Morning Express - stocks, oil, and gold trade desk analysis

E-mini S&P (September)

Yesterday’s close: Settled at 3232.25, up 28.25

NQ, yesterday’s close: Settled at 10,675.25, up 216.25

Fundamentals: U.S. benchmarks finished higher yesterday after strong technical support held. While the week begins to heat up, some of that enthusiasm dissipated amid overnight volatility; we are in the heart of earnings season, Congress faces off on stimulus and the Federal Reserve is on deck.

We look to a deluge of corporate earnings this morning, less so for their 2nd quarter results and more for their outlook. Pfizer is up 3% premarket after reporting better than expected earnings coupled with an upbeat outlook to finish the year. Raytheon is also up 3% on strong results. However, McDonald’s and 3M are each down at least 2% after missing. Starbucks and AMD headline after the close.

Senate Republicans unveiled their $1 trillion plan to bolster the county post-pandemic. Is it enough? House Democrats calling for $3.5 trillion certainly do not think so. They must now bridge the divide as remaining measures dry up ahead of the August recess. The Republican plan waters down some unemployment benefits because such hefty handouts disincentivize many workers. Markets though seemed to key off the ball moving forward yesterday and both sides agreeing Americans must receive at least a $1,200 stimulus payment.

Rates rose yesterday and had begun to extend overnight with risk-assets broadly climbing. The Treasury auctioned 2-and 5-year Notes yesterday and auctions 7-year Notes today. The additional supply might be the culprit, but with the Federal Reserve policy meeting in focus, one must wonder if expectations for no rate hike until August 2022 and their balance sheet ballooning above $9 trillion is a bit overzealous.

Case Shiller Home Price Index is due at 8:00 am CT and CB Consumer Confidence follows at 9:00 am CT along with Richmond Fed Manufacturing. Dallas Services is due at 9:30.

Technicals: Yesterday’s late grind edged out a close above major three-star resistance in each the S&P and NQ. Did a rally unfold? No. Price action has remained very contained with the bears regaining their sight near-term edge late last night with the tape dipping back below our momentum indicators this morning. We have adjusted major three-star resistance in each the S&P and NQ slightly to now align with yesterday’s settlement, previously studies and our momentum indicator. For the S&P this is ...  Please sign up for a Free Trial at Blue Line Futures to have our entire technical outlook, actionable bias and proprietary levels emailed directly.

Crude Oil (September)

Yesterday’s close: Settled at 41.60, up 0.31

Fundamentals: Crude Oil slipped from a high just below $42 late last night along with risk-assets broadly. Re-emerging virus concerns in Europe and Asia just as the U.S. is seeing a light at the end of the tunnel are certainly weighing on demand projections. The market seems little concerned with additional OPEC+ supply hitting the market next week, but we are seeing front-month Brent holding up better than the next couple months. However, massive central bank liquidity, a terrific job by OPEC+ in rebalancing and U.S. Dollar weakness are all working to keep the energy space buoyed at or near their recovery highs. U.S. Crude inventories grew last week but expected to have dropped last week. The private API survey is due after the bell.

Technicals: Price action is holding up very well at elevated levels. Our Pivot from yesterday has now acted as support at unchanged on the week. Our momentum indicator has risen to 41.44 ...  Please sign up for a Free Trial at Blue Line Futures to have our entire technical outlook, actionable bias and proprietary levels emailed directly.

Gold (August)

Yesterday’s close: Settled at 1931, up 33.5

Fundamentals: Gold extended its record surge early last night hitting 1974.7. The December contract, which we will use as front month by Thursday, hit $2,000 on the dot. Silver surged to a high of 26.275 and achieved our target. Price action reversed sharply from that peak as Treasuries had been slipping and could have been viewed as a canary in the coalmine. Although there was no event that caused the sharp reversal, ultimately the precious metals sector had become over-heated and such a fall is not surprising at all. In fact, it is to be expected and certainly after achieving our targets. Traders and investors want to exercise patience as we look to Consumer Confidence at 9:00 am CT, a 7-year auction at noon and of course the Fed tomorrow followed by GDP Thursday. All in all, we believe there is higher to go over the long run but want to be buyers and reestablish longs from lower levels.

Technicals: Yesterday, we pointed to our next upside target being 1958. This was the 100% range extension from the early March high and the ensuing low. Achieving such a landmark extension gives reason for the rally to pause. Additionally, in much of our media commentary we have pointed to 26.00-26.25 being a good intermediate upside target for Silver to take a breather. This aligns the .382 retracement from the new swing low in March back towards the historic 2011 high. Gold’s weakness has responded to the psychological 1900 level which is also our major three-star support aligning multiple technical indicators; holding above here is extremely constructive...  Please sign up for a Free Trial at Blue Line Futures to have our entire technical outlook, actionable bias and proprietary levels emailed directly.

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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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