Morning Express | Actionable Proprietary Research and Levels for Commodities and Futures
E-mini S&P (December)
Yesterday’s close: Settled at 3353.25, down 39.75
NQ, yesterday’s close: Settled at 11,273.25, down 195.50
Fundamental: With less than 90 minutes left in the session, the S&P was nearing its September 16th swing high from after the FOMC statement and the Russell 2000 was breaking out to the highest level since February. President Trump put the kibosh on the rally with a tweet storm calling for the Senate to end Coronavirus aid negotiations due to the House’s reluctance to come off its “$2.4 trillion” perch (although their number is $2.2 trillion), and instead focus on confirming Supreme Court Justice nominee Amy Coney Barrett.
Volatility ensued and the S&P finished 2% off its high, but not before the tape pulled a Pac-Man and tagged stops above the 3419.50 high on September 16th by trading 3421.75 after the tweets had begun. The Russell finished 2.6% from its new swing high and the NQ 2.2% from another failure at major three-star resistance.
Each index bled into the electronic close, but none set a new low overnight on today’s session. The President in a tweet last night emphasized his readiness to send $1,200 stimulus checks to individuals immediately if House Speaker Pelosi was willing to sign a “stand alone bill”. This soothed the market, signaling that the President is not giving up. As each politician jockeys ahead of November elections they are posturing to their base. The result: what could at times be simple legislation, turns into extended debates as articles are included that may not even be necessary to accomplish the broader goal.
In the end, the market knows stimulus is coming. Maybe before the election, but certainly after. In an interview with Kitco’s David Lin yesterday, Bill Baruch broke down his expectations for before and after the election as 2020 winds down.
On the economic calendar today, we look to the September FOMC Minutes released at 1:00 pm CT. Yesterday, Fed Chair Powell reemphasized the steadfast notion that Congress must pass fiscal measures to support the economy. Minneapolis Fed President Kashkari reiterated the same point this morning. In fact, ECB President Lagarde, amid sinking German Industrial Production data earlier, said that central banks must be on guard of premature withdrawal of stimulus. We get additional comments from Kashkari, a 2020 voter, at noon CT. Also, at that time there is a 10-year Note auction. New York Fed President Williams, a permanent voting seat, speaks at 2:00 pm CT and Chicago Fed President Evans a 2021 voter, speaks at 3:30 pm CT.
Another narrative traders should keep an ear to the ground on are comments from the House’s antitrust report on big tech and a potential push to break them up. This could severely cripple the NQ and markets broadly.
Technicals: As much as yesterday’s reversal was news drive, one cannot ignore the perfect failure at major three-star resistance in the S&P at 3419.25. For those chuckling at how easy that level was to note here, how about our major three-star resistance in the NQ at 11,539-11,574? This is a level that we have had before multiple tests and it has steadfastly kept a lid on rallies. To the downside, each the S&P and NQ held major three-star support. For the S&P this was Friday’s settlement, a level we let stand alone at 3339.25 and for the NQ it is the 11,204-11,255 pocket. We certainly do not find it ironic that price action stopped bleeding at each respective level. We find our previous major three-star level at 3379.50 a point of balance in the S&P and this morning it aligns well with our momentum indicator at 3373; this pocket is our Pivot; above or below here the bulls or bears will try to gain an edge. We view 11,321-11,348 similarly in the NQ. We have added major three-star support in the S&P at 3353.25, yesterday’s settle, a break below here will set the tone and the tape on a path for a new swing low on the week.
Resistance: 3385-3387**, 3399.75-3405.75**, 3419.25***, 3431.75****, 3451.25**
Support: 3365-3367.75**, 3353.25***, 3339.25***, 3333.75**, 3315.50-3319.25**, 3300**, 3293**, 3280.50-3287.25***
Resistance: 11,398-11,404**, 11,468-11,498**, 11,539-11,574***, 11,735-11,764***
Support: 11,204-11,255***, 11,125-11,147**, 11,000-11,054***
Crude Oil (November)
Yesterday’s close: Settled at 40.67, up 1.45
Fundamentals: Crude Oil reversed sharply post-settlement along with risk-assets yesterday as fiscal stimulus talks broke down upon President Trump’s tweet. Still, the hopes and the likeliness of getting a deal done, at the least after the election, has kept a bid on risk-assets at the onset of U.S. hours. Furthermore, Crude has been buoyed by the expectation of Hurricane Delta moving through the Gulf. On the other side of the coin the API report last night was slightly bearish with a larger headline build on Crude inventories than expected. Additionally, the demand landscape is a growing concern as governments expand restrictions and lockdowns due to the uptick in Covid-19 outbreaks.
The EIA data is due at 9:30 am CT and analysts expect +0.294 mb Crude, -0.471 mb Gasoline and -0.995 mb Distillates. Remember the FOMC Minutes come out at 1:00 pm CT and could easily grab a hold of risk assets as well as comments out of Washington.
Technicals: We have a range now defined in Crude upon another failure at the 40.60-40.80 pocket of resistance. To the downside, Monday’s settlement and late low helped create major three-star support at 39.07-39.24 and this brings a line in the sand for the week’s rally. The 200-day moving average looms overhead as resistance at 41.28 and given that the 50-day is tracking closely at 41.12, a breakout above major three-star resistance at 41.57-41.72 is extremely bullish as it would encourage the Golden Cross. However, a break below 39.07-39.24 is negative and will encourage added selling.
Resistance: 40.60-40.80**, 41.28**, 41.57-41.72***
Support: 39.07-39.24***, 38.75*, 38.45**, 38.17-38.25**, 37.58-37.67**, 36.36-36.58***
Yesterday’s close: Settled at 1908.8, down 11.3
Fundamentals: Gold was smacked down late yesterday along with risk-assets. As we have steadfastly noted, Gold is trading along with risk assets. Yesterday, we added that those who followed us with buys at 1910 and 1855 should lock in gains as we run into major three-star resistance overhead. Those who followed our directive should be happy today; we do not see Gold falling apart and believe we are instead in a range with strong support below the market and strong resistance overhead. We are unequivocally long-term Bullish in Bias Gold but do not believe the breakout to $2300 will come until the first quarter. For this reason, traders have a great landscape to use the technicals and capitalize ongoing headline volatility. The U.S. Dollar is lower today and this helps bring support to the commodity space. The Minutes from the September FOMC Meeting are due at 1:00 pm CT and this begs to introduce late session, post-settlement, volatility again.
Technicals: We have said it many times, Gold is in a seasonally soft time of year. The metal’s high yesterday was 1927; when something is battling uphill as Gold is doing during this Q4 consolidation, it may not fully test strong resistance levels. Therefore, we called for longs to lock in gains at a minimum here yesterday morning. Furthermore, out momentum indicator had caught up with the tape at the time rising from 1917. Today, our momentum indicator has slipped to 1898 and will fall further. A move out above here and then through 1902-1905 is again near-term bullish. Until then, we must see constructive bottoming at a higher low and will look to major three-star support at 1877.1-1880 to now lay that groundwork. Our Pivot of 1889, the midpoint from the September low to yesterday’s high, will become a point of balance and continued action above here is supportive.
Resistance: 1898**, 1902-1905***, 1917*, 1933-1937***, 1950-1958***
Support: 1877.1-1880***, 1864-1866**, 1851**, 1845.4****, 1829.8***
Sign up for your FREE trial of our daily Markets Commentary!
Follow us on our social media sites to stay on the pulse of our latest research and commentary!
Twitter - twitter.com/bluelinefutures
Facebook - facebook.com/BlueLineFutures
StockTwits - stocktwits.com/BlueLineFutures
Latest blog posts - bluelinefutures.com/blog
Blue Line Futures
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.