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Fed Analysis and how we're trading the macros | Bill Baruch breaks down the action | Morning Express

E-mini S&P (December)


Yesterday’s close: Settled at 3379.50, down 15.50


NQ, yesterday’s close: Settled at 11,255, down 195


Fundamentals: The Federal Reserve delivered everything that was expected yesterday, they even signaled rates will stay at zero into 2023. If they were to give guidance on unwinding current policy measures, those measures would not reach their full potential. Instead, an important narrative from the Fed within the statement was, “The Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent and expects it will be appropriate to maintain this target range until labor market conditions have reached levels consistent with the Committee's assessments of maximum employment and inflation has risen to 2 percent and is on track to moderately exceed 2 percent for some time.” Going forward, this will raise the emphasis on Nonfarm Payroll as the economy recovers and we will stay glued to the latest inflation data. More importantly, with a baseline, the Fed has quietly removed the QE-to infinity rhetoric. For this reason, and the fact we have typically seen weakness after Fed meetings of late, equity markets are lower.

On the economic calendar this morning, Jobless Claims was a strong report. Some may argue with that comment because Initial Claims came in above the 850,000 at 860,000. At this point and time, we feel that any Initial Claims number decisively below one million is solid. Furthermore, Continuing Claims, one that we feel is as important or more important than Initial Claims, hit a new post-pandemic low. Philly Fed Manufacturing was in line with expectations, but below last month’s read. This coupled with lower than expected Building Permits and Housing Starts threw could water over the Jobless Claims.

Divide on new fiscal measures remains in Washington. President Trump grabbed headlines after a tweet directed at Republican Senators encouraging them to go for the larger deal. With an election less than two months away, many Republicans want to exude fiscal responsibility. However, Fed Chair Powell reiterated that fresh measures from Washington are needed.


Technicals: The tape is heavy this morning, the NQ has forged a new session low while the S&P is lingering above the 3310.25 low set last night. Rare major four-star support in the NQ comes in at 10,861-10,924 and we must see a break and close below there in order to encourage the next leg lower. One that could test 10,489-10,558. The December S&P, at 3310.25, held Friday’s front month low from Friday at 3308.75. This is key support, however, above there is major three-star support at ... Please sign up for a Free Trial at Blue Line Futures to have our entire technical outlook, actionable bias, and proprietary levels emailed each morning.

Crude Oil (October)


Yesterday’s close: Settled at 40.34, up 1.88


Fundamentals: The bulk of Crude Oil’s gains came early yesterday on the heels of API’s massive headline surprise. We said here that “anything in the mere ballpark of a 5 mb draw of Crude on the official EIA report should be enough to sustain this early strength”. The EIA posted -4.389 mb and Crude has had a steady bid at the $40 region ahead of today’s options expiration, despite broad weakness across risk-assets. Yesterday’s report also signaled that U.S. production has recovered all its hurricane losses, with estimated levels reaching 10.9 mbpd. However, buoying the market is a meeting of OPEC’s JMMC to discuss production plans after both the IEA and OPEC signaled concern for the demand outlook.


Technicals: We do believe that large open interest at the $40 Put and Call strikes has tethered price action to the region. If risk-assets remain under broad pressure through today, we imagine weakness in Crude will kick in post-expiration. For this reason, we are introducing a cautiously Bearish Bias, but the S&P must also remain heavy in order to hold such a near-term Bias. This does not change the fact we believe there is tremendous long-term value in the $35 region. Strong resistance remains at...  Please sign up for a Free Trial at Blue Line Futures to have our entire technical outlook, actionable bias, and proprietary levels emailed each morning.

Gold (December)


Yesterday’s close: Settled at 1970.50, up 4.3


Fundamentals: Gold is getting whacked today while the U.S. Dollar is showing only moderate gains. However, the Treasury complex is firmly higher, and Gold is ignoring the strength there. Overall, risk-assets have been weak after yesterday’s Fed meeting. Per our discussion in the S&P section, the Fed overall provided a baseline to remove the QE-to infinity rhetoric and risk-assets are going through the motions to digest such. We remain long-term Bullish in Bias Gold, but the metal remains within its defined consolidation range as it enters a seasonally softer time of year.


Technicals: Price action is decisively below our Pivot of 1955.5-1958 which encompasses several technicals as well as our momentum indicator; continued price action below here will leave the tape heavy. Still, there is strong support below the market at ...  Please sign up for a Free Trial at Blue Line Futures to have our entire technical outlook, actionable bias, and proprietary levels emailed each morning.


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