E-mini S&P (September) / NQ (Sept)
S&P, last week’s close: Settled at 4342.75, up 32.00 on Friday and 71.50 on the week
NQ, last week’s close: Settled at 14,713.75, up 165.25 on Friday and 374.75 on the week
Fundamentals: U.S. benchmarks rallied sharply on Friday, after a strong Nonfarm Payroll report and ahead of the long Independence Day weekend. Yes, we are calling Friday’s jobs report for June a strong one, but not only because job growth at 850,000 exceeded the 700,000 expected, but because people returned to the workforce. Many are calling the combination of strong job growth and a drop in the headline U-3 Unemployment Rate as Goldilocks. Markets certainly interpreted this as such on Friday; stocks rallied whereas rates and the U.S. Dollar slipped. However, the U-6 Unemployment Rate cannot go unnoticed. First, the U-3 accounts for unemployed people who are actively seeking a job, but the U-6 rate shows true employment because it also includes the underemployed and discouraged workers. Job growth through April and May was poor because people simply did not want to work. Instead, they enjoyed cushy unemployment benefits. Those benefits have started to dissipate, forcing many back into the workforce. Although the Participation Rate was unchanged, there was a clear reentrance to the workforce seen not only through the divergence between U-3 and U-6, but as lower paying jobs weighed down Wage Growth. By all consideration, Friday’s Nonfarm Payroll report exudes a giant step forward for this economy. Still, let us not forget, it is only one report. What the report did was break a budding negative trend and establish emphasis on whether July can carry the positive economic momentum.
OPEC+ made headlines over the long weekend. What was supposed to be a one day meeting on July 1st to unanimously bring back 400,000 bpd each month from August to December, instead dragged into the start of this week. Saudi Arabia wants to secure the production deal through 2022, but the UAE refuses to use old baseline production data after growing their capacity. The rift has become a roadblock to a deal at all and therefore no production has been brought back online. The new sent Crude Oil higher on Friday and by more than 2% last night. Traders must keep an ear to the ground for developments as Crude achieved a massive resistance level and closes in on the psychological $80 mark.
The economic calendar picks up quickly this week. Final June Services PMI is released at 8:45 am CT, but followed by the more closely watched ISM Non-Manufacturing at 9:00 am CT. Tomorrow, the Federal Reserve releases the Minutes from their June, hawkish-turn, meeting at 1:00 pm CT.
Technicals: We remain very optimistic the stock market overall but must encourage traders to be on the lookout for a consolidation day. If you have been following our daily research, you know that we have been nothing but Bullish in Bias. Friday’s have become cornerstone sessions within this bull run, but this has left Mondays as the new ‘Turnaround Tuesday’. Given the holiday, today is Tuesday, but you get the point, and this comes ahead of tomorrow’s FOMC Minutes. With that out of the way, we are still more Bullish in Bias because the market has done nothing wrong and given us no sign of exhaustion. In fact, the S&P has now set a fresh record high for eight straight sessions. We will look to our Pivots, and point of balance, that aligns our momentum indicators closely with Friday’s settlement; continued action above here will pave a path of least resistance to our next major three-star levels. However, as we mentioned, we are prepared for a healthy consolidation lower. In the case of such, major three-star support levels in each the S&P and NQ bring a terrific buy opportunity 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 (August)
Last week’s close: Settled at 75.16, down 0.07 on Friday and up 1.11 on the week
Fundamentals: From our S&P/NQ section: OPEC+ made headlines over the long weekend. What was supposed to be a one day meeting on July 1st to unanimously bring back 400,000 bpd each month from August to December, instead dragged into the start of this week. Saudi Arabia wants to secure the production deal through 2022, but the UAE refuses to use old baseline production data after growing their capacity. The rift has become a roadblock to a deal at all and therefore no production has been brought back online. The news sent Crude Oil higher from Friday’s low and by more than 2% last night. Traders must keep an ear to the ground for developments as Crude achieved a massive resistance level and closes in on the psychological $80 mark.
Price action has reversed sharply, trading down as much as 1% on the session. There have not been any new developments to cause the reversal. We attribute our rare major four-star resistance, the intraday Crude open, and mounting Put option bets on the overnight rally. Although a poor close today will bring a need for caution and open the door to $70, it does not change the intermediate to longer-term bullish trend.
Technicals: Is it all that surprising to see Crude Oil post a high of 76.98 before slipping? Absolutely not; we have rare major four-star resistance at 76.89-76.90. The sharp drop has so far responded to first key support, but now faces overhead damage. First key resistance comes in at 75.34 and a failure to regain this level will leave the market vulnerable to continued waves of selling. In such a case, strong support 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.
Gold (August) / Silver (September)
Gold, last week’s close: Settled at 1783.3, up 6.5 on Friday and 5.5 on the week
Silver, last week’s close: Settled at 26.501, up 0.401 on Friday and 0.375 on the week
Fundamentals: Gold and Silver are starting the week off with a bang. One factor lifting the metals is certainly lower rates. Despite a strong Nonfarm Payroll report Friday, the idea that such gives credence to a Fed taper later this year crushes the inflation narrative. As we have discussed here many times over the last two weeks, the Bond market has been quick to price in peak inflation. Another factor lifting the metals that cannot go ignored is of course the Basel III reclassification of Gold as Tier 1 asset for banks that began July 1st; it is now more attractive to own physical Gold. On the economic calendar today, we look to final June Services PMI at 8:45 am CT and the more closely watched ISM Non-Manufacturing at 9:00 am CT.
Technicals: Friday’s whipsaw and hold of the 1775-1777 level in Gold certainly made us more Bullish in Bias and paved the way for a healthy rally, or rebound. Yes, that is the truth, Gold is still rebounding from June’s bloodbath, and this means there is tremendous overhead damage. In the near-term Gold must work through this overhead damage at major three star resistance at 1812-1815 and then again at 1828-1835. In the longer-term there is a nice bullish inverse head and shoulders developing with the November low being the left shoulder, the March low being the head, and the recent low being the right shoulder. Given this technical pattern coupled with the Basel III reclassification of Gold, we find it imperative for investors to have Gold exposure in their portfolio. Now, we must see Gold hold above... 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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