Morning Express | Actionable Proprietary Research and Levels for Commodities and Futures

E-mini S&P (December)

Last week’s close: Settled at 3473.25, up 35.75 on Friday and 134 on the week

NQ, last week’s close: Settled at 11,724.75, up 185.75 on Friday and 491.50 on the week

Fundamentals: U.S. benchmarks are picking up right where they left off Friday; risk-on. Although Coronavirus aid talks continue in Washington and President Trump raised his price limit, a deal before the election looks less likely by the day. House Speaker Pelosi, as expected, criticized the White House’s latest attempts as each side postures for elections less than a month away. Despite the Federal Reserve’s steadfast narrative that fiscal measures are necessary to keep the economic recovery moving, White House Economic Advisor Larry Kudlow said over the weekend he does not think the recovery is dependent on it. Congress will need to shift gears and focus on confirming President Trump’s Supreme Court pick Amy Coney Barrett. This could deflect attention from passing a stimulus package, but the market seems less focused on when the aid comes and instead on pricing in the fact its coming.

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Thursday night, as China came back from holiday, the Yuan hit the highest level since April 2019 against the U.S. Dollar. This brought a tailwind to commodities and in particular the metals sector. Over the weekend, the People’s Bank of China cut the reserve requirement for banks when trading currencies from 20% to zero. This slapped the Yuan below Friday’s low as its down 0.76% on the session versus the U.S. Dollar.

Both the S&P and NQ are at the highest level since the September 3rd selloff. There are only two foreseeable headwinds between now and the end of the year that would keep these two indices from setting fresh record highs. The first would be comments that fiscal measures have hit an insurmountable roadblock and the other is a rising U.S. Dollar. Traders must keep a pulse on the Chinese Yuan and the reversal at the onset of the week. Today, there is a deluge of comments coming from Eurozone leaders. Tomorrow, we look to U.S. inflation data via CPI.

Technicals: Price action is ripping, both the S&P and NQ are clearly out above our momentum indicators which align more closely with Friday’s settlement and bring major three-star support below the market at 3473.50-3487 in the S&P and 11,724-11,764 in the NQ. Overhead resistance now begins to align with the damage created around the September 2nd selling. The week of August 24th actually held the closing week high and this brings first key resistance in the S&P. For the NQ this aligns with the round 12,000 level as well as other technical indicators to create major three-star resistance at 11,976-12,025. Traders do not want to chase action, we will continue to hold a cautiously Bullish Bias as we expect new record highs in the coming months if not sooner. However, we would not be surprised to see tests of first support or near such to present a better buying opportunity. A close below 3431.75-3437.50 in the S&P and 11,539-11,574 in the NQ will create a windfall of selling and a near-term failure.

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Bias: Neutral/Bullish

Resistance: 3494**, 3516.50-3523.50**, 3568.75-3576.25***, 3587***

Support: 3473.50-3487***, 3445.25-3451.25**, 3431.75-3437.50***

NQ (December)

Resistance: 11,976-12,025***, 12,225**, 12,397-12,465***

Support: 11,724-11,764***, 11,539-11,574***

Crude Oil (November)

Last week’s close: Settled at 40.60, down 0.59 on Friday and up 3.55 on the week

Fundamentals: Several supply factors began weighing on Crude Oil Friday. A visible catalyst on Friday was when Norwegian oil workers ended a strike that removed as much as 1 mbpd from the market. Additionally, as Hurricane Delta made landfall this weighed on near-term demand forecasts, but more importantly foreseeably allowed production to restart in the Gulf over the weekend. Libya’s National Oil Corporation also lifted a force majeure at its biggest oilfield, El Sharara, which produces 300,000 bpd. Lastly, a weaker Chinese Yuan is weighing on the commodity complex, although we may not see it broadly just yet.

Technicals: Crude Oil traded to a high of 41.47 and has so far failed at major three-star resistance at 41.57-41.72 and to hold the 200-day moving average which comes in today at 41.03. Still, the 50-day moving average is now out above the 200-day coming in today at 41.09. Regardless, Crude Oil must begin closing above quick in order to gather bullish tailwinds from the Gold Cross and avoid a decisive rejection. Price action faces major three-star support at 39.05-39.22 and this is where it must respond in the next 24 hours. Our momentum indicator is dropping but for now aligns with Friday’s settlement at 40.40-40.60 and a close above here is very upbeat.

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Bias: Neutral/Bullish

Resistance: 40.40-40.60**, 41.03-41.09**, 41.57-41.72***, 43.24-43.69***

Pivot: 39.95-40.04

Support: 39.05-39.22***, 38.47**, 37.58-37.67**, 36.36-36.58***

Gold (December)

Last week’s close: Settled at 1926.2, up 31.1 on Friday and 18.6 on the week

Fundamentals: Gold closed the week with a bang. As we pointed out here, like clockwork, China came back from holiday and Gold ripped. The Chinese Yuan also gained significant ground Friday. However, the People’s Bank of China threw cold water over the currency move over the weekend by cutting the reserve requirement ration from 20% to zero for what banks must hold when trading currencies. The Yuan has lost all ground it gained against the U.S. Dollar, closing below Friday’s low. This is certainly holding back commodities today and this coupled with the technical landscape cannot be ignored.

Technicals: Gold traded to an overnight high of 1939.4 as it extended Friday’s momentum, however, the tape is showing signs of exhaustion pulling back at the onset of U.S. hours. Our momentum indicator trails such a rip, but once the tape stalls, it catches up. Today, this comes in at 1930 and while below there the tape is vulnerable to waves of selling. Still Friday’s settlement brings support at 1926.2, but we could easily see a move back to 1915-1917; it will be a matter of how the bulls respond.

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Bias: Neutral/Bullish

Resistance: 1933-1937***, 1950-1958***

Pivot: 1926

Support: 1915-1917**, 1902-1905***, 1877.1-1880***

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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.