E-mini S&P (December) / NQ (Dec)
S&P, yesterday’s close: Settled at 4354, up 20.00
NQ, yesterday’s close: Settled 14,759, up 103.75
Fundamentals: U.S. benchmarks surged by 1% overnight and ripped through resistance levels after closing strongly. Stocks held support early and turned sharply higher yesterday after U.S. Treasury Secretary Yellen lectured Congress (again) on what is at stake if they do not get their act together and raise the debt ceiling. Her words pushed the divisive group into motion, and they are now close to a deal to kick the can down to December. This is the major driver, but tailwinds have also come in the tune of yesterday’s Bond reversal as Tech is leading overnight, and Russia coming to rescue Europe from their energy crisis. Early yesterday, the 10-and-30-year Treasury hit new high yields of 1.573% and 2.148%, respectively, but came off sharply as the price of Natural Gas and Crude Oil reversed. The energy crunch has mounted inflation fears in recent weeks, together with the fear of U.S. default, they have lifted rates. Do not worry, Russia’s President Putin said the country will be able to increase flows. There is no hidden agenda here. What could go wrong? For now, the market is enjoying a strong wave of risk-on ahead tomorrow’s Nonfarm Payroll.
Weekly Jobless Claims this morning was a healthy beat for both Initial and Continuous. NY Fed President Williams speaks at 8:40 am CT and traders want to keep an ear to the ground on ECB officials speaking.
Technicals: Price action in the S&P has broken out of a very tight, algo driven, consolidation pattern that experienced slightly lower highs and slightly higher lows each following day within last Friday’s range. The breakout of this pennant has driven price action by another 1% and the S&P is now facing major three-star resistance at 4399.75-4406.50, aligning multiple levels including the opening bell slam on September 28th. Similarly, the NQ has broken out above a strong wave of resistance and while holding above here, it paints a path of least resistance to 15,029-15,035. Now, it is important to understand that neither of these indices closed above their resistance yesterday and it was the overnight run that did it. Therefore, there are large gaps now pinning previously strong resistance as our first and second waves of major three-star support. Furthermore, this higher price action must be well-received intraday. We have had a cautiously Bullish Bias since last Friday and do believe there is higher to go from here in the near-term. Rare major four-star resistances now come 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 (November)
Yesterday’s close: Settled at 77.43, down 1.50
Fundamentals: News that Russia will rescue Europe from its energy crisis subdued surging prices across the space yesterday. This led to a reversal in Crude by as much as 6% and a flush that cleared out longs. U.S. Natural Gas reversed by more than 15%. Also, news the White House is willing to release from the SPR has weighed on the tape. Yesterday’s EIA data, a bearish report led by a large build in both Crude and Gasoline, certainly did not help either. However, given all the headwinds, price action did battle to hold major three-star support at 76.98 through close, before the overnight flush. The inventory builds were supported by an acceleration of Imports and an estimated increase of 200k bpd in production as it returns in the Gulf. However, Refinery Utilization showed stronger than expected activity and heading into the winter it could be a sign of things to come.
Technicals: Price action traded sharply lower overnight and through major three-star support at 75.50-75.88, this aligns multiple levels with the apex of a pennant consolidation. However, it spent very little time below here and responded to support at 74.60-74.80 that aligns multiple levels with the topside of old trend line resistance. The rebound is very healthy so far, but we must see a close back above 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 (December)
Gold, yesterday’s close: Settled at 1761.8, up 0.9
Silver, yesterday’s close: Settled at 22.532, down 0.076
Fundamentals: Gold and Silver retreated from a firm overnight session after Jobless Claims handedly topped expectations. Jobless Claims themselves would not always give credence for such a reversal, but as any participant knows, precious metals have been as fickle as ever and the solid jobs picture comes ahead of tomorrow’s Nonfarm Payroll report. Let us also not forget that it is China’s Golden Week, a typically soft week for metals. This mounts the anticipation for tomorrow’s Nonfarm Payroll report, it will either make or break Gold and Silver in the near term. The U.S. Dollar has firmed a bit from the overnight lows and Treasuries are edging lower; both weighing on the complex.
Technicals: We remain cautiously Bullish at this level but would not be surprised for algos to squeeze the bulls into tomorrow’s jobs data given the reversal this morning and market vulnerability. Early strength in Gold fell shy of key resistance and the high on the week at 1771.5 and has slipped back below our Pivot that aligns with our momentum indicator. Continued action below the Pivot is not great to see and can weigh on the tape, but strong support does come 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.
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