Morning Express - stocks, oil and gold analysis

E-mini S&P (September)

Yesterday’s close: Settled at 3070.75, up 21.75

NQ, yesterday’s close: Settled at 10,088.25, up 77.50

Fundamentals: On Thursday, the U.S. set a record for new virus cases. The curve across some southern states steepened sharply, in particular Texas and Florida. On a positive note, the rate of deaths has not followed suit. U.S. benchmarks are unchanged ahead of the bell after grinding out a strong close yesterday. The S&P traded to a new low overnight, ahead of Thursday’s session, and held the retest at the open. While the NQ marginally breached its overnight low on the open, risk-assets queued off strength in the energy sector to begin turning a corner, sealing a rejection and the rest was history. Tech and Healthcare both performed very well, but it was the Banks that led the late charge after passing the Fed stress test. The XLF (Financial Sector ETF) gained 2.65%. However, the Fed warned of the Covid-19 aftermath and potential mounting bad loans. They banned buybacks and capped dividend payments to combat potential losses.

Stocks around the globe gained ground overnight on the heels of that late U.S. strength. China was closed on holiday, but Monday night we look to June Manufacturing PMI. ECB President Lagarde spoke early this morning and said the worst of the pandemic is likely over, however, warned of an economic shift in the aftermath that will mark some businesses obsolete. From the U.S., we look to the Core PCE Index at 7:30 am CT, the Federal Reservers preferred inflation indicator. This May read brings Personal Spending and Income components that made headlines one month ago. Spending fell by a record amount as individuals stayed home in quarantine in April. However, due to stimulus checks and unemployment that earned some more than their jobs, Income rose by a record. The data is expected to return to the mean today. Final June Michigan Consumer reads are expected at 9:00 am CT.

Technicals: With a recovery session like yesterday, it is tough to say that both the S&P and NQ have done anything wrong this week. Yes, the S&P did take out the Sunday night low and what we coined major three-star support at 3062 earlier. However, the NQ was buoyed by a strong technical shelf and ultimately, although decisively violating a trend line from the March lows and briefly breaching the 200-day moving average, the S&P is holding within a longer-dated flag-like consolidation pattern with slightly lower lows and slightly lower highs. We must remind you that such a pattern is healthy and especially so within the backdrop of the NQ’s constructive landscape. The fundamentals certainly concern us but the momentum is undeniable. We remain very cautious and Neutral through today, but again the resilience and rally through resistance levels in the S&P yesterday must not go unnoticed. That trendline from the lows comes in at today’s session low and has held to bring first key support, meaning it never closed below the trend line. Our momentum indicator aligns with ... 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 38.72, up 0.71

Fundamentals: The energy complex recovered well yesterday from Wednesday's weakness. At an interesting inflection point to finish out the week; August WTI is struggling to regain $40 while August Brent is buoyed by the psychological benchmark. Although the broader macroeconomic picture is displaying renewed demand fears due to a steepening virus curve, tailwinds behind the hope of OPEC+ compliance through July helped August WTI respond at a crucial level of technical support. Fear across risk-assets dissipated after the opening bell yesterday and energy led before handing the baton to tech and the banks. Baker Hughes will be closely watched as Rig Counts continue to slip, however, estimated production surged in a snapback from the prior week. We maintain that a recovery in U.S. production at these price levels is the elephant in the room.

Technicals: Fading the rally into major three-star resistance is proving to be a solid play after trading to a high of 39.35 overnight. Our momentum indicator comes in 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.

Gold (August)

Yesterday’s close: Settled at 1770.6, down 4.5

Fundamentals: Gold remains in consolidation after achieving an eight-year high. Rally attempts to recoup such gains have stalled just as Silver struggles to hold what has become a psychological barrier at $18. The Treasury complex is gaining ground this morning and helping to keep the metals complex together. The Federal Reserve's preferred inflation indicator, the Core PCE Index, and its components were mixed this morning and we now look to final June Michigan Consumer data. The biggest headwind for Gold may have become fears of deflation due to a record rise of Covid-19 cases.

Technicals: Although we remain unequivocally Bullish in Bias Gold over the long-term, resistance at 1782-1784.8 is keeping rallies in check and exuding the exhaustion of failing to hold new eight-year high. Given such stalls and ultimately the second test to 1761.7, we have reduced the strength of this support to only a key level. We now have major three-star support and our main buy target 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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