E-mini S&P (December)
Yesterday’s close: Settled at 3300.50, 35.75
NQ, yesterday’s close: Settled at 11,063.25, up 17.00
Fundamentals: It is Election Day and U.S. equity benchmarks continue their rebound from the depths of unchanged on the year Friday. We noted here yesterday that a slight back and fill is not uncommon early in Monday’s intraday session after such a surge higher to close out the week and overnight. Furthermore, we said, holding above 3273 and in positive territory throughout the day was paramount and would pave a path of least resistance to our rare major four-star level at 3383. The cards have fallen perfectly heading into the opening bell, but we must remind you that heroes are not made today. The run that began in the final minutes Friday is not only the byproduct of a rejection at unchanged on the year, but as the market anticipates uncontested election results. This has been a long-time narrative of ours; markets hate uncertainty. All things considered; this election is the epitome of uncertainty. Regardless who wins and regardless of their policies, the next couple months should bring much less uncertainty and this is bullish.
Still, when using leverage and positioning for the near-to intermediate-term, we prefer to be offensive and not defensive. What does this mean? If you caught the rebound, do not be greedy. It is highly likely that volatility only increases as the clock ticks toward midnight. Traders should pull out their 2016 election playbook; the tape made a new swing high early in the evening before plummeting to limit down as the polls shifted. We all know what happened from limit down and patiently buying into it turned out to be one of my (Bill Baruch) best and most notable trades that year. However, I would have never had that opportunity to be offensive if I were forced to defend pre-positioning; I would have been sidelined with losses upon massive volatility. Tonight, traders must expect the market to swing just as the polls do.
On the economic calendar, we look to ISM NY Business Conditions at 8:45 am CT and Factor Orders at 9:00 am CT.
Technicals: The path of least resistance technically is to our rare major four-star resistance at 3383, but as we have already said; do not be greedy. The good news is that our supports held through yesterday and land this exact groundwork. Coming into today, our momentum indicator in the S&P comes in at 3316; continued action above here is very favorable. Just like yesterday though, given the overnight surge, we would not be surprised to see some back and fill. However, holding above major three-star support today at 3300-3302.25 is paramount. The same goes for continued construction above 11,039-11,046 in the NQ. Furthermore, decisive action above our Pivot, which aligns with our momentum indicator this morning, at 11,110-11,167 is bullish. Overhead, there are notable resistance levels. The NQ is lagging the S&P’s rebound and this aligns our 3383 upside target in the S&P with 11,343 in the NQ instead of 11,588-11,621. Regardless, do not be greedy.
Resistance: 3345**, 3353.25-3356**, 3383****, 3406.75-3410***
Support: 3316**, 3300-3302.25***, 3287.50-3291.25**, 3273**, 3258.25-3264.50***, 3250.25**, 3231-3238***, 3172.75-3198****
Resistance: 11,225-11,250**, 11,343***, 11,457-11472**, 11,588-11,621***, 11,750-11,789***
Support: 11,039-11,046***, 10,829-10,891***, 10,656-10,660***, 10,489-10,558****
Crude Oil (December)
Yesterday’s close: Settled at 36.81, up 1.02
Fundamentals: Crude Oil is up nearly 7% on the week already as it has rebounded along with the broader risk-environment. The announcement of fresh lockdowns in Europe coming out of the weekend put early pressure on the energy complex, but comments from Russia that have raised anticipation for a delay of OPEC’s planned production cut taper on January 1st have lifted prices steadily. All things considered, markets are looking for less uncertainty tomorrow and the landscape has responded accordingly. Although we think Crude Oil will be higher in the coming months, we expect continued volatility today; if you bought yesterday, look to capitalize on strength.
Technicals: Crude Oil has ripped right through our rare major four-star resistance level and this is BULLISH! Still, we must temper our expectations as we expect continued volatility; if you have caught this rebound, consider taking some profits. There is a new path of least resistance higher as long as price action remains above major three-star support at 36.80-37.06 and we could see steady buy waves as long as the tape stays above 37.58-37.77 as the morning unfolds.
Resistance: 38.28-38.41**, 39.23-39.36***, 39.92-40.23**, 41.50-41.74***,
Support: 36.80-37.06***, 35.39-35.79**, 34.82***, 33.12-33.53**, 32.57-32.77***
Yesterday’s close: Settled at 1892.5, up 12.6
Fundamentals: Gold has climbed steadily from last week’s low and this is extremely encouraging for its long-term prospects. However, in the near-term, our largest concern is the election today removes uncertainties tomorrow; this would cause near-term volatility and waves of selling. Regardless, we remain unequivocally Bullish in Bias over the long-tern and until December traders should continue to capitalize on rallies, preparing to reposition on dips. However, the main catalyst for Gold will be the U.S. Dollar and continued weakness in the Dollar will keep a steady bid under Gold. If that trend reverses at all and we see a short-covering rally in the U.S. Dollar, it would create precipitous selling for the metal over the near-term.
Technicals: Gold has cleared strong resistance at 1902, however, it is running into what we have as new major three-star resistance at 1909-1911.9. This level aligns a trend line from the highs with a gap close on October 27th. The tape remains very constructive above 1902 on the session, however, a new low below 1887.6 is negative and could lead quickly as low as 1851 upon added volatility later in the day. A decisive move out above 1909-1911.9 is bullish but there are significant headwinds at 1936-1942 and 1962.1-1970 that we believe are levels traders should capitalize on.
Resistance: 1909-1911.9***, 1915-1917*, 1936-1942***, 1962.1-1970***
Support: 1896**, 1887.6**, 1877.1-1880**, 1868-1871**, 1851**, 1845.4****, 1829.8***
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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.