Morning Express - stocks, oil and gold analysis
E-mini S&P (September)
Last week’s close: Settled at 3178.50, up 37.50 on Friday and up 49.50 on the week
NQ, last week’s close: Settled at 10,837.25, up 109.75 on Friday and up 481.50 on the week
Fundamentals: U.S. benchmarks opened higher last night and are finding favorable tailwinds ahead of the bell. New York reported no new Covid-19 cases for the first time since the onset of the pandemic. Reuters reported this morning Pfizer and BionTech were granted FDA “Fast-Track Designation” for two Covid-19 vaccine candidates. The news helped push the indices broadly out above their overnight ranges. PepsiCo kicked off earnings ahead of the bell and topped expectations. We expect guidance from companies to be thin and PepsiCo failed to update its outlook but noted strong demand as consumers stock their pantries amid lockdowns. The banks step to the plate tomorrow with JPMorgan, Citi and Wells Fargo all reporting. Their loan loss provisions will be under the microscope as a barometer of expectations for defaults.
Today’s economic calendar is quiet, but boasts speeches from NY Fed President Williams at 10:30 am CT and Dallas Fed President Kaplan at noon CT. Both are 2020 voters. Things pick up tomorrow though with GDP and Production data from the U.K., ZEW Sentiment from Germany, Eurozone Industrial Production and U.S. CPI all on the radar. Wednesday evening brings a deluge of data from China.
Technicals: We continue to hold our cautiously Bullish Bias as the path of least resistance remains higher. However, as always, we are not recommending chasing price action and instead pick your spots. The S&P is running into major three-star resistance at 3212.75-3216.75 while the NQ faces the round 11,000 mark. Our rising momentum indicator in the S&P is trailing the spike and aligns with previous resistance and Friday’s settlement as major three-star support at 3170.75-3178.50 this morning. First key support comes in at 3186.75-3189. The NQ continues its melt-up and achieved major three-star resistance at 10,960-11,000. The tape remains immediately bullish while out above 10,825-10,863.75 a level that aligns our rising momentum indicator with previous support and Friday’s settlement.
Resistance: 3212.75-3216.75***, 3258.75**, 3312**, 3339.50****
Support: 3186.75-3189**, 3170.75-3178.50***, 3152.25-3154**, 3126-3129**, 3115.75-3118**, 3103-3107***
Resistance: 10,960-11,000***, 11,330***, 11700***, 12,897.25****
Support: 10,825-10,863.75***, 10,664.50-10,694.50**, 10,625**, 10,560**, 10,513-10,525.75***
Crude Oil (August)
Last week’s close: Settled at 40.55, up 0.93 on Friday and down 0.10 on the week
Fundamentals: Crude Oil is off Friday’s snap back highs as Wednesday’s meeting among the OPEC+ Monitoring Committee comes in to focus. They are expected to consider and potentially announce a taper of the pandemic cuts from 9.7 mbpd to 7.7 mbpd. Russia has been vocal about bringing production back online. The trend is clearly higher, but the gap from March 6th has contained the rally just as ongoing demand comes under question. The IEA revised higher its demand expectations for 2020 but noted last week the surge in Covide-19 cases as the greatest risk to the demand recovery. We also find the potential of rising U.S. production amid more favorable hedging conditions as another clear risk to the
rally. Considering all, we would focus on pullbacks to be a buying opportunity.
Technicals: Price action on Friday regained the 39.60-39.85 level quickly and extended gains to a high of 40.77. It has since been contained by resistance at 40.80. The short-lived nature of Friday’s weakness has buoyed our momentum indicator, today’s Pivot, the tape is favorable while holding out above here. Still, we see limited upside at these levels and would prefer to be buyer at 36.59-36.96.
Resistance: 40.80**, 41.28***, 41.63**, 42.33****
Support: 39.60-39.85***, 38.20-38.49**, 37.50*, 36.59-36.96***
Yesterday’s close: Settled at 1801.9, down 1.9
Fundamentals: Gold is trading higher to start the week. Friday’s pullback was constructive and held a test to previous swing highs. Strength across the metals complex is bringing favorable tailwinds as Copper extends its melt-up and Silver chews through previous technical resistance. U.S. Dollar weakness is aiding such tailwinds. However, traders should keep a close eye on the rise in rates over since early Friday morning and this coupled with such a melt-up in risk assets pose the greatest foreseeable risk to the Gold rally. Today’s economic calendar is quiet, but boasts speeches from NY Fed President Williams at 10:30 am CT and Dallas Fed President Kaplan at noon CT.
Technicals: We have been outright Bullish in Bias Gold and continue to be such. Friday’s pullback battled at 1803.8-1804.4 but ultimately held 1790-1794.8 constructive and today’s response is creating a bull-flag pattern that we believe paves a path of least resistance to 1849.1. Price action is bullish across all time frames while out above 1807.7-1809.3. Silver has chewed through its trend line resistance from July 2016 and this is bringing a much-needed tailwind to Gold given Silver’s lag.
Resistance: 1820**, 1828.5***, 1849.1***
Support: 1803.8-1804.4***, 1790-1794.8***, 1775.6-1781**
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