Morning Express | Technical & Fundamental Landscape | Stocks, Oil, and Gold

E-mini S&P (September)

Last week’s close: Settled ta 3263.50, up 14.75 on Friday and 59.50 on the week

NQ, yesterday’s close: Settled at 10,890.50, up 96.50 on Friday and up 431.50 on the week

Fundamentals: U.S. benchmarks surged into month-end settlement Friday and extended gains overnight. Apple, Facebook and Amazon set the tone following Thursday’s earnings results gaining 10.47%, 8.18% and 3.7% respectively, but the broader market did not perform well amid negative breadth. Typically, such opens the door to a lackluster follow-through session, but the People’s Bank of China said this morning that stimulus in the second half of the year will be more targeted and flexible. Risk-assets then did what they have become accustomed to on stimulus news, rally. Copper is 2% off the overnight low and the S&P almost 1% from its mark. The boisterous sentiment on China’s announcement comes as uncertainty in Washington looms and tensions between the two countries mounts.

Republicans and Democrats in Congress are still wrangling out a fifth stimulus package aimed at boosting the U.S. economy. Unemployment measures from the previous bill, delivering $600 weekly jobless benefits, expired on Friday. Lawmakers met over the weekend and White House Chief of Staff Meadows reiterated Sunday he was not optimistic on a deal. Treasury Secretary Mnuchin also made the rounds calling for a one-week extension.

Bill Baruch joined CNBC’s Fast Money Halftime show on Friday to discuss the U.S. Dollar.

TikTok grabbed headlines after President Trump threatened to ban the Chinese-owned video app. The news exudes a deteriorating relationship between the U.S. and China as the White House looks to impose a more broad-based ban on Chinese software firms deemed to pose a security threat. China has expressed strong opposition to what it calls “discriminatory policy”.

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The week kicks off with final July Manufacturing PMIs. The Eurozone read was firm and continues to signal a snap back from the pandemic. However, a growing number of cases around the world are posing new threats to the recovery from London to Australia. In the U.S. we look to Manufacturing PMI at 8:45 am CT and the closely watched ISM Manufacturing read at 9:00 am CT. St. Louis Fed President Bullard speaks at 11:30 am CT, he is a nonvoter this year and next.

Technicals: After a wave of selling on the open Friday, price action in the S&P again stabilized in the 3200 region. This laid the groundwork for a consolidation higher, but instead the S&P and NQ roared north in the final 90 minutes of the month. Some of that momentum carried overnight with both indices set to open higher and right at levels of strong resistance. For the S&P it is major three-star resistance at 3284.50 and the NQ it is just below the previous record high that aligns to create major three-star resistance at 11,002-11,058. Our Pivots today help bring a barometer for this early strong sentiment; above here the bulls will continue to hold the near-term driver’s seat. For the NQ, this is Friday’s high. Friday’s settlement prices help create first key supports in each. These are levels we would not be surprised to see tested early in the session. What matters is how the tape responds upon that test.

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Bias: Neutral

Resistance: 3284.50***, 3312**, 3339.50****

Pivot: 3271-3273.25

Support: 3263.50**, 3254.50-3257**, 3243.50**, 3225-3229***, 3213.50-3214**, 3204**, 3190.25-3194.50***

NQ (September)

Resistance: 11,002-11,058***, 11,325**, 11,400-11,408***

Pivot: 10,934

Support: 10,863.75-10,895**, 10,785-10,794*** 10,510-10,540***

Crude Oil (September)

Last week’s close: Settled at 40.27, up 0.35 on Friday and down 1.02 on the week

Fundamentals: Data that shows U.S. production falling by 2 mbpd in July is working to offset OPEC+ supply coming back online. In fact, data showed the cartel already increased production by 1 mbpd in July when the voluntary curbs were lifted. The OPEC+ agreement took 9.7 mbpd out of the market and this is set to drop to 7.7 mbpd for August with many being vocal about ramping production. Manufacturing PMI data today will signal the strength of the recovery. The final July read for the Eurozone was firmer and we look to the U.S. read at 8:45 am CT ahead of the more closely watched ISM Manufacturing at 9:00 am CT. On Friday, Baker Hughes said one rig fell off to match the low from two weeks ago at 180 active rigs and one above the low from 2009. U.S. China tensions will continue to be front and center as the globe battles a new wave of the pandemic which could be detrimental to energy demand just as the added supply hits.

Technicals: Price action responded Friday at first key support at 39.65 and did so again overnight, now moving back above our Pivot at 40.08-40.27. Still, first key resistance overhead comes in at 40.61 and this kept rally attempts in check Friday. There are a number of resistances that have kept a lid on this slow constructive consolidation pattern, and we remain Neutral awaiting an opportunity to buy much lower.

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Bias: Neutral

Resistance: 40.61**, 41.02-41.28**, 41.62-41.78**, 42.64****, 46.37***

Pivot: 40.08-40.27

Support: 39.65**, 38.77***, 37.87**, 37.07-37.32**, 34.67***

Gold (December)

Yesterday’s close: Settled at 1985.9, up 19.1 on Friday and 60.7 on the week

Fundamentals: Gold hit a new record on the open early last night at 2009.5 before quickly slipping below the opening range. The U.S. Dollar is firming up from two-year lows and as crucial technical boundaries held on a monthly closing basis. We maintain that at these elevated levels, Gold has had a tremendous run and we would like to see the tape pare back to level of more value. Final July Manufacturing PMI is due at 8:45 am CT and the closely watched ISM read follows at 9:00 am CT. This could set a tone on the U.S. recovery as jobs data also comes into focus this week, there is an ISM Employment component today. Traders also want to keep an ear to the ground on rising U.S.-China tensions, developments on fiscal policy in Washington and the growing number of Covid-19 cases worldwide. We expect all three narratives to swing Gold this week ahead of Nonfarm Payroll Friday.

Technicals: Gold is holding very well at elevated levels and continues to find a path of construction when testing support. First key support comes in at 1974.7-1979 this morning with our Pivot being 1985.9-1991. The bulls will hold the driver’s seat across all time frames while above these levels and the market is susceptible to rallies to new highs at any moment while out above our Pivot. Still, we believe the price is due to take a breather which will allow for it to recalibrate and collect fresh buying. This level may only be as shallow as major three-star support at 1955.2-1957.7, but we favor something slightly deeper.

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Bias: Neutral/Bullish

Resistance: 2000***, 2054**, 2072.5***

Pivot: 1985.9-1991

Support: 1974.7-1979**, 1955.2-1957.7***, 1925.2-1927.5***, 1900-1909.6***, 1888.3**

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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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