Stocks and Gold Fighting Deflationary Fears | Actionable Analysis and Levels | Morning Express

E-mini S&P (December)

Yesterday’s close: Settled at 3532.50, down 35.50

NQ, yesterday’s close: Settled at 11,820, down 66.00

Fundamentals: U.S. benchmarks are snapping back from yesterday’s unenthusiastic session. Despite a sea of red within indices, stocks broadly did nothing wrong through their healthy pullback and our rare major four-star support in the S&P held its second test of the week. The U.S. set another daily record for Covid-19 cases, California joined Texas to become the second state to hit one million cases, Chicago issued a stay-at-home advisory essentially cancelling Thanksgiving, and there is a threat of new restrictions across New Jersey and New York . Considering this news flow and no sign of Congress working on fiscal measures, it is quite a feat for the S&P to not only hold the critical support mark at 3498.75-3500.75 but rebound ahead of the U.S. open.

Fed Chair Powell weighed on sentiment yesterday saying, “the next few months could be challenging.” Although he added its “too early to assess” the vaccine news and the impact on the economy, Dr. Fauci made his rounds and was particularly upbeat. During Powell’s virtual conference with other central bank leaders, it was ironic for him to point out that ‘the economy as we knew it, may be over,’ saying that it accelerated existing trends and encourages an increase use of technology and telework.

Bill Baruch joined CNBC’s Trading Nation yesterday to discuss how Alphabet and Facebook are well-positioned for this more virtual environment and should see an increase in ad spending.

On the economic calendar this morning, Eurozone GDP data fell just shy of expectations. We now look to U.S. PPI at 7:30 am CT and fresh November Michigan Consumer data at 9:00 am CT. St. Louis Fed President Bullard, a non-voter until 2022, speaks at 7:30 am CT.

Technicals: Yesterday’s pullback in the S&P was a bit deeper than the NQ. Still, each laid constructive groundwork. The S&P again responded to our rare major four-star support at 3498.75-3500.75 and the NQ responded to our second layer of major three-star support at 11,750-11,789, a higher low on the week by 2%, before holding our first major three-star support upon settlement. Each certainly has their work cut out in order to finish the week by encouraging added buying. Major three-star resistance for the S&P is directly overhead and aligns with its previous record at 3568.75-3576.25. The NQ has major three-star resistance at ... Sign up for a Free Trial at Blue Line Futures to have our entire fundamental and techincal outlook, actionable bias, and proprietary levels for the markets you trade emailed each morning.

Crude Oil (December)

Yesterday’s close: Settled at 41.12, down 0.33

Fundamentals: The spread of Covid-19 across the U.S. and fear of added restrictions have weighed on demand forecasts for Crude Oil. Additionally, yesterday’s official EIA data was a bearish surprise, headline Crude Oil stockpiles actually increased by 4.278 mb. Yes, the composite including the product draws was more in line with official analyst estimates, however, the news certainly threw cold water over what API posted Tuesday evening. Adding to the bear case is news that Libya’s production has increased to 1.2 mbpd. Still, the rally is holding out above the psychological $40 mark and a critical level of major three-star support below as the bulls anticipate OPEC+, at their meeting later this month, to delay their planned production cut taper for January 1st.

Technicals: As we noted here earlier in the week, we would not be surprised to see a pullback. Well, here it is, and this bullish run will remain constructive as long as major three-star support at ... Sign up for a Free Trial at Blue Line Futures to have our entire fundamental and techincal outlook, actionable bias, and proprietary levels for the markets you trade emailed each morning.

Gold (December)

Yesterday’s close: Settled at 1873.3, up 11.7

Fundamentals: The U.S. Dollar stopped rising and Gold is gaining ground. It has been a tough week for the metal, but given the overnight strength, it is showing a real sign that it could finish on a positive note. Gold was hammered Monday, its biggest drop since 2013, on the heels of Pfizer’s vaccine news. However, the resurgence of Covid-19 cases, although a deflationary event, has worked to offset Monday’s news. The narrative went from the Fed maybe having to do less, to more stimulus measures maybe being necessary to battle new lockdowns and restrictions. Either way, this is not the time of year that Gold performs and as we have pointed out, we welcomed this week’s lower prices in order for a better long-term buying opportunity.

Technicals: Gold has stuck its head out above the 1877.1-1880 level which also aligns with our momentum indicator. Our first level of major three-star resistance comes in at 1893 and a close above there helps to begin repair. Although Gold must close above ... Sign up for a Free Trial at Blue Line Futures to have our entire fundamental and techincal outlook, actionable bias, and proprietary levels for the markets you trade emailed each morning.

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