E-mini S&P (March)
Yesterday’s close: Settled at 3712.75, up 19.00
NQ, yesterday’s close: Settled at 12,751, up 80.25
Fundamentals: It is quadruple witching day, December futures and options on futures will cash settle at 8:30 am CT. Also, Tesla will officially join the S&P on Monday. All of which could easily create some ripples of volatility. We have been very Bullish in Bias since the September swoon, which we called, and now find it to be a good time to watch a few rounds. In recent weeks, we detailed long positions in both the Micro E-mini NQ and Micro E-mini Russell 2000. Generally speaking, our (yearend) targets on these positions were 12,900-13,000 in the NQ and the round 2000 for the 2000. All things considered, it has been an amazing run, we are glad to book profits and see where things end up at the start of next week.
Something to consider, the Federal Reserve reassured markets on Wednesday they will steadfastly stay ultra-accommodative until the market has visibly recovered; this is becoming priced in. Furthermore, Fed Chair Powell believes asset prices are not over-valued given the low-rate environment; why we want to be buyers on pullbacks, do not fight the Fed. Although we have looked to protecting some downside, we remain fully allocated within wealth management portfolio mandates. Markets have also priced in a $900 billion bipartisan coronavirus aid package.
The key phrase here is ‘priced in’. As quadruple witching forces a cleansing and Tesla’s inclusion creates interesting rebalances, there is no room for error in Washington ahead of today as last week’s one-week spending bill to avert a shutdown runs out at midnight tonight. The problem is things are priced to perfection. For this reason, again, we want to watch a few rounds.
Today’s economic calendar is quiet, but we look to Chicago Fed President Evans at 10:00 am CT, he is a 2021 voter. Also, permanent voting seat, Fed Governor Brainard speaks at 10:10 am CT. Lastly, right after the closing bell, but before futures close for the weekend, the Fed will release their Bank Stress Test.
Technicals: Make no mistake, the S&P and NQ are breaking out from one of the most amazing consolidations between the August highs and September lows. With the long game in mind, we are happy to step aside after the S&P exceeded its August high by 3.5% and the NQ by 2.5%. In order to exude this slight caution, we will reduce our Bullish Bias to Neutral/Bullish and look to pullbacks as a buying opportunity. The S&P is testing major three-star resistance that aligns multiple technical indicators but did quietly trade to a new record of 3723 overnight. Our near-term upside target is 3735.50-3737.50 and we further see 3817.75-3827.50 in short order. However, the reality is, we believe 3976 and then 4621 to be in the cards for the S&P in that aforementioned long game. Both the S&P and NQ are holding above our Pivots today, which represent our momentum indicators; above here, they are bullish across all time frames. The NQ is running into first key resistance, but so far has held beautifully above what is now major three-star support at 12,635-12,670. The landscape remains terrific, but from time to time, it is important to reevaluate and take a breath.
Resistance: 3714.75-3718.75***, 3735.50-3737.50***, 3756.50**, 3781.50**, 3817.75-3827.50***
Support: 3700-3702**, 3691.50-3693.75***, 3678.25-3681**, 3660**, 3635.50-3640***, 3614.75-3623.25****
Resistance: 12,754-12,777**, 12,861-12,897***, 12,955-13,000***, 13,156**, 13,300-13,369***, 13,583**, 14,274****
Support: 12,635-12,670***, 12,572-12,596**, 12,462**, 12,368-12,388***, 12,249-12,277***, 12,013-12,076****, 11,808***
Crude Oil (February)
Yesterday’s close: Settled at 48.54, up 0.54
Fundamentals: Crude Oil has done a terrific job clinging to gains. Despite a worsening Covid-19 landscape, vaccine tailwinds, a weaker Dollar, fiscal hopes, an accommodative Fed, and the start of inventory draws have all powered prices to the highest since the first days of March. This was when OPEC’s meeting to reduce production was slowly falling apart. To some degree, as we discussed in the S&P section, perfection is being priced in. We still believe the path of least resistance to be higher, however, there are market profile hurdles within the broader risk-landscape as Crude Oil stretches to $50. For this reason, we began taking a more cautious tone with Crude Oil through inventory data and the Fed meeting Wednesday. Although both appeased our narrative, in the near-term, we find better value in being patient for a little dip.
Technicals: Price action remains elevated and trading against first key resistance. It has flirted with out rising momentum indicator since Wednesday but never decisively broke below and this has allowed for buyers to feed the market. This morning, that level is 48.20 and while above here, the path is paved to exceed first key resistance at 48.66-48.88 and achieve $50. However, if exhaustion settles in, we could quickly see the Wednesday morning inventory lows of 47.17.
Resistance: 48.66-48.88**, 50.00***
Support: 47.17**, 46.72-46.81**, 45.72**, 44.84-45.14***, 44.10***
Yesterday’s close: Settled at 1890.4
Silver, yesterday’s close: Settled at 26.181, up 1.129
Fundamentals: As we have detailed, we could not have asked for a better script; Gold has done exactly what we forecasted. So where to now? That is the question each day. We love both Gold and Silver, but if you have not capitalized on this strength in some way, then you are doing it wrong. With that said, this week’s reassurances from the Fed have been priced in and we now wait for Congress to get its act together. The problem here is, a $900 billion package is already priced into this Gold and Silver market. Again, if you are approaching today with the belief that volatility will not continue, then you are doing it wrong. Yes, our near-term target of 1915 is very much in the cards today, but make sure you do not need to fill your glass entirely as you squeeze the last bit of juice from the orange. There will be many more oranges in the very near future.
Technicals: Gold pulled back to a low of 1881.9 and held major three-star support perfectly. This perfect technical landscape ultimately paves the way higher to our major three-star resistance target of 1915-1920. Still, 1890-1894 remains a battleground and now aligns with our momentum indictor; continued action above here will invite fresh buying, however, a slip below will signal some exhaustion. Similarly, Silver is battling at previous major three-star resistance that aligns with our momentum indicator to now create our Pivot at 26.07-26.15; continue action above here will pave a path of least resistance to our next upside target of 27.12-27.28. Given yesterday’s high and overnight range, key resistance comes in first at 26.745. However, also similar to Gold, a failure to hold above 26.07-26.15 will signal some exhaustion setting in and open the door to probe lower.
Resistance: 1915-1920***, 1927**, 1964.7***
Support: 1870-1878***, 1848.2-1852.7***, 1823.5-1825***
Resistance: 26.745**, 27.12-27.28***
Support: 25.64-25.75**, 25.41*, 25.01-25.05***
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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.