E-mini S&P (June)
Yesterday’s close: Settled at 2644.50, up 161.75
Fundamentals: The S&P is up 10% this week, in a little more than one session. Stocks are quickly pricing in a light at the end of the tunnel; a potential plateau in virus outbreaks and estimating when the economy will go back to work. Make no mistake, this is not black and white, there is a stew of narratives fueling the global risk-on rally. First, momentum is beginning to gather in Washington as officials support the idea of a fourth fiscal stimulus package despite being on break until April 20th. The situation throughout the country is dire, and the world for that matter, but let’s remember only the idea of the historic $2.2 trillion package passed two weeks ago is being felt. The Federal Reserve has provided enough liquidity to stabilize the entire globe, literally, but the economic impact felt on the ground is yet to be seen. That $2.2 trillion package has yet to solidify jobs and put money in the hands of individuals and small businesses. There may be a light at the end of the tunnel, and that is still a big ‘if’, but the credit stresses and defaults up and down the economy are the biggest elephant in the room. The market is working to find a fair value, if you will, but this seems to be a fair value as ‘if’ the economy is going back to work next week. As the market prices in the jawboning of a fourth package from Washington and the hopes of new measures from China and Europe, Japan becomes the latest to approve a $1 trillion stimulus. The package totaling 20% of GDP comes as the nation declared a state of emergency.
Let’s not ignore the nearly 10 million and counting unemployment claims. Let’s not ignore the hard data such as growth [or contraction], manufacturing and earnings which have yet to be realized by those algos driving price action through this air pocket after a technically bullish close yesterday. But most of all, let’s not forget the consumer who was in the driver’s seat of this economy for the last 18 months. The consumer who had bought the Starbucks coffee each day, upgraded their iPhone regularly, went out for dinner five nights a week and splurged on countless yet discretionary other items. After facing the possibility or reality of job loss will that consumer be the same? How about the businesses of the hardest hit areas? The Texas oil patch, the farmers and ranchers across the Midwest, the mom and pop shops, the restaurants and the successful small to medium sized business that have no revenue and cannot pay rents. Heck there are public companies that don’t have the cash to operate.
Technicals: With price action surging and fundamental uncertainties still very relevant, where is resistance? Maybe we should be asking, where is support to maintain the rally? First, we have had an unusually large range of rare major four-star resistance in the S&P at ... Please sign up at Blue Line Futures to have our entire technical outlook, actionable bias and proprietary levels emailed to you directly. Crude Oil (May)
Yesterday’s close: Settled at 26.08, down 2.26
Fundamentals: Crude Oil is off the overnight highs with some cold water being poured over hopes of a coordinated production cut. Still, Crude did gain as much as 50% from its low and is still up 30% on hopes of coordinated action. OPEC+ and specifically Saudi Arabia and Russia seem to be making headway and all sides understand the necessity of a coordinated 10 mbpd cut. However, OPEC+ wants the U.S to oblige. Although President Trump can get some credit for bringing the two energy powerhouses together, he has shown very little willingness to interject in the decisions of private U.S oil and gas companies nor does he legally have the power. This market will trade on developments into Thursday, but it will also take notice of the broader risk-environment and weekly inventory coming down the pipeline. Not only because of the massive weekly builds expected but for any slight indication of production tapering off.
Technicals: Price action is consolidating ahead of Thursday and attempting to build a floor above 24.97-25.36. Although we do find this market vulnerable to trade as low as ... Please sign up at Blue Line Futures to have our entire technical outlook, actionable bias and proprietary levels emailed to you directly. Gold (June)
Yesterday’s close: Settled at 1693.9, up 48.2
Fundamentals: Gold surged to a new seven and half year high early last night, hitting 1742.6. In recent days, we have pointed to this impending bull wave technically and fundamentally. Bill Baruch gathered those thoughts and charts for an Op-ed article published by CNBC. Despite last night’s surge, we must remind you that our narrative has not changed: you do not want to be buying Gold when everyone is screaming for it, you want to be capitalizing on Gold you already own. Last night, we absolutely recommended our clients to take profits on long Gold and Silver exposure. Is there higher to go over the intermediate and longer-term? Absolutely, but let’s not ignore that Gold lost as much as 3% from its high last night to a low of 1689.
Technicals: Gold is settling in after its latest surge. The path of least resistance is higher over the intermediate and longer-term, however, we must define where it must hold in order to stay constructive. First, our momentum indicator now comes in at ... Please sign up at Blue Line Futures to have our entire technical outlook, actionable bias and proprietary levels emailed to you directly.
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