Scripted Perfectly; Breakouts and Rebounds | Equities, Metals, and Energies | Morning Express
E-mini S&P (December)
Yesterday’s close: Settled at 3623.25, down 13.25
Fundamentals: Settled at 12,277, up 19.50
Fundamentals: U.S. benchmarks have again found vaccine tailwinds and are set to open higher by about 1%. Yesterday, Moderna requested clearance from the FDA via the Emergency Use Authorization and plans to apply for the same in Europe after their primary analysis proved the vaccine to be 94.1% effective, in line with their earlier findings. Furthermore, the company said there were no serious safety concerns. Moderna gained 20.24% yesterday and is up about 10% overnight. Early this morning, Pfizer and BioNTech said they will request similar clearances. In recent weeks, we have discussed the ‘vaccine news trickle’; a slow developing, yet constant flow of news that continues to lift stocks just as a glimmer of exhaustion may look to set in. Today’s tailwinds have the S&P testing its record high of 3668 with much broader participation than the last few sessions as Financials and Energies snap back from yesterday’s bludgeoning.
The U.S. Dollar also remains in the spotlight as the Dollar Index hovers at two and a half year lows. Today, Fed Chair Powell and U.S. Treasury Secretary Mnuchin are set for a joint Congressional testimony to begin at 9:00 am CT. Most recently, headlines have described a dispute between the two after the Treasury requested the Federal Reserve to return unused funds from the unprecedented pandemic stimulus measures. We think the news cycle is making ‘much ado about nothing’, however, the two will certainly field questions on the topic as well as the state of economy now and given the surge in Covid-19 cases.
On the economic calendar, we look to final Manufacturing PMI for November at 8:45 am CT, followed by the more closely watched ISM read. Fed Governor Brainard and ECB President Lagarde each speak at 11:00 am CT.
Technicals: We have been and remain more Bullish in Bias as the path of least resistance is clearly higher. All major U.S. benchmarks are eyeing fresh record highs. For the S&P, this aligns to create major three-star resistance at 3662-3668, a level already tested this morning with an initial high of 3664.50. For the NQ, its record sits at 12,448, but up first is major three-star resistance aligning its closing high with the November 9th spike high. We find both benchmarks immediate-term bullish while holding out above first key support in the S&P 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 (January)
Yesterday’s close: Settled at 45.34, down 0.19
Fundamentals: Crude Oil appears to be one of the quietest on this morning’s board as OPEC+ delayed a final production decision until Thursday. All things considered, the tape is holding well given the potential ‘buy the rumor, sell the news’ event as OPEC+ has actually put a production increase on the table. A production cut taper was all but a foregone conclusion before the recent 10% rally, however, given the stable price landscape, which has incurred tailwinds from vaccine news, a weaker U.S. Dollar and stronger than expected data from China, there are several cartel members that want to expand production despite a still very uncertain landscape through 2021. The UAE with backing from Russia proposed a 500,000-bpd production increase. Traders must keep an ear to the ground, although we still find the path of least resistance higher, similar disagreements in the past (as recent as March) have caused Saudi Arabia to throw in the towel altogether and turn on the ‘taps’; this would slam the price of Crude Oil back below $40.
Technicals: We have been fairly Bullish and dialed such back to cautiously Bullish. Given rising uncertainties, we see no need to position directionally. First key support is holding at 44.60, with major three-star support below at 43.33-43.83. Just as major three-star resistance overhead has brought a ceiling at 46.42. Price action is now settling in at the psychological $45 mark. We would look to weakness without a drastically shifted fundamental landscape as a buying opportunity, but see no value being long at this point and therefore have shifted to outright Neutral in Bias... 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.
Yesterday’s close: Settled at 1780.9, down 7.2
Fundamentals: We could not have scripted this sell-off and bottoming process in Gold any better. Everything has played out perfectly; the ever-building break below rare major four-star support at 1845-1850, the move to 1800 for Options Expiration, and then the final flush through Futures Expiration Friday and Monday. All of which led to a low of 1767.2 when our next rare major four-star support was 1770! Furthermore, what has happened in the meantime? The U.S. Dollar has trekked lower with the Dollar Index at a two and half year low. It is also no coincidence that Gold is higher today and the Chinese Yuan is set to end a three-day losing streak against the Dollar. Listen, this is the most important part, we want to remind you a bottom is a process and not a price. Although we are confident that process is underway, it certainly does not mean to chase Gold without defining risk. There is now tremendous overhead technical damage that Gold must repair, and the seasonally bullish time of year does not kick in for another three weeks.
Technicals: We are changing our Neutral outlook (we have been Neutral since the break below 1845-1851), and although we are excited, we are exuding caution by only turning Neutral/Bullish. Gold has traded $50 from low to high in 24 hours, it is not the time to chase price action into trend line resistance from connecting the lows dating back to August 12th and furthermore the high of 1822.6 from mid-week last week. Our momentum indicator is trailing the tape significantly and we imagine it catches up with first key support at 1801.6-1805 through tomorrow morning; it would be constructive to hold out above here in order to build for a test to ... 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.