E-mini S&P (June) Yesterday’s close: Settled at 2994.50, up 41.50 NQ, Yesterday’s close: Settled at 9406.50, up 0.25 Fundamentals: An exuberant start to the week closed on a soft note yesterday after headlines reminded market participants the White House is mulling over sanctions on China for how they handled the Covid-19 outbreak. The S&P failed to settle above its 200-day moving average which aligned with the psychological 3000 mark and the NQ finished 2% from its session high. Yesterday was characterized by strength in the banks; JPMorgan +7.1%, Bank of America +7.15%, Wells Fargo +8.65%, Citigroup +9.23%. It was not the only sector up strongly though, industrials, energies and others joined the party. However, it was big tech that weighed on the NQ amid this rotation; Microsoft -1.06%, Facebook -1.15%, Apple -0.68% and Amazon -0.62%. Price action overnight held yesterday’s late session pullback, and this set the stage for early morning strength. Although Asia was mixed, it was Europe that again fueled U.S. benchmarks. With many of the same sectors performing again, such as banks and industrials, the S&P and Russell 2000 are outpacing gains in the NQ ahead of the bell. Adding a tailwind to risk-assets was developments with the European Commission’s 750 billion-euro Recovery Fund and the plan to issue 500 billion-euros as grants instead of loans. With support from Germany, the market is buying into the belief of a centralized European budget. The strength in risk-assets, as well as the Euro, comes as the program would reduce risks of default from weaker members. The yield of the Italian 10-year has lost nearly 50 basis points since the idea gained traction from Germany and France a little over a week ago. Still, there are four clear opponents: Austria, Netherlands, Finland, and Sweden. On the economic calendar, we look to Richmond Manufacturing at 9:00 am CT, Dallas Services at 9:30 am CT and comments from St. Louis Fed President Bullard at 11:30 am CT. Technicals: Yesterday, we reintroduced a cautiously Bullish Bias and noted the first retest to key support at 2988.75-2990 should prove to be a buying opportunity and one that traders could look to hold upon a close above 2997.25-3004. Price action hit that level and has since recovered, trading to a low of 2983.25. We will continue to hold this cautiously Bullish Bias as long as price action holds above ... 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 34.35, up 1.10 Fundamentals: We find Crude to be fundamentally and technically exhausted just below a crucial level of respective resistance on each front. On the fundamental front, we have seen the bullish narratives playout and provide strong tailwinds; U.S and OPEC+ production loss, normalization kickstarting demand, and China building their stockpile. Furthermore, sometimes strength is the byproduct of an exacerbated loss, what we witnessed upon the May expiration. However, given that these narratives are priced in to what we believe is near-perfection, the wild cards become U.S-China trade/sanctions, a shallow recovery in demand, an uptick in infections which causes new lockdowns and maybe the largest elephant in the room – production coming back online now that we are at higher prices or OPEC revising the terms of its latest agreement. With all of this in consideration, we find it attractive to expect a pull back from these levels. Technicals: First key support is 33.25, this aligns with a previous level but more importantly is unchanged on the week. There are layers of support below here, but our major three-star does not come in until ... 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 1705.6, down 29.9 Fundamentals: Gold got hammered yesterday along with other safe-havens. However, for Gold particularly, this was not much of surprise as we have voiced caution heading into the June options (yesterday) and futures expiration this week. Furthermore, the large amount of open interest at $1700 acted as a magnet, something Bill Baruch discussed in yesterday’s ‘What’s Moving’. That weakness is playing out a through this morning and earlier due to the risk-on environment and positive traction from Europe (see S&P section). Still, our long-term Bias has not wavered, and we emphasize this is not the time to be dumping the metal. New positions should be taken in August Gold, contact us for help in rolling from June to August. Technicals: Price action must regain our Pivot at 1695, this is our momentum indicator and continued price action below here will leave the door open for continue weakness. Only a close above ... 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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