Picking up where we left off, it's all about the Dollar | Stocks, Crude Oil, Gold, & Silver
E-mini S&P (March) / NQ (March)
S&P, last year’s close: Settled at 3748.75, up 24.50 on Thursday, 1.45% on the week, 3.46% in December, and 16% in 2020
NQ, last year’s close: Settled at 12,885.50, up 44.00 on Thursday, 1.42% on the week, 4.96% in December, 47.2% in 2020
Fundamentals: U.S. benchmarks are all higher, kicking off 2021 just where they left 2020. Fueling the risk-on jolt is a weaker U.S. Dollar; it is -0.7% against the Chinese Yuan and the Dollar Index is -0.5%. As we discussed in our last note and throughout the year, the Dollar is the sacrificial lamb for the pandemic ridden economic rebound and its continued weakness will provide for higher asset prices.
Today’s news cycle overshadows the broadly green board. Georgia’s Senate runoff is officially held tomorrow and squarely on the minds of investors. Republicans must hold onto one of the two seats up for grabs in order to maintain their majority. We do not believe markets are ready for a blue sweep and the added uncertainties will spark some volatility at the least. Over the weekend, the Washington Post released a call where President Trump pressured Georgia’s Secretary of State to find votes, but markets seem little concerned with such optics for now.
Additionally, on the economic calendar, Chinese Manufacturing PMI last night missed at 53.0 versus 54.8, and the final December Eurozone reads were also softer. We look to the final U.S. December read at 8:45 am CT, but the more closely watched ISM follows tomorrow.
Technicals: Price action roared higher to start last week, then in true bull market mode settled in constructively before pushing higher into the weekly close where the S&P set a fresh record. There is absolutely nothing to not like here, but that does not mean traders should chase the tape higher; pullbacks are buying opportunities. Overhead, the S&P faces our next key resistance at 3781.50-3788 and the NQ is battling at major three-star resistance that aligns several technical indicators with the round 13k at 12,955-13,000. However, if the tape holds out above our Pivots, this is 3756.50 for the S&P and previous resistance at 12,861-12,897 for the NQ, the stage will be set for new highs before the closing bell. For those of you not on our bull train, Monday’s are not for fighting the tape. With that said, major three-star support in the S&P at 3735.50-3737.50, if tested may get the bears excited, but we believe this is an optimal buy the first test swing trade if so. We remain Bullish in Bias.
Resistance: 3781.50-3788**, 3817.75-3827.50***
Support: 3745-3748**, 3735.50-3737.50***, 3724-3726.50*, 3714.75-3718.75***, 3704-3706.25**, 3695***
Resistance: 12,955-13,000***, 13,118-13,156**, 13,300-13,369***, 13,583**, 14,274****
Support: 12,808*, 12,704-12,751***, 12,623-12,655***, 12,572**, 12,434-12,462***, 12,368-12,388***
Crude Oil (February)
Last year’s close: Settled at 48.52, up 0.12 on Thursday, up 0.60% on the week, +7.01% in December, and down 20.5% in 2020
Fundamentals: Crude Oil enjoyed the New Year’s jolt, nearly touching $50 with a high 49.83 before peeling back. Overshadowing the stealth strength are mounting Covid cases and the potential of added supply. However, with rising case numbers across the U.S. and Europe it seems unlikely that OPEC+ will increase production by 500,000 bpd beginning in February. Russia has pushed the narrative over the last two weeks, but it has not continued to garner traction ahead of the start of today’s OPEC+ meeting. For now, tailwinds are being provided by the weaker U.S. Dollar and in particular the strength of the Chinese Yuan which again reached the highest against the Dollar since June 2018. However, soft Manufacturing PMI from China and the Eurozone are working to offset such. The U.S. read is due at 8:45 am CT.
Technicals: Price action, although trading more than a dollar from its overnight high, is holding ground very well. In fact, Crude Oil has held ground terrifically amid otherwise exhausted characteristics. You know what that is called, a bull market. We have been and continue to be upbeat Crude Oil, however, have simply seen little value in front of tremendous resistance at $50 and instead are patient for a pullback to use as a buying opportunity. Still, continued action through today at and above our Pivot at 48.52-48.61, which aligns with out momentum indicator, is bullish. Added resistance at 49.24 should also not be ignored.
Resistance: 49.24**, 50.00***, 52.95***
Support: 47.25-47.50**, 46.17**, 45.72**, 44.84-45.14***, 43.72-44.10***
Gold (February) / Silver (March)
Gold, last year’s close: Settled at 1895.1, up 1.7 on Thursday, up 0.63% last week, up 6.4% in December, and up 24.4% in 2020
Silver, last year’s close: Settled at 26.412, down 0.161 on Thursday, up 1.95% last week, up 17.21% in December, and up 47.3% in 2020
Fundamentals: We loooove Gold, and Silver. This is a tremendous start to the week, month, and year; exactly what we have hoped for. Fresh weakness in the U.S. Dollar and Chinese Yuan strength has fueled a broadly strong move across the metals space. Furthermore, soft Manufacturing PMI from China and the Eurozone has increased safe haven demand. We now look to the U.S. read in a jam-packed week of economic data that concludes with Nonfarm Payroll. Today we look to comments from 2021 Fed voting members Chicago Fed President Evans and Atlanta Fed President Bostic at 9:00 am CT.
Technicals: Gold has broken out above a trend line from its August high at 1900-1904 and major three-star resistance aligning multiple levels at 1915, roaring towards our next major three-star resistance at 1964.7. As for Silver, it has cleared major three-star resistance at 27.12-27.28, a level in which our momentum indicator is catching up, now providing a floor of major three-star support that price action must stay out above. Broadly, this paves a clear path for Gold to hit $2000 and Silver $30 in the very near future. Still, this does not mean chase today’s tape, and if anything, traders who followed us long should be securing profits.
Resistance: 1964.7***, 1973**, 1991**, 2000***
Support: 1915-1920***, 1900-1904***, 1893**, 1879.5-1882** 1871-1873***
Resistance: 28.01**, 29.23-29.38**, 29.91-30.36****
Support: 27.12-27.28***, 26.41**, 25.90-26.07***, 25.01-25.12****, 24.30***
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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.