Morning Express - stocks, oil and gold analysis

E-mini S&P (September)

Yesterday’s close: Settled at 3148.25, down 30.25

NQ, yesterday’s close: Settled at 10,600, down 237.25

Fundamentals: U.S. benchmarks held ground overnight after reversing sharply on news California rolled back its reopening. The governor announced an order to close all indoor business, including bars, dining, museums, movie theatres and more. Additionally, the state’s two largest school districts, Los Angeles and San Diego which enroll nearly three quarters of a million students, said they will launch fully online this fall with the hope of reopening normally this school year if the pandemic subsides. Price action across indices was in full-on melt-up mode with the NQ surpassing 11,000 and the S&P reaching the highest front-month level in more than a month.

Just ahead of the California news, Dallas Fed President Kaplan said the pandemic liquidity facilities will be pulled back as the economy improves. Of course, the Fed-driven rally would not appreciate such and began paring some of the session’s gains.

On the economic calendar, data from the U.K. and Eurozone was broadly poor. Yet, we have seen risk-assets continue to stabilize from yesterday’s late session weakness. U.S. CPI is on deck at 7:30 am CT with comments from Fed Governor Brainard and St. Louis Fed President Bullard this afternoon at 1:00 and 1:30 CT.

The banks reported today and both JPMorgan and Citigroup are trading higher after beats. JPMorgan’s profit, though buoyed by trading, was cut in half by setting aside more than $10 billion for bad loans. Overall, this is not a good outlook on the economy. Furthermore, banks could trade as a bellwether of sentiment today; they routinely have reversed sharply from premarket earnings announcement gains in the same session or those just following.

Technicals: We must Neutralize our cautiously Bullish Bias as we must view the fundamental news from California as a potential canary in the coal mine. On a technical basis, price action closed sharply below key levels that defined the immediacy of the fresh leg higher in each the S&P and NQ. Furthermore, the overnight recovery from yesterday’s low has remained contained below such support levels that are now resistance at 3174-3178.50 in the S&P and 10,837.25-10,863.75 in the NQ. However, a move out above each is bullish. Each has responded in front of 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 each morning.

Crude Oil (August)

Yesterday’s close: Settled at 40.10, down 0.45

Fundamentals: OPEC released their Monthly Report this morning and although the tape is lower, the reaction is/was arguably muted. The report itself was not overall bearish, but weakness in Crude Oil this morning coincided with the OPEC report, however, also a wave lower from the overnight recovery highs in stocks; risk-assets reversed sharply from yesterday’s melt-up the new California halted its reopening. Crude Oil was not immune. OPEC noted 2020 Oil demand falling by 8.95 mbpd, better than the previously forecasted 9.07 mbpd. Furthermore, they expect 2021 demand to surge by a record 7 mbpd. Another supportive factor is that OPEC sees 2020 supply to decline by 3.26 mbpd instead of the previously forecasted 3.23 mbpd. What stood out most to us is that surge in 2021 demand. This creates expectations of a healthy market, of which are being priced in now at a level it could almost only disappoint. It is concerning that the risks of the virus and thus demand are ongoing.

Bill Baruch spoke with the TD Ameritrade Network yesterday on Energies

Bill Baruch spoke with CNBC’s Fast Money yesterday on where he wants to buy Crude Oil in the intermediate-term as well as a potential day-trade opportunity (trade is now cancelled).

Technicals: Price action yesterday was hit post-settlement and is now trading steadfastly below our 39.60-39.85 level. Ultimately, while below here, it opens the door down to the level we want to be buyers, 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 each morning

Gold (August)

Yesterday’s close: Settled at 1814.1, up 12.2

Fundamentals: Gold surged early in the session but stalled against technical resistance when Dallas Fed President Kaplan said the Federal Reserve would pull away pandemic liquidity measures upon a strengthening economy. This ultimately goes without saying. Additional weakness came on the heels of California shutting down and fears of deflation relating to such. The selling ensued across equity markets and cash was raised with Gold at elevated levels. U.S. CPI data this morning was stronger than expected and brought a tailwind to Gold firming off the overnight lows. We remain extremely optimistic on Gold.

Technicals: Gold settled strongly yesterday but could not chew through resistance at 1820 and traders began paring gains. The selling brought price action back below our momentum indicator which is now at 1800. The tape has responded off major three-star support at 1790-1794.8 and is constructive this morning holding back above that 1800 mark. A steady session above ...  Please sign up for a Free Trial at Blue Line Futures to have our entire technical outlook, actionable bias and proprietary levels emailed each morning.

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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.

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