Morning Express - stocks, oil and gold analysis

E-mini S&P (September)

Yesterday’s close: Settled at 3219.50, up 36.00

NQ, yesterday’s close: Settled at 10,683.25, up 37.00

Fundamentals: U.S. benchmarks settled-in yesterday morning after surging overnight upon positive Covid-19 vaccine news (covered here). That consolidation through the first half of U.S. hours held technical support (the gap from the prior session’s close) and found fresh buying amid President Trump’s infrastructure discussion coupled with rumors he does not want to escalate tensions with China. Although these are all to be expected as he campaigns for re-election, the market often finds a silver lining to perform given this ultra-liquid ZIRP world. The late session wave retested the early highs, for the S&P, the highest level since February 25th. But something odd happened last night. A deluge of economic data from China broadly beat expectations and stocks traded lower. In fact, with YoY Q2 GDP at +3.2% (versus +2.5% expected), China is the first major economy to return to growth since the onset of the pandemic.

Bank of America and Morgan Stanley both beat earnings estimates this morning. Bank of America is trading lower by about 2.5% premarket though and it is important to note they set aside $5.8 billion for bad loans. We have said it before, the banks are clearly telling investors they are preparing for the defaults, preparing for the pockets of the economy to worsen. Abbott and Johnson & Johnson also both beat expectations this morning, however, their respective stocks are muted. Netflix reports after the bell.

Today, the ECB left rates unchanged as expected and President Lagarde holds a press conference at 7:30 am CT. At that time, we also get a deluge of U.S. data that includes June Retail Sales, fresh July Philly Fed Manufacturing, and Initial/Continuous Jobless Claims. The U.S. data has broadly been better than expected of late. Yesterday, both NY Empire State Manufacturing and Industrial Production came in stronger than anticipated. At 10:10 am CT, NY Fed President Williams speaks, and Chicago Fed President Evans follows at 12:30.

Technicals: We noted here yesterday that the NQ did not seem to want to join the party. The S&P nudged the highest level since February 25th and the Russell surged by 4.2%. However, the NQ stayed contained by our first key resistance at 10,791, a level that we said would allude to an exhausted tape which would then rely on the banks to power higher. Fundamentally, we envision the banks giving back some of their prior gains. What matters most this morning is how the S&P battles against 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 directly each morning.

Crude Oil (August)

Yesterday’s close: Settled at 41.40, up 0.81

Fundamentals: The energy sector has incurred a whirlwind of positive news, yet Crude Oil has not been able to breakout above previous highs or fully achieve covering the August contract gap from March 6th. Price action is again stalling at the front-month gap from the March 6th close despite upbeat comments from President Trump on infrastructure and China, a much larger U.S. inventory draw than expected, strong data from China and of course OPEC’s meeting yesterday. At their OPEC+ JMMC Meeting, the committee tapered the production cut less than expected to begin in August; 1.6 mbpd instead of 2 mbpd. However, that 400,000 bpd difference applies to those who were under-compliant, and the market probably feels if they were not compliant prior to August, what will change now. Still, amid several tailwinds, Crude is struggling at the higher elevation and this begs two questions. Is all this good news priced in? President Trump turning on campaign mode, China recovering quickly and OPEC balancing supply/demand perfectly. Or, is it today’s options expiration that must pass in order to get a directional move? We shall find out, however, we continue to maintain that there is only a limited value at these levels below 42.33 and want to see a pullback to our target (discussed below) as a buy opportunity.

Technicals: Price action achieved a new high close, but is simply struggling to hold ground. Call it options expiration or an exhausted profile as it runs into the March 6th gap. Either way, price action has backed off what is now major three-star resistance 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 (August)

Yesterday’s close: Settled at 1813.8, up 0.4

Fundamentals: The better U.S. data and positive vaccine news of late has held Gold back from extending its run. However, it is important to understand the constructive nature of this consolidation as it awaits a fresh fundamental catalyst. The longer-term narratives do not change, Gold is trending bullishly, and central banks are buying as they devalue their currencies to the metal. All the while, interest rates are at and below zero. Patience as Gold settles in during this time is key, however, the window for the near-term bullish run is winding down seasonally and has another 30-45 days.

Technicals: Yesterday, we Neutralized our Bias in Gold to only cautiously Bullish. This is given the exhaustion of the near-term run, but we remain long-term Bullish in Bias. Our momentum indicator aligns with first key resistance and while below there a consolidation will be encouraged. As long as the metal can continue building a floor 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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