Morning Express - stocks, oil and gold analysis
E-mini S&P (September)
Yesterday’s close: Settled at 3183.50, up 35.25
NQ, yesterday’s close: Settled at 10,646.25, up 46.25
Fundamentals: U.S. benchmarks finished strongly yesterday and gapped higher on the evening reopen for today’s session after positive Covid-19 vaccine news. Moderna published the results of their Phase 1 trial late yesterday, it showed an immune response in all 45 patients with only minor side effects. This was a more detailed report than those May 18th headlines that led to a surge in risk-assets before questions overshadowed the enthusiasm. Moderna is up nearly 20% premarket. Amid these bullish tailwinds, there are now expectations of good news to be announced surrounding [the University of] Oxford’s Covid-19 vaccine candidate backed by AstraZeneca. Bloomberg published an article calling Oxford’s team the front-runner. AstraZeneca is up nearly 5% premarket. Pfizer and BioNTech are also gaining ground premarket up 1.5% and 4% respectively.
Goldman Sachs reported earnings this morning, blowing the roof off expectations at $6.26 a share versus expectations of $3.78 a share. With the strongest trading revenues in years, the company weathered a volatile second quarter very well. Their results though, when compared to some peers such as JPMorgan, were buoyed by less cash being set aside for bad loans. At the same time, it exudes the fears of such banks with a higher concentration to lending.
Yesterday, President Trump removed Hong Kong’s special status. Markets seemed unconcerned with the landmark decision that continues to signal a deteriorating relationship between the U.S. and China. Instead it traded higher on a problem only recently created and one that risk-assets never even traded lower on; the U.S. government will now allow international students to stay in the U.S. while taking online classes. Although the market was already grinding higher yesterday, it seemed that this headline got the ball rolling ahead of Moderna ‘officially’ announcing their results (yes, we are alluding to the Moderna announcement already being known by a select few).
Today, we look to fresh July NY Empire State manufacturing at 7:30 am CT, Industrial Production at 8:15 am CT and Philadelphia Fed President Harker at 11:00 am CT. Fed Governor Brainard, who is considered a centrist (dovish to hawkish), lit a fire under risk-assets yesterday calling for additional measures due to the ongoing risks and a slow recovery. Harker who also spoke of the slow recovery yesterday, is considered to be more hawkish among the committee. He is a 2020 voter and his comments will be closely watched again today. Tonight, a deluge of Chinese data that includes Q2 GDP and Industrial Production is due at 9:00 pm CT.
Technicals: Price action weathered the waves of selling early yesterday and buyers stepped in front of strong major four-star supports in each the S&P and NQ to begin construction on the day. In a session where U.S. benchmarks felt almost certain to stay at the lower end of their ranges, they again proved doubters wrong. The S&P is right at its June 8th front-month high and above there it would be at the highest level since February 25th. Our momentum indicators are lagging this tremendous strength and for the S&P they are rising and should align with 3192.25 this morning, yesterday’s late high. The S&P is outpacing the NQ today and this could be a sign of a weak rally. Fundamentally, can the banks hold these gains? Remember, the banks rarely hold such two-day earnings gains. For now, the S&P is bullish while holding out above a crucial level 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 40.29, up 0.19
Fundamentals: The OPEC Joint Ministerial Monitoring Committee meeting is underway. Early discussions point to tapering the pandemic cuts from 9.7 mbpd to 7.7 mbpd. Additionally, early comments from the Saudi Energy Minister allude to holding some production back whereas Russia’s Energy Minister appears more eager to taper. Still, Novak, Russia’s Energy Minister, made a point that the market will not be flooded with unneeded production and much of their increase is earmarked domestically. Overall, the tape is holding ground well and just below recent highs. However, the strength is amid the broader risk-on move coupled with a large unexpected draw reported by the private API survey last night and less to do with the start of the OPEC JMMC meeting. API’s -8.322 mb Crude and -3.611 mb Gasoline set a fairly bullish bar for today’s official EIA report at 9:30 am CT where analysts expect -2.098 mb Crude, -0.643 mb Gasoline and +1.485 mb Distillates.
Technicals: Price action is showing signs of exhaustion below previous highs and what we have now coined major three-star resistance at 41.00-41.28. 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 each morning.
Yesterday’s close: Settled at 1813.4, down 0.7
Fundamentals: Gold is losing some ground from yesterday’s highs amid the risk-on move and positive vaccine news. This is not surprising as we have seen Gold do exactly this each time headlines point to steps forward in fighting Covid-19. Still, the path of least resistance is higher for Gold and dips are a buying opportunity. Both NY Empire State Manufacturing and Industrial Production beat expectations; this is likely to add further weight on the tape through today’s session but a hold against technical support will exude the metal’s broader strength. Philadelphia Fed President Harker speaks at 11:00 am CT. Fed Governor Brainard, who is considered a centrist (dovish to hawkish), lifted the metal complex and risk-assets yesterday calling for additional measures due to the ongoing risks and a slow recovery. Harker who also spoke of the slow recovery yesterday, is considered to be more hawkish among the committee. He is a 2020 voter and his comments will be closely watched again today. Tonight, a deluge of Chinese data that includes Q2 GDP and Industrial Production is due at 9:00 pm CT.
Technicals: Gold has battled extremely well to hold what is strong support at 1803.8-1804.4 after failing again at 1820. This level is strong support, although not a major three-star due to its close proximity to the market upon a stalling profile. A hold above here today will lay the groundwork for a strong finish to the week. Resistance is ... 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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