Powell & Inflation at Jackson Hole | South China Sea | Actionable Macro Insights | Morning Express

E-mini S&P (September)

Yesterday’s close: Settled at 3480.25, up 37.25

NQ, yesterday’s close: Settled at 11,991.25, up 265.00

Fundamentals: Fed Chair Powell delivers his keynote speech at Jackson Hole at 8:10 am CT. U.S. benchmarks surged yesterday, and this week’s breakout hinges on what he says. Analysts expect Powell to announce the committee’s policy shift to Average Inflation Targeting. We discussed the concept earlier this week, it is as it sounds; inflation has run below the Fed’s 2% target for an extended period of time, unprecedented stimulus measures are expected to boost inflation and the committee will symmetrically allow it to run above 2%. Simply put, the Fed has no plans to remove the Kool-Aid. Now, it is important to understand if the Fed laid the groundwork to unwind policy now, it will inherently water-down the current measures. With expectations mounting, the next question must be, has the market over-anticipated today’s delivery?

The second look at U.S. Q2 GDP improved from -32.5% to -31.7%. Weekly Initial Jobless Claims came in at 1,006,000, in line with expectations.

Technicals: Price action melted higher yesterday and never looking back. The S&P traded into our next key resistance level of 3478.25 which now aligns with yesterday’s high. The NQ was contained by the round 12,000 mark, our next major three-star resistance, with a high of 12,001. Our momentum indicators now align with previous resistance to create our Pivots, the bulls are undoubtedly in control across all time frames above here. For the S&P this is 3466.25 and for the NQ this is 11,916-11,925. Below here, major three-star supports come in at ... Please sign up for a Free Trial at Blue Line Futures to have our entire technial outlook, actionable bias, and proprietary levels emailed each morning.

Crude Oil (October)

Yesterday’s close: Settled at 43.39, up 0.04

Fundamentals: Crude Oil is down marginally at the onset of U.S. hours. This comes after extending to new swing highs yesterday before settling in just a bit. Despite a bullish inventory report that printed larger draws than expected for both Crude Oil and Gasoline, coupled with the threat of Hurricane Laura shutting down production for an uncertain amount of time, Crude Oil still could not decisively breakout above crucial technical levels. Now, we are seeing some of the price action build-up to the storm dissipate. While traders cannot underestimate how uncertainty can keep a bid under the tape into the weekend, one cannot ignore how such can also disrupt demand. Fed Chair Powell speaks at 8:10 am CT and will certainly disrupt risk-assets.

Technicals: Crude Oil stuck its nose to a high of 43.78 before slipping back to hug the October 200-day moving into settlement at 43.25, settling at 43.39. Constructively, price action has remained steadfastly out above 42.92, the gap settlement from March 6th and this is very supportive. However, our momentum indicator comes in at ...  Please sign up for a Free Trial at Blue Line Futures to have our entire technial outlook, actionable bias, and proprietary levels emailed each morning.

Gold (December)

Yesterday’s close: Settled at 1952.5, up 29.4

Fundamentals: Gold roared higher yesterday after hitting our major three-star support at 1907.4-1909.6 perfectly. News that China launched two missiles into the South China Sea as a warning to the U.S. seemed to correlate with the acceleration of price action. Heading into today, the tape failed to follow through and instead has settled in after such a surge. The second read on U.S. Q2 GDP came in a tad better than expected, but the true highlight of the day and rest of the week is Fed Chair Powell’s keynote speech at Jackson Hole at 8:10 am CT, we discussed in more detail in the S&P section.

Technicals: Major three-star resistance at 1967.1 has again stopped the tape in its tracks. Not only have we had this level for a week, it also now aligns with a trend line form the highs; it has contained the rally so far as we await Fed Chair Powell’s speech. Our momentum indicator comes in at ...  Please sign up for a Free Trial at Blue Line Futures to have our entire technial outlook, actionable bias, and proprietary levels emailed each morning.

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