E-mini S&P (June) / NQ (June)
S&P, yesterday’s close: Settled at 4185.75, up 11.25
NQ, yesterday’s close: Settled at 13,790, down 60.00
Fundamentals: With U.S. benchmarks trading near record highs, the first trading day of the month started strongly, but finished on soft footing. Per our discussion here yesterday, it was no surprise to see stocks move higher through the opening bell; they have done just that for each of the last three months. The question we must answer is whether the first half of May will be similar in strength to February and April, or choppy like March. Bill Baruch joined the Yahoo Finance Closing Bell yesterday and emphasized how we believe May will start off choppier as it digests April’s gains. Energies +2.9%, Materials +1.5%, Health Care +1.2%, and Industrials +1% led yesterday as the NQ lost 0.43%. The reopening trade was boosted first on news the European Commission recommended lifting travel restrictions and next by India health officials calling for Covid cases to plateau. Further tailwinds came from news New York, New Jersey and Connecticut plan to lift restrictions over the next two weeks. 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. Despite the strong reopening trade, a less boisterous ISM Manufacturing PMI read, 60.7 versus 65 expected, seemed to throw cold water over the tape. The S&P opened at major three-star resistance at 4200.75-4203.25 and failed to chew through before retreating on the heels of the Manufacturing data. Fed Chair Powell and NY Fed President Williams both struck an upbeat tone yesterday with Powell noting the economy’s picture is brighter and Williams saying that inflation should be at 2% or higher for the rest of the year. Without bubble wrapping such comments with the Fed’s ongoing patient rhetoric, one may easily call these less dovish. Today, we look to Factory Orders at 9:00 am CT and comments from San Francisco Fed President, a 2021 voter, at noon CT. On the earnings front, energy names are performing well with Conoco Phillips and Marathon Petroleum both topping estimates and gaining about 2% ahead of the bell. Leidos, Martin Marietta and DuPont also beat top and bottom numbers. After the bell, we are eager to see reports from T-Mobile, Activision Blizzard, Pioneer Natural Resource, Caesars, and more. (Disclosure: Blue Line Capital owns MPC, LDOS, TMUS, and PXD) Price action across indices dove lower at 6:30 am CT, but it was not Ferrari’s earnings driving the tape. A wave of risk-off came on news that a Chinese military aircraft entered Taiwan airspace. This will be something traders must keep an eye on as the session unfolds. Sometimes, investors just need an excuse to sell a little. As we noted above, we expect the first half of May to be choppy as it digests April’s record run.
Technicals: Yesterday, the S&P’s early breakout attempt was contained by major three-star resistance at 4200.75-4203.25 and the market settled at our 4186 level like a magnet. At the same time, the weaker NQ finished lower, but selling was contained by major three-star support at 13,75-13,776. Today’s early weakness has now chewed through not only this support for the NQ, but major three-star support in the S&P at 4167.25-4174. It will be critical to see if added waves of selling hit the tape through regular trading hours; if so, we would expect a bit of follow through. The market is clearly exhausted after April’s run and now needs time to refresh the market profile. However, a failure to follow through in the first few hours of trade will quickly build added strength in a broad region of support. This is important because, although we turned slightly Bearish in Bias, the market is unquestionably in a longer-term uptrend and we hate fighting the trend; the trend will win three times out of four. Traders must understand the massive amounts of support that do build upon such a strong uptrend, the next in the S&P comes just below 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 (June)
Yesterday’s close: Settled at 64.49, up 0.91
Fundamentals: The reopening news from Europe and the U.S. has certainly brought bullish tailwinds and there are upbeat prospects that new Covid cases in India have plateaued. Cases have now dropped for three straight days since peaking above 400,000 on April 30th. India is the worlds third largest consumer of Crude and data according to Reuters yesterday showed that imports in March increased by 12% versus February. Although April imports are expected to drop sharply, this has arguably already become priced in. Saudi Aramco reported a $21.7 billion profit and almost enough free cash flow to cover its massive $18.7 billion dividend. This news, coupled with upbeat reports from energy giants last week, and those from ConocoPhillips and Marathon Petroleum today have all brought bullish tailwinds to the space at a very seasonally strong time of year. Heading into the summer months, Crude is called by refiners at a higher rate in order to meet driving demand. Given added reopening tailwinds, there seems to be a perfect storm brewing for a run to $70. Standing in its way is the broader market. The S&P stalled at resistance yesterday and turned lower this morning on news that a Chinese aircraft had moved into Taiwan airspace. There are two sides to the geopolitical coin here and traders must keep a pulse on developments.
Technicals: Crude Oil gained as much as 2% at a high of 65.84 early this morning, essentially achieving the $66 mark we pointed to in yesterday’s Midday Market Minute. Price action has consolidated nicely into the U.S. hours as our momentum indicator rises but trails the tape significantly and aligns to bring first key support with yesterday’s settlement at 64.49-64.55. Although strong resistance is overhead 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. Gold (June) / Silver (July)
Gold, yesterday’s close: Settled at 1791.8, up 24.1
Silver, yesterday’s close: Settled at 26.96, up 1.087
Fundamentals: The precious metals complex started the week and month on terrific footing. U.S. Dollar weakness and strength across the Treasury complex provided a perfect backdrop when coupled with Gold and Silver’s construction against support over the last two weeks. News that a Chinese aircraft moved into Taiwan airspace is something to keep a close eye on as this could bring added geopolitical premium to Gold, and thus Silver. As we move through this pivotal week, jobs will certainly become the major focus and could deter Gold’s prosects of regaining and holding out above $1800. Additionally, there could be bullish tailwinds from an improving virus picture in India as it invites fresh physical purchases. All things considered, the landscape is ripe for higher prices, but traders must tread cautiously until yesterday’s move can prove to be more than just 1st of the month allocations.
Technicals: Gold and Silver settled in last night but held the bulk of yesterday’s gains in what looks to be unfolding as a constructive consolidation. There is clear resistance overhead in Gold at 1796.3-1800, a level that it has failed multiple times in recent weeks, however, the more Gold tests it, the better the odds for higher prices. Such a move would point to 1820 and 1830. For Silver, major three-star support now 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.
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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.