Morning Express

E-mini S&P (June)

Yesterday’s close: Settled at 2852.50, down 70.25

Fundamentals: U.S benchmarks sold off sharply into yesterday’s close but are attempting to stabilize ahead of the bell. Several rising headwinds could be designated as the culprit, but when it truly comes down to it, we find technicals to have been the leading catalyst (discussed in the Technical section below). Market participants await a speech from Federal Reserve Chair Powell this morning at 8:00 am CT. Negative Interest Rate Policy (NIRP) has certainly grabbed headlines of late and last week we pointed out that the December Fed Fund futures were signaling negative rates later this year. A deluge of Federal Reserve speakers have left their stamp on the first half of the week and deflected the notion of moving rates below zero. Still, there is pressure to do more. Yesterday, Core CPI contracted in consecutive months for the first time since December 1982 to January 1983 and the U.S Treasury auctioned $32 billion 10-year Notes at a record low yield of 70-basis points. The strong auction, with $7 billion more than last month, echoes broad uncertainties and even fear. Today, PPI data is due at 7:30 am CT and the Treasury auctions $22 billion in 30-year Bonds. In Washington, House Democrats are perusing a bill that unleashes $3 trillion more in stimulus. Although they may vote on this Friday, Senate Republicans are stiff-arming the attempt. If we know one thing, it is how this market has an addiction for stimulus. This alludes to the political jockeying tied to reopening state and local economies around the country and news that Los Angeles could keep its stay-at-home order in place through the summer seemed to be the straw that broke the camel’s back. According to the LA Times, the county Public Health Director referred to the move as “certain”. Amid these domestic narratives, a fresh chapter in the U.S-China trade war looms after Senate Republicans introduced a bill yesterday that permits President Trump to sanction China over its handling of the Coronavirus outbreak.

Technical: The selling yesterday picked-up once it seemed certain to break below 2900. This is an area of option open interest to note where dealers would be expected to jump on the wave of selling. Furthermore, we had major three-star support at 2879.75-2880 which aligned multiple technical indicators as well as the gap settlement from May 7th and a break below here was also expected to incur strong waves of selling. Major three-star resistance is now at ... Please sign up for a Free Trial at Blue Line Futures to have our entire technical outlook, actionable bias and proprietary levels emailed directly.

Crude Oil (July)

Yesterday’s close: Settled at 26.33, up 1.25

Fundamentals: The risk-appetite amid Fed Chair Powell’s speech and competing headlines discussed in the S&P section will certainly play a role today, but OPEC just released their Monthly Report and the EIA inventory data is due at 9:30 am CT. OPEC cut their 2020 world oil demand by 2.23 mb from April. They overall expect 2020 oil demand to fall by a total of 9 mbpd. However, drastic revisions to supply are supportive. The elephant in the room becomes whether we continue to see such supply cuts from the U.S with prices back in the $30 range a few months out. The EIA expects +4.147 mb Crude, -2.216 mb Gasoline and +2.857 mb Distillates. This comes after a much larger than expected headline build printed by the private API survey last night, but also one that showed a draw at Cushing which is seen as buoying the tape; +7.6 mb Crude, -1.911 mb Gasoline, +4.712 mb Distillates and -2.216 mb at Cushing.

Technicals: Volatility has slipped out of Crude as the range is suppressed. First key support has created a stronger than expected floor at 24.38-24.55. Still, first key resistance at ... Please sign up for a Free Trial at Blue Line Futures to have our entire technical outlook, actionable bias and proprietary levels emailed directly.

Gold (June)

Yesterday’s close: Settled at 1706.8, up 8.8

Fundamentals: Gold posted a very constructive session yesterday, holding technical support and gaining ground amid Dollar weakness. The metal is off to a good start once again ahead of Fed Chair Powell’s speech. The Dollar has edged lower again due to Euro strength on comments from German Chancellor Merkel and weaker than expected U.S PPI data. The time running out though and Gold must find a catalyst to breakout above its consolidated range. Fed Chair Powell begins his speech at 8:00 am CT today and there is a deluge of economic data and headline narratives that can act as a tailwind or headwind. We continue to be unequivocally Bullish Gold over the longer-term.

Technicals: Gold is out above our momentum indicator this morning which aligns with previous resistance at 1709.2-1711.8 and this is very favorable for the bull camp as it looks to secure a breakout of its consolidating wedge pattern. Still, key resistance at ... Please sign up for a Free Trial at Blue Line Futures to have our entire technical outlook, actionable bias and proprietary levels emailed directly.

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