Morning Express | Oracle, Softbank, & M&A | ECB on Euro Strength | OPEC Compliance
E-mini S&P (September)
Last week’s close: Settled at 3333.75, down 6.75 on Friday and 83.75 on the week
NQ, last week’s close: Settled at 11,061.50, down 116.75 on Friday and 487.25 on the week
Fundamentals: U.S. benchmarks have climbed steadily since last night’s open, despite trading to new intraday swing lows Friday. It was reported late yesterday that ByteDance chose Oracle (over Microsoft), for a sale of TikTok’s U.S. assets. The tape on Sundays, regardless of how the prior week finished, has commonly proven to be buoyant. With the news of a deal coming ahead of President Trump’s September 20th deadline where the company must announce a sale or be banned by September 29th, it certainly paved a path of least resistance higher. In recent weeks, the market has used TikTok as a barometer of U.S.-China relations and keyed off the news with a one-way ticket sending the S&P and Dow above Friday’s high. Further developments through the morning point to the agreement not being an outright sale and instead a partnership, yet the market has largely held onto its gains and Oracle is still up 10%. The deal still seeks approval from both the U.S. and Chinese government, a tall task on either side. Please sign up for a Free Trial at Blue Line Futures to have our entire fundamental and technical outlook, actionable bias and proprietary levels emailed each morning. In other deal making news, Softbank again finds itself in the headlines. This time as it sells its U.K. based chipmaker ARM to Nvidia for $40 billion. The news comes after a string of disappointing investments for the VC firm, but most recently after the stock lost ground when it became known the company was behind a very profitable, but extremely speculative, option call buying scheme in the tech sector. Gilead agreed to pay $21 billion for Immunometric who owns a promising breast cancer treatment. Lastly, Bloomberg reported that UBS and Credit Suisse are again exploring a merger. Also driving sentiment this morning are lingering hopes that Congress can agree to a new stimulus package and tailwinds behind Covid-19 vaccine news. The House returns today, and Speak Pelosi said over the weekend she was optimistic of renewed talks. Pfizer and Germany’s BioNTech announced their jointly developed Covid-19 vaccine could be ready for distribution by the end of the year. Additionally, AstraZeneca was approved to restart its Phase 3 trials. Today’s economic calendar is light, but we look to comments from ECB Executive Board member Lane at 8:30 am CT. He has been instrumental in advocating the ECB concentrate on subduing the Euro’s strength. ECB President Lagarde, at her press conference following the policy meeting last Thursday, dismissed such a notion. However, over the weekend she has leaned on governments to enact fiscal spending to aid the recovery. Tonight, there is a deluge of August economic data out of China including Industrial Production at 9:00 pm CT.
Technicals: Both the S&P and NQ set new swing lows intraday on Friday, however, neither closed below crucial levels of support. In fact, each held their Tuesday night (Wednesday session) reopen lows. This helped provide a technical tailwind to the Sunday night action ahead of Monday’s opening bell. The S&P is facing resistance at 3375-3380.25 and again at 3387 and 3395-3397. This area has slowed the overnight buying and the bears must suppress the tape back below 3360.50-3366.50, which aligns with our momentum indicator, in order to reinvigorate added selling. Similarly, the NQ has tested our crucial 11,252-11,290 level before backing off. Our Pivot encompasses our momentum indicator at 11,177-11,190 and the bears want to move the tape decisively back below here. Whereas the S&P took out its Friday high of 3375, the NQ still faces it’s at 11,356 which aligns with resistance at 11,326. Please sign up for a Free Trial at Blue Line Futures to have our entire fundamental and technical outlook, actionable bias and proprietary levels emailed each morning. Bias: Neutral/Bearish
Resistance: 3375-3380.25**, 3387**, 3395-3397**, 3406.75-3408.25**, 3417.50-3424.50***
Support: 3352.75-3355**, 3345.50**, 3333-3337.25****, 3321**, 3308.75**, 3292-3295.50***, 3280-3284**, 3253.50-3263.50*** NQ (September)
Resistance: 11,252-11,290***, 11,326-11,356**, 11,458-11,478**, 11,519-11,575***, 11,700-11,751**, 11,800-11,843***
Support: 11,059-11,087***, 10,890.50-10,937***, 10,459**, 10,301**** Crude Oil (October)
Last week’s close: Settled at 37.33, down 0.03 on Friday and 2.44 on the week
Fundamentals: Energy is broadly lagging commodities and a wave of risk-on to start the week as the U.S. Dollar is lower. Making its waves through the sector is report from BP calling for peak oil demand within the next few years. In fact, according to one scenario modeled, peak demand could have occurred last year. Data over the weekend showed OPEC at 103% compliance in August, however, there are reports the cartel could relax production curbs further. Traders are also monitoring tropical storm Sally that is moving towards the Gulf and expected to become a hurricane. Natural Gas is seeing renewed buying on the news, however, Crude Oil hasn’t. Overall, the dynamic continues to feel unenthusiastic. Tonight’s slate of economic data from China at 9:00 pm CT must be watched closely.
Technicals: The technical landscape remains that from Friday after a nearly unchanged session. Our momentum indicator has not budged either. First key resistance overhead at 38.00 has done its job in keeping rally attempts contained while rare major four-star support remains below at 35.25-35.94. Please sign up for a Free Trial at Blue Line Futures to have our entire fundamental and technical outlook, actionable bias and proprietary levels emailed each morning. Bias: Neutral
Resistance: 38.00**, 38.80-39.05***, 39.77-40.00***, 41.11**, 41.46-41.58***
Support: 35.25-35.94****, 33.52***, 32.33, 32.66*** Gold (December)
Yesterday’s close: Settled at 1947.9, down 16.4 on Friday and up 13.6 on the week
Fundamentals: Gold is snapping back from a lackluster Friday on U.S. Dollar
weakness and comments from U.S. Treasury Secretary Mnuchin this morning that “now is not the time to worry about shrinking the deficit or the Fed’s balance sheet”. This comes as traders eye the start of the two-day FOMC meeting tomorrow, set to conclude at 1:00 pm CT Wednesday. ECB Executive Board Member Lane speaks this morning and has been attempting to keep a cap on Euro rallies, his comments should be watched closely.
Technicals: We remain cautiously Bullish in Bias Gold has it remains in a constructive consolidation above the 2011 previous record high. Today’s early strength is attempting to push through a trend line from the August 7th record, a level that was breached briefly on Thursday before slipping. This trend line now comes in front of major three-star resistance at 1973-1976.6 but we continue to view that pocket as the true resistance given the previous breach. Our momentum indicator is rising and aligns with the 1955.5-1958 pocket to create first key support; a close below here today is very negative. Please sign up for a Free Trial at Blue Line Futures to have our entire fundamental and technical outlook, actionable bias and proprietary levels emailed each morning. Bias: Neutral/Bullish
Resistance: 1973-1976.6***, 1987**, 2001.2**, 2020-2028***
Support: 1955.5-1958**, 1944*, 1928-1932***, 1907.4-1909.6***, 1889.6***, 1845.4****, 1829.8***
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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.