E-mini S&P (September) / NQ (Sept)
S&P, yesterday’s close: Settled at 4421.50, up 26.75
NQ, yesterday’s close: Settled at 15,167.75, up 94.25
Fundamentals: It is Nonfarm Friday, and today’s jobs data will prove critical in a path to normalization. Expectations are for 870k jobs created in July and for the Unemployment Rate to drop to 5.7% from 5.9%. At last week’s Fed meeting, Fed Chair Powell noted the economy is “some way away” from the committee’s employment goals. Would one report do the trick? No, but we look to three data points being a trend. In June, job growth snapped back with 850k jobs created after two underwhelming months. A strong read today will lead into Jackson Hole later this month, setup August’s report on September 3rd, and pave the way for a potential policy shift at the September quarterly meeting later that month.
How would we define a strong report? Although expectations are for 870k, we would view anything above 800k as keeping the Fed on track. Without a significant drop in the Unemployment Rate below expectations or surge in Wage Growth, something within 800k - 1,000k would be supportive to asset prices, but not in any new or overwhelming manner. However, we must remind you that Friday’s have proven to be strong sessions. In the case of a hot read, something over 1,000k, we could see the market begin pricing in an expected taper. Although the long-end of the curve had previous rallied upon hawkish Fed comments in June, we do believe that has been shaken out and a strong report coupled with the anticipation of added supply in August would significantly underpin yields. This would likely pave the way for value and cyclical stocks to outperform. We further imagine a Goldilocks report being something in the ballpark of 500k-800k jobs created with the Unemployment Rate remaining steady. In such a situation, Tech is likely to continue its outperformance and especially so with Covid cases on the rise. Lastly, if today’s report is more in line with the 330k from ADP, common sense says the market should pullback, but common sense was exchanged for an ever-expanding Fed balance sheet; we will look to the Technicals and what the market is telling us through the first hour.
Heading into the weekend, the Senate is expected to vote on the infrastructure bill that calls for $550 billion in new spending.
Technicals: The S&P and NQ both achieved fresh closing record highs, but they are still working against resistance aligning with traded highs. In other words, it is not yet a clean breakout and today’s weekly close after Nonfarm Payroll will be paramount. Previous resistance in the S&P at 4411.75-4415 is now support and our momentum indicator is rising through the top-end of this range; a break below here will open the door to a continued consolidation, like we have been seeing. As for the NQ, it is also battling at previous record highs and our rising momentum indicator comes in at ... Sign up for a Free Trial at Blue Line Futures to have our entire fundamental and technical outlook, actionable bias, and proprietary levels for the markets you trade emailed each morning.
Crude Oil (Sept)
Yesterday’s close: Settled at 69.09, up 0.94
Fundamentals: Crude Oil has rebounded to ping the $70 mark as geopolitical tensions between Israel and Lebanon are front and center. As we noted here yesterday, Israel fired back after 19 rockets were launched at them from Lebanon. Overnight, Hezbollah refired rockets at Israel. The geopolitical tensions have encouraged a rebound from oversold territory and a level of technical support, but the question remains whether Crude can hold this ground in the wake of rising Covid cases and potential demand destruction. The U.S. Dollar and the risk-environment will be key today after the jobs report and will certainly have an overall impact on the energy space.
Technicals: As we noted here yesterday, steady action and a close above 68.45-68.53 will pave the way for higher prices, that could extend to major three-star resistance at ... Sign up for a Free Trial at Blue Line Futures to have our entire fundamental and technical outlook, actionable bias, and proprietary levels for the markets you trade emailed each morning.
Gold (December) / Silver (September)
Gold, yesterday’s close: Settled at 1808.9, down 5.6
Silver, yesterday’s close: settled at 25.292, down 0.169
Fundamentals: Gold and Silver are at the mercy of today’s Nonfarm Payroll results as the look to finish out another failed rally attempt and disappointing week. The U.S. Dollar has gained significant ground from Wednesday’s reversal low and the Treasury market reversed sharply from Wednesday’s early high, all on the heels of in line, but perceived to be hawkish comments from Fed Governor Clarida and a record setting ISM Non-Manufacturing read. Traders should dive into our discussion of Nonfarm Payroll and what such results mean in the S&P section in order to navigate. However, we do believe that Gold and Silver have sold off pricing in a strong read and the potential of 1,000k or more jobs created. Several major banks, including Goldman Sachs has called for such. We would expect Gold and Silver to rebound strong upon any result showing less than 800k jobs created.
Technicals: Price action in Gold has slipped below the 1801.5-1804.6 support level, trading into what was a steadfast floor previously at 1793-1796. Remember, Gold has not settled below 1800 since July 6th. So far, it has responded, just as Silver did below $25. Today will be more fundamental in nature, but traders must keep a close eye on where such fundamentals force price action technically and how it responds there.... Sign up for a Free Trial at Blue Line Futures to have our entire fundamental and technical outlook, actionable bias, and proprietary levels for the markets you trade emailed each morning.
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