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E-mini S&P (December)

Yesterday’s close: Settled at 3504.75, down 28.00

NQ, yesterday’s close: Settled at 12,094, down 4.25

Fundamentals: U.S. benchmarks are broadly unchanged as we move through Amazon and Apple events, dive into earnings season and remain deadlocked in Washington. Apple left much to be desired yesterday at its 5G iPhone launch and the stock finished -2.65%, but off its worst on the session. Bill Baruch joined Yahoo! Finance yesterday to discuss markets with a focus on earnings. There, he pointed out that JPMorgan set aside less than estimated for bad loans. This has been a closely watched component through bank earnings during the pandemic; generally speaking, it gives a pulse on how the banks are preparing for the economic recovery to fizzle out and defaults to rise. Goldman Sachs reported this morning and set aside $278 million, down from $1.59 billion in the second quarter. The company crushed expectations with a surge in trading revenues. Although the stock is up more than 2% ahead of the bell, the question is whether the banks can hold such gains. We have become accustom to premarket surges quickly dissipating in bank stocks through the session. There is no need to look further than JPMorgan yesterday. Bank of America’s results were less enthusiastic than expected this morning. They beat profit forecasts by missed on revenues while booking another $1.4 billion in bad loan provisions and missing on Net Interest Income. The stock is down about 3% ahead of the bell. Wells Fargo is also down nearly 2% after reporting. UnitedHealth beat estimates and is trading in positive territory.

Nothing has changed in Congress; the impasse is alive and well. Senate Leader McConnell tried to push for a smaller $500 billion fiscal plan, but it was quickly shot down by House Speaker Pelosi. On the other hand, she will continue talks with U.S. Treasury Secretary Mnuchin. President Trump has called for a “go big or go home” Coronavirus spending bill, but he is certainly getting backlash from fiscal conservatives in the Senate.

Our narrative: inflation is showing up. Although yesterday’s more closely watched Core CPI read was a touch below expectations at +1.7% YoY for September, it has inched higher and August was revised up to +1.7%. Today’s PPI read increased more than expected across the board. We have actually seen the U.S. Dollar trade lower, stocks inch higher and Gold surge at and around the results. Fed Vice Chair Clarida speaks at 8:00 am CT, Fed Governor Quarles follows at 9:30 am CT and there is a 20-year Bond auction at noon CT.

Technicals: The support levels we highlighted here yesterday lived up to the hype. This was second key support in the S&P at 3491.25-3494 and major three-star support at 11,976-12,025. These pockets aligned multiple technical indicators with the opening low range of Monday’s bell and have proven to be very tradable support levels. Especially so knowing there was a back stop just below. Bill Baruch joined CNBC’s Futures Outlook yesterday to discuss his more intermediate-term outlook for this bull market and levels of strong support to buy against. There, he highlighted the Inverse Head & Shoulders breakout and neckline at 3431.75-3437.50 and gap support above there aligning with Friday’s settlement and large pocket of support at 3473.50-3480. Our Pivots today are our momentum indicators, they come in at .... Please sign up for a Free Trial at Blue Line Futures to have our entire fudndamental and technical outlook, actionable bias, and proprietary levels for the markets you trade emailed each morning.

Crude Oil (December)

Yesterday’s close: Settled at 40.20, up 0.77

Fundamentals: Crude Oil is up more than 1% this morning and 3% from responding to major three-star support late Monday. The rebound in price comes despite mixed outlooks on growth through 2021 from the IEA and IMF and a rather downbeat synopsis on OPEC’s Monthly Report yesterday that called for oil demand growth to decline in 2021 by 80,000 bpd more than previous forecasted. OPEC added the expectation that U.S. production will recover more quickly than expected. All things aside, China is the bellwether with steadfast demand. Data from late Monday night showed China’s Crude imports rose to nearly 12 mbpd, a YoY increase of 17.6% and MoM increase of 5.6%. Now, bubble wrap all of this with bullish near-term expectations on inventory data that will begin trickling out with API after the bell. Early EIA estimates call for -3.387 mb of Crude in what would be the largest draw since mid-September.

Technicals: Giddy up! We have increased our Bullish Bias after Crude responded to major three-star support perfectly at the onset of the week and amid steady waves of selling after failing at the 50-and 200-day moving averages and major three-star resistance at 41.57-41.72 last week. We remained steady in our outlook and have now increased it as price action moves to retest the 50-and 200-day at 41.02 and 40.86, respectively. The Golden Cross has already taken place, follow through is what matters now. We are getting more Bullish in Bias now but need to see a close above ... Please sign up for a Free Trial at Blue Line Futures to have our entire fudndamental and technical outlook, actionable bias, and proprietary levels for the markets you trade emailed each morning.

Gold (December)

Yesterday’s close: Settled at 1894.6, down 34.6

Fundamentals: Gold has rebounded steadily from yesterday’s bludgeoning. Driving the gains is U.S. Dollar weakness and what has quickly become almost as important to Gold, Chinese Yuan strength. A small gain of 0.40% for the Yuan against the Dollar has brought a tailwind to the metals sector. Furthermore, remember, China’s new 5-year plan set to start in 2021 will plan to add more strategic metals to its reserves. A stronger Yuan buys more. Steady to strong inflation data from CPI yesterday and PPI today has also seemingly brought support Fed Vice Chair Clarida added this morning that the economy needs “another year” to return to pre-pandemic levels. This is a sign that amid rising inflation, the Fed will hold rates at the zero bound: bullish for Gold.

Technicals: Sometimes a bull market needs to washout to rid it of weak hands and gather buying at attractive levels to cleanse and reinvigorate its market profile. This appears to be what Gold did yesterday. In that case, today’s move is very bullish, however, we must, must, must see a close above major three-star resistance at ... Please sign up for a Free Trial at Blue Line Futures to have our entire fudndamental and technical outlook, actionable bias, and proprietary levels for the markets you trade 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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