly reduced production. Rig drillers will be some of the first to succumb to such troubles, Diamond Offshore filed for bankruptcy over the weekend, the stock is down 61.1% at 0.365. Sign up at Blue Line Futures to have 1 or all 6 of our daily futures and commodities reports emailed directly. Production does need to decrease, but as we have said, it is not the problem. This is a demand issue. Saudi Arabia has led a push from OPEC to begin the planned May 1st cuts immediately. Still, this does not change the over-supply due to no demand; storage that is nearly full and Crude Oil that now has nowhere to go. Technicals: July Crude Oil has chewed through the psychological $20 mark, however, we have not had major three-star support until 17.12-17.29. This aligns the July low with the landmark 17.12 from November 2001. Below there, all bets are off, and we can see a move to 9.75-10.57 which aligns the 1986 low, the 1998 low and the low settlement for June. In fact, this 9.75-10.57 area is also crucial for the June contract which has a $12 handle this morning, another level to watch is the low of 6.50. Our momentum indicator is coming into $20 and this is first key resistance, a close above here will neutralize some near-term weaknesses. Sign up at Blue Line Futures to have 1 or all 6 of our daily futures and commodities reports emailed directly. Bias: Neutral Resistance: 20.00-20.50**, 21.22**, 23.22-23.40***, 24.12*** Pivot: 18.69 Support: 17.12-17.29***, 9.75-10.57*** Gold (June) Last week’s close: Settled at 1735.6, down 9.8 on Friday and up 36.8 on the week Fundamentals: Gold finished a tremendous week with a soft session Friday. It would seem that risk-on in equities did throw some cold water over the metal as it lost ground along with the Dollar and Treasuries on Friday. Conflicting narratives are pulling it in different directions. On one hand cash is stable through the viewing of equity markets, on the other hand Crude Oil is sharply lower exuding deflation. In the end, its Gold that has been grinding towards a record high. Sometimes one must just take a step back and not get caught in the forest and miss the trees; we are unequivocally Bullish in Bias Gold over the long-term and firmly believe we will see a new record high, likely this year. Still, deflation has weighed on its friend Silver the most and Gold cannot set a record high without Silver getting out of the gutter. With a jam-packed week of economic data, central banks and earnings, some guaranteed news comes with the expiration of May Silver options today and the retiring of May futures this week; this could help bring some relief to the beleaguered metal. Technicals: We have been Bullish in Bias across all timeframes because Gold has held a crucial level of technical support at 1725-1727.5 and did again this morning. Our near-term concerns come in result of price action below our momentum indicator at 1741.5. The good news for Gold bulls is that there is a tremendous amount of support below. The bad news is that upon waves of liquidation, supports have mattered less. What matters is how constructive Gold is against those supports in the near-term in order to lay longer-term construction and the hold at 1660.5 last week was magnificent. Sign up at Blue Line Futures to have 1 or all 6 of our daily futures and commodities reports emailed directly. Bias: Bullish/Neutral Resistance: 1760**, 1775-1788.8*** Pivot: 1741.5 Support: 1735.6*, 1725-1727.5***, 1707.5-1710**, 1695-1697**, 1660.5-1666.2***
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