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Stocks, Metals, Energies, and the Inflation Dance | Morning Express

E-mini S&P (March) / NQ (March)


S&P, yesterday’s close: Settled at 3928, up 0.25


NQ, yesterday’s close: Settled at 13,699.75, down 68.00


Fundamentals: U.S. benchmarks are slipping back into yesterday’s range after finishing strongly. The Federal Reserve Minutes from the January 27th meeting jump-started markets during an unenthusiastic session, showing officials agreeing the economy is “far from” their longer-run goals. This means the Fed will remain accommodative, keeping rates near zero and maintaining asset purchases of at least $120 billion per month. Jobs data has certainly agreed with this assessment as Nonfarm Payroll has fallen shy of expectations for five of the last sixth months. Furthermore, Fed Chair Powell said last week the real Unemployment Rate is closer to 10%. Today, Initial Jobless Claims rose to 861,000, the highest since the week of January 21st. Although Continuing Claims improved WoW, they did come in higher than expected for the second week in a row. Outside of jobs, the economy is improving and showing broad signs of economic activity. Yesterday, January Core Retail Sales blew the doors off and snapped back from two underwhelming holiday months and PPI came in at the highest MoM improvement since September 2012. ISM/PMI data has also been strong and early this week NY Empire State Manufacturing finally lifted out of the gutter. Today, Philly Fed Manufacturing came in at a robust 23.1. At the same time, Walmart reported earnings this morning and is down 5% after missing estimates and guiding that it expects sales growth to slow in the coming year. The economy is certainly at an inflection point and this goes along with our rhetoric yesterday; U.S benchmarks, at these levels, have priced in perfection and we find little near-term value right here, right now. In conclusion, we welcome lower prices.


Technicals: The table is set for the bears, can they cross the goal line? We are not talking about a massive selloff, but instead a healthy pullback of 3-5%, given such a fundamental inflection point. Yesterday’s late rally traded into a thick area of resistance aligning multiple technical indicators, as well as last Friday’s settlement. Our momentum indicator is lower heading into the bell and has been slopping lower since Tuesday. For the S&P, this comes 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 (April)


Yesterday’s close: Settled at 61.16, up 1.08


Fundamentals: Crude Oil surged late yesterday as the landscape remains distorted; it is now estimated the U.S. has lost as much as 4 mbpd due to the conditions across Texas. We must remember that the Crude Oil has been in a strong uptrend and this has helped pave a path of least resistance during the weather disruptions. News yesterday that Saudi Arabia plans to raise production beginning in April, reversing the self-imposed cut of 1 mbpd through February in March. The maneuver is a sign of confidence in the landscape improving and initially knee-jerked the market below $60. However, the continued uncertainties in Texas remain the key driver. Furthermore, it is likely that amid such conditions, the expiration of March options yesterday and the roll into April through the end of the week has exacerbated the upside.

EIA inventory data is due at 10:00 am CT and analysts estimate -2.429 mb Crude, +1.397 mb Gasoline, and -1.571 mb Distillates.


Technicals: April Crude Oil traded to a high of 62.29 overnight as it tested our next level of major three-star resistance at 62.50. As it peels back today, we look to first key support at 60.95-61.28; this aligns previous resistance, yesterday’s settlement and our momentum indicator. While above this support, the market is within its next leg higher, however, we are beginning to feel strongly we could be within a short-term blow off top. We welcome the weakness and like positioning with low risk to capitalize on the downside, however, also believe there is tremendous buy opportunity from ... 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 (April) / Silver (March)


Gold, yesterday’s close: Settled at 1772.8, down 26.2


Silver, yesterday’s close: Settled at 27.315, down 0.01


Fundamentals: Gold was able to rebound post-settlement, overnight from session lows and our rare major four-star support. Although very technical, this was also in part due to the U.S. Dollar Index slipping from resistance at 91.00 as it ran up into the Fed Minutes and what was short-term relief in Treasury yields overnight. However, the Treasury complex (prices) are back to the swing lows; this is weighing on risk-assets broadly and certainly the metals. We noted in the S&P/NQ section that we believe the stock market is broadly vulnerable and at inflection point; if the U.S. Dollar avoids extending gains as a safe haven and instead the Treasury complex rebounds as such, this will pave a terrific fundamental landscape for Gold from rare major four-star support as a safe haven. Today, Jobless Claims underwhelmed yet again, and this echoes the need for fiscal and monetary stimulus measures, a supportive factor for Gold. Silver is on board, and the table is set. Can Gold rebound from the edge of the cliff.


Technicals: Gold held rare major four-star support at 1767.2-1770 yesterday, matching the low from November 30th. Silver is doing its part, holding major three-star support 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.

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