E-mini S&P (June)
Yesterday’s close: Settled at 2948, up 101.50 Fundamentals: The Federal Reserve has been in the driver’s seat for years. In fact, that metaphor was a cornerstone of ours last year in lieu of the December 2018 selloff and trade war. The Fed’s balance sheet quintupled from 2008 to 2015 and this liquidity became the tail wagging the dog. After a meager reduction into September 2019 it has nearly doubled in the last nine months. The original Greenspan Put has evolved into the Fed Put; a belief this liquidity provides metaphorical Put Option protection allowing investors to blindly ‘buy the dip’. The essence of this narrative is long-term bullish equities. We don’t disagree and that is why we have a wealth management arm, Blue Line Capital. This ‘Fed Put’ allows the market to begin moving in a direction that at times can be unstoppable, a tape that you simply do not want to fight. Yesterday was one of those days and it quickly blossomed from a rejection of lower prices upon the opening bell both Thursday and Friday. These types of moves can quickly snowball and during such, any positive news goes unquestioned; buy first, research later. Yesterday, Modenra revealed positive Covid-19 vaccine trial data and the stock surged 38% in under an hour premarket. Their Phase 1 trial vaccinated dozens of participants. The eight who were pulled all showed neutralizing antibodies. A Phase 2 trial is not likely until July and the company used the rally to announce a stock sale: $1.34 billion at $76 per share. The stock has settled in at this $76, nearly 20% from yesterday’s peak. Check out Bill Baruch’s ‘What’s Moving’ from yesterday’s close. Today, Federal Reserve Chair Powell and Treasury Secretary Mnuchin testify before the Senate Banking Committee via video conference. The Fed’s balance sheet expansion and the programs that it paves the way for will be under question. Buying corporate bond ETF’s should be on top that list. We are certain to hear both call for additional fiscal measures from Congress. Retail earnings from Walmart, Home Depot and Kohls are also in the spotlight. Walmart was the big winner of the bunch, capitalizing as consumers stocked up ahead of and during lockdowns; the stock is up 4% premarket. Home Depot fell shy of expectations and Kohls is higher despite poor numbers due to being closed. On the data front, ZEW German Economic Sentiment surged the most since April 2015, signaling optimism six months out. However, ZEW Current Conditions were the worst since 2003. U.S Building Permits and housing starts were mixed. Minneapolis Fed President, dove and 2020 voter Kashkari speaks at 9:00 am CT. Boston Fed President and hawk Rosengren speaks at 1:00 pm CT. Technicals: Yesterday, we reintroduced a cautiously Bullish Bias. As we noted to be careful chasing the tape, the Bias was less-so to create bullish interest and more-so to deflect traders from trying to fade a Monday rally. Ultimately, Monday rallies are typically not ones to try and fade. Both the S&P and NQ achieved new high settlements from the March lows. The S&P has retreated a bit and did not breakout of its previous range highs. Whereas the NQ did, it still faces a tall task of strong resistance; first, major three-star resistance at 9369.50 stopped price action in its tracks yesterday and above there, rare major four-star 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.
Crude Oil (July) Yesterday’s close: Settled at 31.65, up 2.13 Fundamentals: Crude Oil is developing an inside session thus far after its three-day surge. Even the bulls are surprised upon such strength in recent days. With front-month Brent above $35, headlines are keeping the rally contained pointing to OPEC considering production-cut waivers at $40. On the other hand, U.S Shale production is expected to fall by a record in June. This is an interesting point because with July WTI at $32 and December nearly $35, it will soon become attractive to ramp production. With steep declines in production becoming priced in, any sign of an uptick around the corner should weigh heavily on price action. Inventory data will come into the picture today. Early estimates as mentioned yesterday are for a sharp drop at Cushing and this coupled with a near zero build of Crude overall has been supportive to the tape. Technicals: Yesterday’s high of 33.10 held major three-star resistance at 32.96 and the consolidation has allowed our momentum indicator to catch up with price action at 32.00; below here will continue to encourage a consolidation lower. Minor support was created at the low of the session, but ultimately, we imagine a test to unchanged on the week at major three-star support 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 1734.4, down 21.9 Fundamentals: Gold and Treasuries both took a beating yesterday upon the Moderna news. Silver also reversed from its overnight highs. Gold also lost significant value in Euro-terms after news that France and Germany are pushing forward with a 500 billion-Euro package. Ultimately, the bloc coming together is viewed as constructive for the cause and will stimulate growth, eyeing larger long-term budget cooperation. Previous failed attempts had weakened the Euro. Gold, Silver and Treasuries were all higher Sunday night on the heels of Fed Chair Powell’s 60 Minutes interview. We get more of Powell today as he joins Treasury Secretary Mnuchin in a testimony via video conference before the Senate Banking Committee. Technicals: We began Neutralizing our Bias yesterday as Gold showed signs of failing. The good news is the construction at major three-star support at 1734-1735.5, a level it held upon settlement yesterday. Our Pivot now encompasses our momentum indicator 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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