Morning Express

E-mini S&P (June)

Last week’s close: Settled at 2928.50, up 48.50 on Friday and up 106.75 on the week

Fundamentals: Friday’s Nonfarm Payroll report, although a record print, was not as bad as feared. Ultimately, this allowed the week’s strong momentum to playout through the session. The S&P made a run at its April 29th high settlement before falling just shy, whereas the NQ finished at the highest level since February 24th and up 5.1% for the year. This strength has tailed off just a bit at the onset of U.S hours. After each extended gains early in the overnight, risk-assets broadly incurred a wave of selling that began after the European open.

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At the helm this week are competing narratives. On one hand, amid a push to reopen the economy, the tech driven rally has become a safe haven of sorts. U.S Treasury yields hover barely above zero and expectations linger for a negative Fed Funds rate later this year. This has forced investors to search for yield and tech has been the answer. The Treasury begins their record wave of borrowing with a slew of auctions throughout the week. On the other hand, what type of economy is the result of easing lockdown resitrictions? Additionally, reports of a Coronovirus outbreak infecting White House staff has certainly pushed investors’ risk appetite on its back foot to start the week.

There is a deluge of Fed speakers on the calendar this week. Today, Atlanta Fed President Bostic and Chicago Fed President Evans speak at 11:00 and 11:30 am CT. We look to U.S CPI tomorrow, Q1 GDP from the U.K midweek, a trio of critical data from China Thursday evening and Eurozone GDP Friday.

Technicals: Price action is showing signs of intermediate-term exhaustion this morning. This is to be expected after such a five-day run. Both the S&P and NQ are back below our momentum indicators which come in to align with Friday’s settlement and previous levels to create major three-star resistance at 2926-2928.50 in the S&P and 9200-9239.25 in the NQ. Each index is now testing first key support levels at 2892-295 in the S&P and 9107.75-9144.75 in the NQ. For the S&P, we believe a continued trade below 2901.50-2904.50 paves a path of least resistance to test 2879.75-2880 at a minimum. For the NQ, a break below Thursday’s gap settlement of 9107.75 intraday should quickly open the door for a test to 9005.75-9036.50, a level that we would almost designate as a rare four-star as we believe it defines the latest leg.

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Bias: Neutral

Resistance: 2926-2928.50***, 2940-2953.75****, 2968.75**, 2988.75**, 3052.75***

Pivot: 2901.50-2904.50

Support: 2892-2895**, 2879.75-2880***, 2857-2861.25**, 2822-2833.50***

NQ (June)

Resistance: 9200-9239.25***, 9285**, 9369.50***, 9439-9477.50****

Support: 9107.75-9144.75***, 9005.75-9036.50***, 8920.50-8935***

Crude (July)

Last week’s close: Settled at 26.17, up 1.34 on Friday and 3.88 on the week

Fundamentals: Crude Oil had been following a broad risk-off wave overnight, trading from a high of 26.09 shortly before midnight to a low of 25.05. However, reports that Saudi Arabia directed Aramco to cut an extra 1 mbpd in June with a target of 7.492 instead of 8.492 has lifted the energy complex. The goal of these additional cuts being to encourage other OPEC+ participants to stick to the new deal. This comes after reports that Iraq has not met its quota of cuts. Furthermore, we find it interesting that jawboning comes as the June futures contract has one week left from tomorrow; strategic.

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Technicals: Price action has struggled to trade through key support at 24.38-24.55 and overnight was buoyed from a higher low at 25.05. The mid-morning surge has regained our momentum indicator and Pivot at 25.62-25.85 and this helps the bulls neutralize a wave of weakness than began after this recovery became exhausted. We still find value in selling this higher level and will hold a cautiously bearish Bias. However, we will lean on defined low risk strategies for such exposure. Feel free to contact us at to learn more.

Bias: Neutral/Bearish

Resistance: 26.39-26.49**, 28.14-28.46***, 29.42***

Support: 25.62-25.85**, 24.38-24.55**, 23.40-23.88***, 22.62**

Gold (June)

Last week’s close: Settled at 1713.9, down 11.9 on Friday and up 13.0 on the week

Fundamentals: Gold is snapping back from early morning weakness and finding that support from the surge in Crude Oil. The metal is battling a stronger Dollar and seemed to incur weakness as equity markets edged lower. Competing narratives tugging on Gold is nothing new, but what may be most crucial is the path of Treasury yields. Weakness in Treasury prices, higher yields, Friday certainly weighed on Gold despite a weaker dollar. However, Silver stayed bid along with equities. Ultimately, there seems to be a tightening technical range which will help favor a directional move. We remain unequivocally bullish in the long-term, but cautious day to day due to those competing narratives. This week, we add a deluge of Fed speakers. Today, Atlanta Fed President Bostic and Chicago Fed President Evans speak at 11:00 and 11:30 am CT; neither is a 2020 voter this year, but both are next year.

Technicals: Friday’s weakness was very disappointing given that Gold was on the edge of achieving a break above trend line resistance. The wave lower into this morning has pushed Gold back below our momentum indicator which gives us no choice but to neutralize our Bias a bit. The metal must trade and close back above 1709.2-1711.8 today in order to reinvigorate the tape into tomorrow. Still, the range bound tightening wedge cannot go unnoticed on a weekly and this heightens the potential of a directional break this week; today’s range essentially checked each end of this wedge.

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Bias: Neutral/ Bullish

Resistance: 1715.4**, 1723-1725.8**, 1737-1740***, 1760-1764***

Pivot: 1709.2-1711.8

Support: 1695.4**, 1690**, 1683-1685***, 1676**, 1660.5-1666.2***

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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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