Morning Express - stocks, oil and gold analysis

E-mini (September)

Last week’s close: Settled at 3007, down 63.75 on Friday and down 52.50 on the week

NQ, last week’s close: Settled at 9865.50, down 222.75 on Friday and down 58.00 on the week

Fundamentals: U.S. benchmarks opened lower Sunday night but have pared losses, turning positive ahead of the opening bell. A record rise in Covid-19 cases across the U.S. last week weighed on risk-sentiment. This steepening curve halted the reopening process in many southern states, but with price action turning, investors seem to be more focused on the slowing rate of infections over the weekend. Also adding tremendous pressure to the tape has been social media boycotts. Companies including Verizon, Coca-Cola and Starbucks have either halted or plan to pause all social media advertising because platforms have ‘failed to stop the spread of hate’. Facebook and Twitter lost 8.3% and 7.4% respectively Friday and are each down another 2.5% premarket. Traders must keep a pulse on this narrative as it could quickly become more dominant amid a risk-off wave.

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There is a jam-packed economic calendar in this holiday shortened week. Today, sentiment data from the Eurozone was just below expectations, although the closely watched German reads broadly improved last week. CPI data from Germany this morning was stronger than expected. Today is a bit quieter overall. From the U.S. we look to Pending Home Sales at 9:00 am CT and Dallas Fed Manufacturing at 9:30 am CT. Tonight, June Chinese Manufacturing PMI is out at 8:00 pm CT and this leads into U.K. GDP, Eurozone CPI and U.S. Consumer Confidence Tuesday. ISM Manufacturing is Wednesday, and Nonfarm Payroll has moved up to Thursday to avoid Friday’s holiday hours.

Technicals: Each the S&P and NQ pinged major three-star support levels on the open last night before paring losses entirely. On Friday, each also settled at crucial levels of support and those settlement prices will be a key barometer for sentiment, sitting decisively in the red and below our momentum indicators for the first half of the day will keep the tape under pressure. For the S&P we have first key support at 3005-3007 and a Pivot of 3014-3020 that encompasses the 200-day moving average, our momentum indicator and a volume pocket. For the NQ, major three-star support at 9832-9845 held Friday’s close and price action is tethered to here this morning. Our momentum indicator aligns to bring first key resistance at 9885-9900. We are Neutral in the near-term and see better value buying lower given last week’s continued lower lows. Only a move out above and close above major three-star resistance at 3058-3063.25 in the S&P and 10,082-10,088 in the NQ will become bullish across all timeframes.

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Bias: Neutral

Resistance: 3044.25**, 3058-3063.25***, 3070.75-3075.25**, 3092**, 3108.75-3110.75**

Pivot: 3014-3020

Support: 3005-3007**, 2993.75-2995.75**, 2981-2986.25***, 2971.50**, 2943.75-2956.25***, 2817-2838****

NQ (September)

Resistance: 9885-9900**, 9969.25-9984**, 10,082-10,088***, 10,196-10,221***, 10,296**

Pivot: 9832-9845.25***

Support: 9754.25-9788.50***, 9722.75**, 9587.25-9603.50***, 9328-9368.25***

Crude Oil (August)

Last week’s close: Settled at 38.49, down 0.23 on Friday and down 1.34 on the week

Fundamentals: Crude Oil has battled demand fears due to the sharp increase in U.S. Covid-19 cases and has done a tremendous job in holding ground. At the onset of this week traders will be keeping a pulse OPEC+ compliance heading into July, inventory data in the U.S. given the rise in cases and of course Chinese demand. Tonight, Chinese Manufacturing PMI for June is due at 8:00 pm CT. Crude Oil demand from China has been a bellwether in the complex’s recovery. Refiners in China also produced record output of products last month and this again signals healthy imports. However, reports that the five biggest importers are teaming up to bargain for prices could begin to cool the narrative. All in all, Chinese Manufacturing PMI and analysts inventory expectations will swing the tape over the next 24 hours. On Friday, Baker Hughes reported Oil Rigs dropped by one.

Technicals: The Managed Money Net-Long position has dissipated marginally over the last two weeks from its peak the first week of June but remains elevated at the highest since July 2018. This leads us to believe that even if Crude Oil had higher to go, there must be a shakeout first in order to gather fresh buying. Price action is trading around our Pivot which includes Friday’s settlement and our momentum indicator. Buyers have steadfastly defending major three-star support at 36.59-36.96. The aforementioned shakeout would foreseeably break this level of support and test 33.47 at minimum, and quickly. Still, while above 38.20 on the session, the bulls remain in the driver’s seat across all timeframes.

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Bias: Neutral/Bearish

Resistance: 39.40-39.85***, 40.35**, 42.33****

Pivot: 38.20-38.49

Support: 37.50*, 36.59-36.96***, 34.66-35.15**, 33.47***, 30.95-31.28***

Gold (August)

Last week’s close: Settled at 1780.3, up 9.7 on Friday and up 27.3 on the week

Fundamentals: Gold posted a tremendous session on Friday; it battled a washout to major three-star support exactly and then recovered strongly and finished nearly $30 from the low. On a fundamental basis, there is renewed safe-haven demand with a sharp increase in Covid-19 cases across the U.S., however, it also reinvigorates deflationary fears. The Treasury complex has seen solid interest and Bill Baruch highlights the path of least resistance higher in each Gold in Treasuries in Friday’s What’s Moving. The economic calendar in this holiday week is jam-packed. We look U.S. Pending Home Sales at 9:00 am CT today, Chinese Manufacturing PMI at 8:00 pm CT tonight, U.S. Consumer Confidence tomorrow, ISM Manufacturing Wednesday and Nonfarm Payroll Friday.

Technicals: Gold held a head-on test to major three-star support and our buy target at 1748.6-1753 on Friday and reversed sharply to finish strong on the session. This support aligns multiple technical indicators with a trend line breakout on the continuous front-month contract. Price action is above our Pivot of 1780.3-1781 which is healthy and paves a path of least resistance higher. Still, major three-star resistance 1794.8-1804.4 has kept rallies in check and only a close above here will confirm the next leg.

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Bias: Bullish/ Neutral

Resistance: 1794.8-1804.4***, 1820-1825***

Pivot: 1780.3-1781

Support: 1770.6-1771**, 1761.7**, 1748.6-1753***, 1733.9-1737***

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