Morning Express | Apple & Tesla Split | China Tensions & Exports | Fed, ISM, & Nonfarm Payroll

E-mini S&P (September)

Last week’s close: Settled at 3504.50, up 19.25 on Friday and up 112 on the week

NQ, last week’s close: Settled at 11,991.75, up 39.00 on Friday and 429.75 on the week

Fundamentals: The S&P traded to a new record high on the open last night and the NQ followed suit shortly thereafter. U.S. benchmarks are broadly better ahead of the bell with two largely anticipated stock splits in focus. Apple will split 4:1 and Tesla 5:1; there is no doubting each’s announcement a few weeks back has brought a tailwind of enthusiasm. Will the event itself pave the way for the market’s record run to cool? Although such is overdue, according to Fox Business, historically speaking, the 10 biggest global brands that have had stock splits over the last 60 years have seen an average rise by 33% over the next 12 months. Only Alphabet and Samsung finished lower one year out.

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U.S. and China relations are also front and center after Beijing said they must now approve any sale of TikTok. Front runners include a bid by Microsoft-Walmart and Oracle. Just last week, China launched two missiles into the South China Sea as a show of strength and warning to the U.S. Despite the obvious, top level trade negotiators continue to praise progress between the two world powers and that is all the market has focused on. A set of data from China Sunday night included Manufacturing PMI, it came in below expectations at 51.0 versus 51.2 and 51.1 last month. The HSBC gauge on Manufacturing PMI is due tonight.

The U.S. economic calendar is light but speeches from Fed Vice Chair Clarida at 8:00 am CT and Atlanta Fed President Bostic at 9:30 am CT are in focus. Bostic is a voter next year.

Technicals: The S&P and NQ finished Friday’s session with a late surge. After not breaking lower intraday, it became common last week to see buying into the bell. Each index responded against first key support levels early on Friday, for the S&P this was 3485.50 and the NQ 11,916-11,925. The higher closes now align with our momentum indicators as well as previous levels to create our Pivots at 3504.50-3509 and 11,991-12,015. Price action above or below here today will help dictate waves, but a failure again break below first key supports (S&P now 3496.75), will likely pave the way for a better close. We now view 3485.50 as major three-star support and a level the S&P must break below today to deter that late buying. Over the longer-term, the S&P is running into a tremendous overhead trend line dating back to 2012 and 2009. This aligns to create rare major four-star resistance at 3535-3545 and a level that was arguably achieved at 3524.50 last night. We will show this in more detail in a video later today.

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Bias: Neutral

Resistance: 3517.25***, 3524.50-3527**, 3535-3545****

Pivot: 3504.50-3509

Support: 3496.75**, 3485.50***, 3466.25**, 3438.50-3446.75***, 3421.75-3423.50**, 3410.75**, 3397.50-3403***

NQ (September)

Resistance: 12,105**, 12,284**, 12,573***, 12,897****

Pivot: 11,991-12,015***

Support: 11,916-11,925**, 11,834**, 11,784*, 11,707-11,726***

Crude Oil (October)

Last week’s close: Settled at 42.97, down 0.07 on Friday and up 0.63 on the week

Fundamentals: Crude Oil has held in positive territory for the entire session as it finds tailwinds from a bullish note by Goldman Sachs. They said the market is “skewed to a faster re-balancing” in 2021 with a main driver being “major oil producing companies keeping capital expenditure low”. The one-two hurricane punch last week has passed, and production in the Gulf remains lower, however, it was unable to decisively break Crude Oil out above key technical levels. The expectation of steadfast Chinese purchases, up from a record July, are also helping to keep a bid under the market. Furthermore, the EIA posted the fifth straight weekly drawdown of Crude stocks. The market now finds itself at an inflection point; if it cannot breakout now, we imagine a consolidation lower at minimum.

Technicals: We held a cautiously Bullish approach for much of last week, but the latest leg of the Crude rally has been unimpressive. Although price action has struggled to accelerate out above the 42.92-43.15 pocket that encompasses the October 200-day moving average, March 6th settlement and momentum indicator it is holding above this crucial Pivot and that is overall supportive. Still, we must completely Neutralize our Bias for now.

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Bias: Neutral

Resistance: 43.52*, 46.37***

Pivot: 42.92-43.15***

Support: 42.31**, 41.81**, 41.46***

Gold (December)

Last week’s close: Settled at 1974.9, up 42.3 on Friday and up 27.9 on the week

Fundamentals: Gold completed an impressive week last week both fundamentally and technically. The Federal Reserve reinforced remaining accommodative for an extended period through Average Inflation Targeting and price action pounded into major three-star support aligning with the previous record highs from 2011 and responded. Fed Vice Chair Clarida said this morning he doesn’t see negative rates as an attractive option and thinks forward guidance can play a crucial role. Atlanta Fed President Bostic speaks at 9:30 am CT, he is a 2021 voter. We look to ISM Manufacturing tomorrow in a week of heavy data that concludes with Nonfarm Payroll.

Technicals: The rally from Thursday’s low has stalled at major three-star resistance at 1981.7-1987. Overall, Gold is in a large range consolidation from 1900 to 2000 and we could see this continuing for a bit. Our momentum indicator comes in at 1974. While minor support at 1966.5-1967.1 was pierced briefly, the early dip stopped ahead of major three-star support at 1955.2-1957.5; a break below here would pave the way for continued selling on the session.

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Bias: Neutral/Bullish

Resistance: 1981.7-1987***, 2020-2028***

Pivot: 1974

Support: 1966.5-1967.1*, 1955.2-1957.5***, 1946.5-1949**, 1940.7*, 1928-1932**, 1914.7**, 1907.4-1909.6***

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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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