Record Highs and Bullish Engulfing Candles; It is all about the Dollar | Morning Express
E-mini S&P (June) / NQ (June)
S&P, yesterday’s close: Settled at 4132.75, up 12.50
NQ, yesterday’s close: Settled at 13,975.75, up 167
Fundamentals: Yesterday, the NQ set a fresh record and fully completed its recovery after losing as much as 12% from the February 16th peak. Not to be ignored, the S&P set a new record for the ninth day out of the last ten. Volatility early yesterday on the Johnson & Johnson news was subdued by contained inflation. Core CPI came in at +1.6% YoY and +0.3% MoM, each only one tenth above expectations and far from the feared hot read, but this is something we expected. Additionally, after St. Louis Fed President Bullard, on Monday, correlated a 75% vaccination rate as a baseline to even begin thinking about a taper, the Johnson & Johnson news could have been broadly supportive; Big Tech and Work From Home stocks led the way.
This morning, JPMorgan, Goldman Sachs, and Wells Fargo kick off earnings season. XLF, the Financial sector ETF, has gained 18% so far this year and banks have played a critical role in stabilizing the S&P amid a volatile first quarter for Tech. The Coinbase IPO and Federal Reserve speeches highlight the rest of today’s calendar. At our investment advisory, Blue Line Capital, Coinbase is certainly on our radar, but today’s opening price could leave little value relative to its $250 reference price. On Coinbase, Bitcoin set a new record of $64,896 overnight. Fed Chair Powell speaks at 11:00 am CT. He is followed by New York Fed President Williams at 1:30 pm CT, Fed Governor Clarida at 2:45 pm CT, and Atlanta Fed President Bostic at 3:00 pm CT, each is a 2021 voter. Dallas Fed President Kaplan rounds out the day, speaking at 5:05 pm CT.
Technicals: The path of least resistance is certainly higher, but is it getting near-term frothy? That question is completely dependent on the index that is breaking out (NQ), and less so on the one that has been (S&P). The NQ not only traded through but settled above our major three-star resistance aligning with its previous record at 13,888-13,964. This is a breakout, right? For now, yes, but it is not locked as we always like to see breakouts on a weekly basis. Let us also not forget that we have major three-star resistance at 14,035 and this is the last hurdle before a clear path of nearly another 2%. We are not the typical commodities brokerage, most do not believe stocks could achieve what they have, and this is where our wealth management arm separates us from the rest; the rest being those that have been trying to sell this market since S&P 3000, if not sooner, and providing a stale overbought thesis each week. We remain very Bullish in Bias, but we do want traders to take some caution until we see the NQ on a weekly close and given the S&P is nearing our next intermediate-term upside target of ... 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 (May)
Yesterday’s close: Settled at 60.18, up 0.48
Fundamentals: Crude Oil’s daily trading range has been tightening. In fact, the CBOE Crude Oil Volatility Index (OVX), for the last two days, has been at the lowest level since March 4th and 5th. At that time, Crude rose to its high of the year on Monday the 8th, before reversing. The volatility suppression could be a sign of bullish things to come. Regardless, we expect today’s EIA data and May Options Expiration to help Crude breakout of this tightening range. Crude was lifted early this morning on the IEA Monthly Report. They increased their demand forecast by 230,000 bpd, citing the vaccine rollout, improving global economy despite a fragile recovery being threatened by the ongoing pandemic. Expectations for today’s EIA data is -2.899 mb Crude, +0.786 mb Gasoline, +0.971 mb Distillates.
Technicals: Price action on Monday surged out above our momentum indicator and the ensuing pullback held that rising line ever since. This has been supportive to the tape and coupled with a break above the trend line from March 15th signals higher prices are likely. Still, we have major a ceiling of 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 (June) / Silver (May)
Gold, yesterday’s close: Settled at 1747.6, up 14.9
Silver, yesterday’s close: Settled at 25.426, up 0.559
Fundamentals: Yesterday’s contained inflation data helped give Gold and Silver the boost they needed. There is reason to believe that coupled with strong technical resistance, Friday’s hot PPI data and fear CPI would be the same, weighed heavily on price action up until yesterday’s data. Make no mistake though, Gold and Silver are not in the clear and certainly still have their work cut out for them both technically and fundamentally. A weaker U.S. Dollar has been slipping since peaking into the end of March but was bottoming out and yesterday’s CPI data allowed it to continue the slide; the Dollar Index tagged the lowest level since March 18th. The Treasury complex has also been supportive as this week’s auctions were met with overall steady demand and ongoing pandemic concerns have also helped keep a bid. Overall, the landscape is ripe for extended gains, but remains fragile. Fed Chair Powell speaks at 11:00 am CT. He is followed by New York Fed President Williams at 1:30 pm CT, Fed Governor Clarida at 2:45 pm CT, and Atlanta Fed President Bostic at 3:00 pm CT, each is a 2021 voter. Dallas Fed President Kaplan rounds out the day, speaking at 5:05 pm CT.
Technicals: Both Gold and Silver had a tremendous session yesterday, each displayed outside bullish daily bars. Gold is trading back to and battling at a key level of resistance at 1746.7-1747.1, a level in which it cleared only briefly last Thursday. However, it is major three-star resistance above there that is most significant at 1756.1-1759.9. On a positive note, support is building just below the tape and begins with our momentum indicator at 1743; continued action above here is supportive. As for Silver, it is also trading above our momentum indicator that comes in at 25.35; continued action above here should lead price action 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.
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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.