Morning Express - stocks, oil, and gold analysis

E-mini S&P (September)

Yesterday’s close: Settled at 3213, down 19.25

NQ, yesterday’s close: Settled at 10,540, down 135.25

Fundamentals: It is Fed Day and the committee is expected to leave policy unchanged. The statement is released at 1:00 pm CT and Fed Chair Powell’s press conference begins 30 minutes later. We will be looking for any signal the committee is willing to waiver from their current path which holds rates steady at zero through August 2022 and allows their balance sheet to balloon above $9 trillion. In the end, markets will be looking for Fed Chair Powell to reaffirm the Fed’s ‘do whatever it takes’ narrative in order to bring the U.S. economy back from the depths of the pandemic.

Powell will also reemphasize the need for additional fiscal measures. Congress is attempting to hash out their differences and bridge the divide between the Republican’s $1 trillion plan and the Democrat’s $3.5 trillion plan. Furthermore, the Republican’s must now gain support from the more fiscally conservative corner of the party. The clock is ticking as current stimulus measures are set to be exhausted and Congress’ recess is scheduled to begin August 7th.

Unprecedented stimulus measures, both monetary and fiscal, have burned the U.S. Dollar to the ground and put its reserve currency status at risk. It has also paved the way for a historic stock market rally. The Fed certainly has a balancing act to perform, but in our opinion supporting the U.S. Dollar must not be overlooked. We would expect Fed Chair Powell to field questions on the Dollar’s demise and this could become an inflection point within the Fed’s policy stance.

There is even more in Washington today as the CEOs of tech behemoths Apple, Amazon, Alphabet and Facebook appear before the House of Representatives Antitrust Sub-Committee. Much of the House panel will look to posturize and although we do not expect to hear anything substantial, developments could set the stage for a battle after November elections. The big five tech companies (including Microsoft) account for one quarter of the S&P 500’s market cap.

We are in the heart of earnings season and Facebook reports after the bell today. We look to Apple, Amazon and Alphabet tomorrow. Boeing, GE and GM are among a slew of companies reporting this morning and all three have all moved upward after mixed reports.

Technicals: Both the S&P and NQ have remained contained by major three-star resistance levels at 3227.50-3232.25 and 10,675-10,679. Overnight into Tuesday’s session each did stick their nose briefly out above before slipping and this brings key resistance further overhead. Still, our focus will remain these major three-star resistance levels and while below here the bears have the slightest near-term edge, but one that is almost equally offset by the bull’s response to strong support below. First key support aligns with settlement in the S&P and NQ. Ultimately, the S&P must close below ... 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 (September)

Yesterday’s close: Settled at 41.04, down 0.56

Fundamentals: Crude continues to hold ground above $40 extremely well. The tape is finding support from the surprise -6.829 mb headline inventory draw posted by API yesterday and fresh lows in the U.S. Dollar. The broader risk-environment is stable at the onset of a very fundamental day; EIA inventory data due at 9:30 am CT and Federal Reserve meeting at 1:00 pm CT. As for EIA, analysts’ expectations are for +0.357 mb Crude, -0.733 mb Gasoline and -0.267 mb Distillates. The API results deviated largely from expectations and now set a bar. Traders will also watch estimated production levels closely. Amid Baker Hughes reporting one rig added last week, the EIA signaled production likely rose by 100,000 bpd in last Wednesday’s report. Is U.S. production beginning to turn a corner?

Technicals: The tape continues to consolidate in a very tight range above $39 and now $40. Still, ralles have been contained by strong resistance at 41.74 and our rare major four-star level at the September gap from March 6th at 42.64. 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 (December)

Yesterday’s close: Settled at 1944.6, up 13.6

Fundamentals: Traders want to begin using the December contract for Gold. The metal is holding healthily out above its previous 2011 record high and while this technically paves a path of least resistance higher, we fundamentally look to the Federal Reserve policy statement at 1:00 pm CT and Fed Chair Powell’s press conference 30 minutes later as hurdles in Gold’s rally. Bill Baruch spoke with CNBC’s Fast Money Halftime show yesterday to discuss what’s next for Silver, explaining that U.S. Dollar weakness, zero interest rate policy, a stew of unprecedented stimulus measures and broad participation across ETFs have lifted the precious metals sector. Although we think Gold and Silver have higher to go, we recommend using this time to be cautious and patient, instead looking to pullbacks to reposition long.

Technicals: Although we remain long-term Bullish in Bias, our near-term caution has Neutralized our Bias. December Gold traded $2000 on the dot Monday night before retreating 3.6%. Price action has stabilized in December out above a crucial level we are watching 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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Bill Baruch



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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