Morning Express | Stocks at All-Time Highs | Nat. Gas & Oil Production | Gold Pivot

E-mini S&P (September)

Last week’s close: Settled at 3392.50, up 11.75 on Friday and up 31.00 on the week

NQ, yesterday’s close: Settled at 11562, up 84.75 on Friday and up 428.25 on the week

Fundamentals: The S&P has broken out above its February 20th record high. Over the weekend, the FDA approved use of Convalescent Plasma in the treatment of Covid-19 patients. The news lit a fuse for the S&P to achieve what it had failed to do upon multiple attempts last week. The FDA and Commissioner Steven Hahn had been the eye of President Trump criticism Saturday morning when he tweeted the organization was delaying approvals until after the election. The FDA swiftly issued an Emergency Use Authorization for the plasma, but noted it was not a full approval as they continued to evaluate the effectiveness and safety.

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The news of the treatment accompanies a push by Trump’s administration to fast track AstraZeneca’s vaccine before the election. Progress in fighting the Covid-19 pandemic is amazing news. From a market standpoint, it brings a tailwind of exuberance to an already bullish tape. In this case, it pushed the S&P to a fresh record. Once the headlines cool, there will come a time that vaccine news pulls the winds from the sails of risk-assets broadly. Remember, the Federal Reserve has added $3 trillion to its balance sheet since February to combat grinding the economy to a halt during lockdowns. There will come a time the Fed must unwind this liquidity in order to be prepared to fight the next hurdle it faces, whatever it may be. We are not calling for the market to reverse today’s gains, but simply pointing out a narrative that cannot go ignored.

The economic calendar is light today ahead of Consumer Confidence tomorrow. The Republican National Convention begins tonight and will certainly grab headlines.

Technicals: Both the S&P and NQ are well out above Friday’s settlement prices, which now create an intraday gap. For the S&P, we have previous record highs, resistance, and our momentum indicator this morning aligning to create first support, a major three-star level, at 3397.50-3400. For the NQ, Friday’s settlement aligns with our momentum indicator to bring first key support at 11,562-11,580. The path of least resistance is higher, but the S&P still must achieve the breakout on a closing basis. Overhead, we have major three-star resistance in the S&P at 3438.50-3446.75 and for the NQ at 11,721; a close above each of these levels today would truly exude a runaway freight train. We hold a Neutral Bias as we do not advise chasing the open, however, a retest to major three-star support in the S&P at 3397.50-3400 would be a buy opportunity.

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Bias: Neutral

Resistance: 3438.50-3446.75***

Support: 3397.50-3400***, 3392.50***, 3377.25-3380.75***

NQ (September)

Resistance: 11,721***, 12,000***

Pivot: 11,654

Support: 11,562-11,580**, 11,502***, 11,400-11,408***, 11,325-11,347**, 11,261-11,283***

Crude Oil (October)

Last week’s close: Settled at 42.34, down 0.48 on Friday and up 0.03 on the week

Fundamentals: Covid-19 treatment news has boosted risk-assets broadly, but the energy space is also incurring tailwinds from active storms in the Gulf. Marco was downgraded back to a Tropical Strom yesterday, whereas Tropical Strom Laura is strengthening and aiming to run through the Gulf as a hurricane tomorrow, making landfall Wednesday. The looming threat had shut down 58% of Gulf Oil production, about 1 mbpd, and 45% of Natural Gas production. The news pushed Crude Oil $1.50 from its low Friday to retest the critical $43 mark and Natural Gas has moved out to new swing highs. One thing to keep in mind and something we always point out; although production is disrupted, landfall can just as quickly disrupt demand. Furthermore, refineries are also disrupted which means less Crude Oil is pulled.

Technicals: Price action has again failed to break through rare major four-star resistance, the gap from March 6th. Additional headwinds come in the tune of the October 200-day moving average at 43.36. To the downside, Friday’s settlement aligns perfectly with our momentum indicator this morning and the continuous 200-day moving average to bring first key support. The inability to breakout has arguably turned a bullish trend into a complete sideways consolidation. We remain very Neutral and want to be buyers from lower levels.

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Bias: Neutral

Resistance: 42.92****, 43.36***, 46.37***

Support: 42.16-42.34**, 41.63-41.87**, 40.77**, 40.00-40.24**, 38.77-39.00**, 35.25-35.88***

Gold (December)

Last week’s close: Settled at 1947, up 0.5

Fundamentals: Gold has nearly had a 2% range whipsawing from early weakness to a spike hitting 1970.2 at the onset of U.S. hours. The tape followed the risk-on move in markets broadly with Covid-19 treatment news grabbing headlines but has come in as the Dollar strengthens off its early morning lows. The economic calendar is light today, but Consumer Confidence tomorrow, Durable Goods Wednesday and Fed Chair Powell Thursday will be pivotal for the metal. We remain cautious as a seasonally bullish time of year unwinds and look to be buyers from lower levels.

Technicals: Price action has been tethered to our Pivot which encompasses our sideways momentum indicator and Friday’s settlement. An early morning rip to 1970.3 was stopped in its tracks by major three-star resistance at 1967.1, which in hindsight provided a tremendous swing short. The spike also created a tail on the daily chart and continued weakness back to the lows will encourage additional selling, so the bulls must be cautious; a close below 1923-1931.6 is near-term bearish.

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Bias: Neutral/Bullish

Resistance: 1955.2-1957.7**, 1967.1***, 1981.7-1985.2**, 2020-2028***

Pivot: 1946.5-1949.4

Support: 1923-1931.6***, 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.