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Morning Express | Stock Split Momentum | China PMI | Dollar Weakness & Trendline | Bill Baruch

E-mini S&P (September)

Yesterday’s close: Settled at 3499, down 5.50

NQ, yesterday’s close: Settled at 12,114, up 122.25

Fundamentals: It is a tech world and the S&P is just living in it; tech is again leading the way higher. Despite the market broadly trying to pullback yesterday, the NQ gained 1% and is tacking on another 1% ahead of the bell. Sector-wise, Energy lost 2% while Banks and Industrials each lost 1%. Upon their splits, Tesla gained 12.5% and Apple 3.3%. The two are not done as Tesla added another jaw-dropping 7% overnight! This was trimmed to 2.5% after the company announced a $5 billion stock offering after its moonshot rise in valuation. Apple’s irrational exuberance is not far behind, up another 2.4% ahead of the bell. There was no special news driving Tesla other than the well-timed appearance of a cheaper stock price with the landing of SpaceX’s Falcon-9 Sunday. Whereas Apple did tell its suppliers to make 75 million 5G iPhones for later this year in a sign of resilience through the pandemic. Direct government stimulus checks into people’s pockets will do that. Yesterday, we noted behemoth splits have averaged a gain of 33% over the next year - this was not to be confused with over the next week.

On the economic calendar, a soft read Sunday night on Chinese Manufacturing PMI was quickly forgotten last night when the counter HSBC survey was better than expected. In Europe, headline August inflation as seen through CPI contracted by 0.2% YoY, the first since 2016, and MoM it was -0.4%. The Core read YoY, excluding food and energy, was also well below expectations at +0.4% versus +0.8%. Last week, Fed Chair Powell made the historic announcement of Average Inflation Targeting, relative to their 2% goal. To put this in perspective U.S. Core CPI for July was +1.6% YoY and the Fed’s preferred Core PCE for July was +1.3%. Each is expected to improve from here. The next ECB meeting is in two weeks and our expectations for action is rising, but with the Euro hitting the highest level since May 2018, the market is certainly not pricing such in. The final read on U.S. August Manufacturing PMI is due at 8:45 am CT and the more closely watched ISM Manufacturing follows at 9:00 am CT. Fed Governor Brainard speaks at noon CT.

Technicals: The S&P traded to an overnight high of 3516.25. Outside of the first seven hours of trading Sunday night, it has been contained by major three-star resistance at ... Please sign up for a Free Trial at Blue Line Futures to have our entire technical outlook, actionable bias, and proprietary levels emailed each morning.

Crude Oil (October)

Yesterday’s close: Settled at 42.61, down 0.36

Fundamentals: Crude Oil is edging higher this morning, feeding off better than expected Caixin Chinese Manufacturing PMI. It is also finding support from the lingering damages of last week’s storms, a slightly better forecast for German GDP for 2020, and an upbeat risk-environment. The private API inventory survey is due after the bell and early expectations point to a sixth straight week of stock drawdowns. On the other hand, final August German Manufacturing PMI was revised lower, and so was 2021 GDP expectations. Not to mention, the other read on Chinese Manufacturing PMI Sunday night underwhelmed. There are also reports of Russia following through with a narrative that started making the rounds a few weeks back; increasing production in the Arctic region. U.S. ISM Manufacturing is due at 9:00 am CT.

Technicals: Price action remains tethered to the 42.92-43.15 pocket that encompasses the March 6th gap, October 200-day moving average and our momentum indicator. While we did see a wave of selling yesterday, price action responded in front of first key support at ...  Please sign up for a Free Trial at Blue Line Futures to have our entire technical outlook, actionable bias, and proprietary levels emailed each morning.

Gold (December)

Yesterday’s close: Settled at 1978, up 3.7

Fundamentals: Gold consolidated well yesterday and capitalized off fresh U.S. Dollar weakness in Asian hours last night by sticking its nose above $2000 for the first time two weeks. Better Caixin Chinese Manufacturing PMI helped strengthen the Yuan and was arguably a catalyst aiding the move. Also, Gold has been able to rally in recent session in the face of rising Treasury yields. Ultimately, Gold has acted as a safe haven in many ways, but more so has become a barometer to the risk-appetite tied to the forecasting of central bank easy-month policy. We still love Gold over the long-run but advise to not chase the metal. The time to buy is not here at 1990-2000 but was instead at 1910-1920. For those that missed it, we believe an opportunity will present itself once again. U.S. ISM Manufacturing is due at 9:00 am CT.

Technicals: Price action is holding out above previous major three-star resistance at 1981.7-1987, this now aligns with our momentum indicator. Continued action above here is ...  Please sign up for a Free Trial at Blue Line Futures to have our entire technical outlook, actionable bias, and proprietary levels 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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