E-mini S&P (September) / NQ (Sept)
S&P, yesterday’s close: Settled at 4288.50, up 6.50
NQ, yesterday’s close: Settled at 14,549, down 14.00
Fundamentals: U.S. benchmarks again retreated at 3:00 am CT. This time on the heels of aggressive comments from China’s President Xi, who called for foreign countries to end their ‘bullying’ of the COMMUNIST nation, "anyone who dares to try, will find their heads bashed bloody against a great wall of steel forged by over 1.4 billion Chinese people”. Excuse me? The speech was delivered at a celebration for COMMUNIST nation’s centenary. China has been criticized heavily for many of their tactics, and certainly not the least being the ongoing Uyghur genocide in the Xinjiang region.
The minor reversal came after fresh record highs for both the S&P and NQ. However, it was Value stocks leading yesterday and the Dow achieved an outside bullish technical pattern, led by Energy +1.3% and Industrials +0.84%. Such momentum carried overnight before the reversal back to unchanged. We have pointed to the Dow through much of this week, saying that Monday’s divergence where Tech gained, and the Dow lost would unwind. The Dow is now on the cusp of a breakout, but make no mistake, we are not bearish Tech.
Bill Baruch joined CNBC’s Trading Nation yesterday to discuss
Treasuries finished weak last Friday but reversed higher upon Monday’s Delta Variant headlines. They traded higher into yesterday but failed to hold; rates have begun to firm ever so slightly this morning upon favorable Manufacturing data out of Europe. Weekly Jobless Claims are out at 7:30 am CT, final IHS Manufacturing PMI follows at 8:45 am CT and the more closely watched ISM Manufacturing PMI is due at 9:00 am CT. A critical Nonfarm Payroll read is released tomorrow. The Treasury landscape will play a pivotal role. Barring any news that derails the stock market broadly, if rates continue to edge higher, we should see Value and the Dow continue to outperform. This thesis is already getting a boost from OPEC news that has lifted Crude Oil by more than 2%. The group plans to bring back less production than anticipated between August and December, at a pace of less than 500,000 bpd each month. Their goal is to tally 2 mbpd of added production through yearend. Some analysts had expected as much as 1 mpbd to return each month.
Technicals: Last night, the S&P achieved our next major three-star resistance upside target with a high of 4305.75. In Wednesday’s Midday Market Minute, we explained how the continued construction above our roadmap of levels detailed below will lay groundwork for 4307. The NQ also achieved our next level of major three-star resistance at 14,622. Overall, this does not change our more Bullish Bias. Although we are less enthusiastic on Tech and the NQ, the Dow broke out of the bull-flag pattern we have been pointing to and did it upon an outside bullish reversing candle yesterday. Typically, a move like that is as bullish as it can get, however, the Dow is not sitting at record highs like the S&P and NQ, and essentially faces trend line resistance from its May 10th record right at today’s high of 34,551. Although we remain exuberant across equities because they continue to perform phenomenally, given the S&P’s achievement, the Dow’s resistance, and our unenthusiasm for the NQ right here, right now (we are long certain Tech stocks at Blue Line Capital, in fact, some of our largest holdings are Tech), we cannot increase out Bullish/Neutral Bias to outright Bullish.
This morning’s pullback has each the S&P and NQ battling at our Pivots that align with our momentum indicators; continued action below the levels detailed will signal some near-term exhaustion. However, steady action above through the first hour will encourage a retest of the overnight highs and major three-star resistances at 4307-4308.50 in the S&P and 14,622 in the NQ. Strong support continues to underpin the market but a break below 4258.25-4260 in the S&P will encourage long liquidation.
Resistance: 4307-4308.50***, 4324**, 4339.50**, 4389.75***
Support: 4276.50**, 4269.25-4271.25**, 4258.25-4260***, 4236.50-4241**, 4227-4231***, 4208-4213***
Resistance: 14,622***, 14,757**
Support: 14,451-14,487***, 14,390**, 14,339**, 14,230-14,286***
Crude Oil (August)
Yesterday’s close: Settled at 73.47, up 0.49
Fundamentals: Crude Oil is surging out above $75 on news OPEC+ will bring back less than 500,000 bpd per month beginning in August. The total increase will be about 2 mbpd through December. Analysts had expected 500,000 to 1 mbpd to come back online per month, so this news is lifting prices and bringing a tailwind to commodities broadly. Also, the U.S. Dollar has retreated from overnight highs, underpinning commodity prices. Still, today OPEC+ is expected to discuss production cuts through the end of 2022 and this leaves the Energy space clinging to the news flow. Although the emergence of the Delta Variant is seen as a potential blow to demand, OPEC+’s quick action to maintain balance in the wake of fears of a 2022 glut via their cuts is seen as a major positive. Still, traders should be on the lookout for a buy the rumor sell the news if comments underwhelm.
Technicals: Price action has surpassed the $75 mark and now looks to close in on our next upside target, rare major four-star resistance at 76.89-76.90. Our rising momentum indicator trails the tape significantly and aligns with previous key resistance at 73.85-74.05; the tape is bullish across all timeframes while out above here.
Support: 73.85-74.05**, 72.57-72.82***
Gold (August) / Silver (September)
Gold, yesterday’s close: Settled at 1771.6, up 8.0
Silver, yesterday’s close: Settled at 26.194, up 0.293
Fundamentals: Gold and Silver are starting the session of on firm footing and finding tailwinds from a pullback in the U.S. Dollar as well as a broadly stable Treasury complex. In fact, given Treasury strength through the first half of the week, Gold and Silver were able to rebound from new lows yesterday despite U.S. Dollar strength. Miners are also beginning to show some life. We have noted in the past that month-end flows and futures rolls have been caused significant volatility across the metals complex and the last week was certainly no different. July 1st not only brings a new month, but new flows because it is now more attractive for banks to hold Gold, a newly established Tier 1 asset. Still, the economic calendar poses risks and today’s weekly Jobless Claims came in better than expected, knocking Gold back from a session high of 1780. Final Manufacturing PMI is due at 8:45 am CT and the more closely watched ISM Manufacturing is due at 9:00. Nonfarm Payroll is tomorrow.
Technicals: Gold has stuck its nose above rare major four-star resistance at 1771-1775. It is uncommon for us to have a rare major four-star resistance in the middle of a range, but we have viewed and continue to view the pocket as significant on a weekly closing basis given tomorrow’s jobs data; we believe a close above here tomorrow will solidify a bottom in the metals. Still, there is tremendous damage to repair to the upside and Silver is running into our next key resistance this morning at 26.40-26.55. Our momentum indicators are rising, for Gold this 1770 and for Silver this is 26.22; steady action above here is necessary encouraging buying through the session.
Resistance: 1775****, 1785.9-1787.8**, 1791**, 1799.3-1800***
Support: 1765.9-1767.5**, 1756.8***, 1750**, 1736.8-1738.2**, 1725***
Resistance: 26.40-26.55**, 26.94-27.09**, 27.32-27.36***
Support: 26.05**, 25.74***, 25.40**, 24.80***
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Blue Line Futures
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.