Morning Express - stocks, oil and gold
E-mini S&P (September)
Yesterday’s close: Settled at 3049, down 69.50
NQ, yesterday’s close: Settled at 10,010.75, down 185.25
Fundamentals: U.S. benchmarks were roiled yesterday as Covid-19 cases surged by roughly 35,000, the most since April. Volatility among risk-assets has certainly increased in the last 36 hours and is not conducive for the bull case. However, monetary and fiscal stimulus are. Without fresh sounds of new measures, risk-assets are due for additional pressures on fears the pandemic worsens domestically. Also lurking are geopolitical threats. The White House is considering $3.1 billion in new tariffs on the EU and U.K. Additionally, the U.S.-China trade war has fallen off the headlines since Monday night, but one must expect fresh developments around the corner; whether bullish or bearish. Remember, tensions remain on the Korean peninsula and on the China-India border.
On the economic calendar, final U.S. Q1 GDP was in line with expectations at -5.0%. Durable Goods data improved sharply but from a very low level. Initial Jobless Claims were more than expected at 1.48 million, however, the Continuing Claims read is quietly becoming more important and was better than expected at 19.522 million versus expectations of 19.968 million. Although an improvement from 20.289 million last week it remains three times previous record highs from 2009.
To key off the discussion of fresh monetary and fiscal stimulus measures discussed earlier, we look to a slew of Fed speakers throughout the day. Dallas Fed President Kaplan speaks at 8:30 am CT (2020 voter), Atlanta Fed President Bostic is at 10:00 am CT, and Cleveland Fed President Mester follows at 11:00 am CT (2020 voter). Lastly, with markets under pressure, it would not be surprising to hear comments on fiscal measures from Washington before the weekend.
Technicals: Yesterday’s wave of selling and decisive break below major three-star support at 3062-3072.25 opens the door lower. The 200-day moving average comes in at 3013.50 and a trend line from the March lows comes in at 3030. Both levels were violated overnight upon the 3005 low, a low that created a rejection bounce of 50 points before slipping again. That rejection bounce helps define the strength of previous support that has now been adjusted to 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 directly each morning.
Crude Oil (August)
Yesterday’s close: Settled at 38.01, down 2.36
Fundamentals: Crude Oil had its worst day in two weeks as a surge in Covid-19 cases sparked fresh demand worries and hit risk-sentiment. Yesterday’s EIA inventory report also paved a path of least resistance lower with Crude stocks gaining 1.442 mb and production increasing by 500,000 bpd. It is important to note that in the prior week EIA estimated production fell by 600,000 bpd and this is simply a snap back. Whereas one week is certainly not a trend, traders should keep a pulse on this in the coming weeks. We have noted before that a potential return of U.S. production is the elephant in the room now that price action is near $40 and producers can now hedge out.
Technicals: Price action remains depressed below yesterday’s breakdown point and our momentum indicator which comes in at 38.15. Major three-star support was tested overnight at 36.96 with a low of 37.08. Given the first test, we have now expanded this support to 36.59-36.96. A decisive break and close below here should then open the door to ... Please sign up for a Free Trial at Blue Line Futures to have our entire technical outlook, actionable bias and proprietary levels emailed directly each morning.
Yesterday’s close: Settled at 1775.1, down 6.9
Fundamentals: Gold is lingering well off yesterday’s fresh eight year high and being dragged by strength in the Dollar as well as deflationary fears tied to a surge in Covid-19 cases. The economic data was across the board better than expected this morning, but better from abysmal levels and this couple with unprecedented stimulus measures is the base case for precious metals. Still, it is important to remember our steadfast narrative; you do not want to buy Gold when everyone is screaming for it, that is when you want to be capitalizing on Gold you already own.
Technicals: As we noted here yesterday, if you followed us long it was necessary to capitalize on such a move and then anticipate a buying opportunity at major three-star 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 directly each morning.
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