Morning Express - global macro market action

E-mini S&P (September)

Yesterday’s close: Settled at 3118.25, up 56.25

NQ, yesterday’s close: Settled at 9961.50, up 173

Fundamentals: U.S. benchmarks shook off a brief bat with reinvigorated volatility yesterday morning. After a blowout MoM May Retail Sales read, price action in the S&P surged to its high of the session (YoY was -6.1%). As the morning unfolded, less enthusiastic Industrial Production, reports of Beijing shutting schools due to Covid-19 reemerging and comments from Fed Chair Powell that the committee will in fact taper measures when the economy stabilizes all caused a violent 100 point swing. Still, the trend is up, and Call Option Open Interest continues to bloat. Combined with unprecedented central bank measures, this creates a path of least resistance higher and price action snapped back to its midpoint just as quick. The European open early this morning brought another wave of buying and U.S. benchmarks are all pointing higher at the onset of U.S. hours.

Yesterday’s gains were broad, nearly the entire S&P was in the green.

Bill Baruch broke down the day’s action across asset classes in yesterday’s What’s Moving segment.

Today, Building Permits and Housing Starts were below expectations and we next look to Crude Oil inventory data at 9:30 am CT. Fed Chair Powell’s second day of his semiannual Congressional Testimony begins at 11:00 am CT. Yesterday, he echoed his comments from last week; there is a long road ahead. However, he was acknowledged the worst is likely behind us, but for the same reason it sparks a conversation on reducing such unprecedented measures. Last week, we said this is a conversation that could gain traction in August, after the Fed’s next meeting and ahead of the September one.

Lastly, traders must keep an ear to the ground on the geopolitical front. Tensions between China and India in a border dispute have escalated and there are casualties. Also, North Korea is attempting to provoke South Korea with threats after blowing up a mutual building at the border.

Technicals: Yesterday, we reintroduced a cautiously Bullish Bias with line in the sand major three-star support coming in at 3062-3072.25 in the S&P and 9754.25-9788.50 in the NQ. These levels were tested head-on upon the swing lower and held perfectly which paved a path higher through the end of the session. Our momentum indicators align closely with yesterday’s settlement to bring today’s Pivot and above there, the bulls remain clearly in the driver’s seat on the session. The S&P has tested yesterday’s high and first key resistance at 3150.50 but is eyeing the gap close from last Wednesday at 3175.50. The NQ has tested 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 each morning.

Crude (July)

Yesterday’s close: Settled at 38.38, up 1.26

Fundamentals: Crude Oil is lower buy holding ground constructively despite yesterday’s API survey showing a larger headline build than expected at +3.857 mb. It was a draw of 3.289 at Cushing that has helped offset the headline coupled with rising geopolitical tensions; China and India are the first and third largest importers of Crude in 2019. Although neither is a producer, you cannot doubt some premium kicking in. More so, the buoyancy in the market is a broad risk-on fervor and even an uptick in virus cases around the world, most importantly China who has now shut down schools, has been ignored. Expectations for today’s official EIA report are -0.152 mb Crude, -.017 mb Gasoline and +2.429 mb Distillates.

The OPEC Monthly Report, just released this morning, showed 2020 demand expectations unchanged for the first time in five months. However, they raised non-OPEC supply by 390,000 bpd and this could allude to stable prices allowing for U.S. production to come back online in the second half (something we have called for).

Technicals: Yesterday, we introduced a cautiously Bullish Bias in Crude as long as it stayed above 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 each morning.

Gold (August)

Yesterday’s close: Settled at 1736.5, up 9.3

Fundamentals: Gold has slipped back once again after failing to chew through technical resistance and as risk assets point higher at the onset of U.S, hours. However, Silver is holding ground tremendously after a washout earlier in the week. Ultimately, the precious metals complex is in a long consolidation pattern without a fundamental catalyst for the next advance. We say advance as we believe higher is in the cards. Treasury yields have gained ground this week and the Dollar has stabilized from its bloodbath, neither is supportive to Gold. Next there are concerns that the virus is reemerging and begs the question on whether it will cause deflationary headwinds for Gold. Although this is a very valid concern, we tend to believe higher will be the initial reaction, however, our timeline for a breakout this year is shrinking as we approach August and September.

Technicals: Gold just cannot chew through major three-star resistance at 1737-1743, although the technical groundwork is not poor. Silver has held well off the lows of the week and the 50-day moving average is creeping up on the 200-day and this Golden Cross could bring a much-needed technical tailwind. Our momentum indicator in Gold comes in at ...  Please sign up for a Free Trial at Blue Line Futures to have our entire technical outlook, actionable bias and proprietary levels emailed each morning.

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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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