Trading the Noise, what this Risk-On Move Means | Actionable Research & Levels | Morning Express
E-mini S&P (December)
Yesterday’s close: Settled at 3435, up 73.50
NQ, yesterday’s close: Settled at 11,763, up 497.25
Fundamentals: U.S. benchmarks continue their melt higher. Although the election has yet to bring a concrete conclusion, former Vice President Biden is on the cusp of victory, and markets find fewer uncertainties. This starts with tax policy and the Republicans maintaining a majority in the Senate. A split Congress evades an egregious tax shift and theoretically keeps ‘endless debt printing’ at bay. Endless debt printing at bay? We are already there you might think. Nope, there was certainly a fear that a ‘blue wave’, Democrats controlling all three branches of government, would pave the way for some version of Modern Monetary Theory. This would be different than pandemic stimulus as it would remain constant for well after the recovery and such coupled with a persistently low growth environment leads to stagflation; more Treasury supply to create debt forces yields higher and inevitable inflation. Furthermore, a split Congress reduces the likeliness of added regulatory measures on big tech. Ultimately, the market gets more of the same and it has steadfastly worked. Leadership from Tech and Healthcare has been reinvigorated and layered with the idea of more ‘Work-From-Home’ due to lockdowns being the preferred Covid-19 cure by Democrats already in power. In other words, there are less uncertainties and this is bullish.
As we await final election results, the Federal Reserve quietly steps into the spotlight. The committee concludes a two-day meeting at 1:00 pm CT with a policy statement, followed by Fed Chair Powell’s press conference. We anticipate Powell to not rock the boat and avoid decisive political questions; doing so will continue to pave a path of least resistance higher for the market.
Elsewhere on the economic calendar, we look to Jobless Claims at 7:30 am CT along with Nonfarm Productivity. The highlight anticipated October Nonfarm Payroll results are due tomorrow morning. Earlier, the Bank of England boosted stimulus programs and the EU slashed its 2021 growth forecast. Regardless, the U.S. Dollar is getting hammered and trading into two-week lows, which basically stand at two and a half year lows.
On the earnings front, Bristol-Myers has followed up yesterday massive day for Healthcare with an earnings beat. The stock is up nearly 2% ahead of the bell. At Blue Line Capital, our wealth management arm, we find our earlier discussion on less uncertainties a green light for Healthcare and broadly bough IHE and IHI yesterday, iShares Medical Devices and Pharmaceutical ETFs.
General Motors is another to repots amid a deluge of results. The carmaker is up 6% premarket after Adjusted EPS crushed estimates, buoyed by strong truck sales, and the CEO added favorable fourth quarter guidance.
All in all, we remain cautiously bullish, but traders must acknowledge that markets rarely move in a straight line and it is of the utmost importance to manage risk when trading leverage. Email us at email@example.com if you want to be connected with our wealth management office to discuss your investment portfolio.
Technicals: The path of least resistance is and has been higher. We have noted this since unchanged on the year held perfectly on Friday, and markets surged into settlement. Still, price action is facing strong overhead major three-star resistance. For the S&P, this is ... Sign up for a Free Trial at Blue Line Futures to have our entire fundamental and techincal outlook, actionable bias, and proprietary levels for the markets you trade emailed each morning.
Crude Oil (December)
Yesterday’s close: Settled at 39.15, up 1.49
Fundamentals: Yesterday’s inventory data was bullish. The EIA confirmed a massive draw of 7.998 mb and the steady decline in inventories since July has U.S. Crude stocks now breaking into the 5-year range. With mounting uncertainties tied to fresh pandemic lockdowns, this brings a breath of fresh air to the bull camp. Additionally, that added production from the prior week’s report was cut in half. Although mostly the byproduct of an active storm season, U.S. production has seemingly flatlined between 10 mbpd and 11 mbpd. The bulls will use this narrative coupled with better than anticipated economic data in recent weeks and a broadly bullish risk-environment as ammo to regain the $40 mark. Furthermore, we had anticipated action from OPEC+ to delay their planned production cut taper January 1st even before comments from the Russian Energy Minister on Monday. This coupled with steadily strong demand from China heading into to 2021 will provide a backbone for higher prices.
Technicals: Price action is firm with waves of selling dissipating quickly and building for higher swing lows. The tape has steadfastly held out above first key support at 37.58-37.77, however, it has struggled to breakout above major three-star resistance at 39.23-39.36. Our momentum indicator has caught up with the tape at 38.75 and this could encourage a bit of consolidation, but a continued healthy one that holds ... Sign up for a Free Trial at Blue Line Futures to have our entire fundamental and techincal outlook, actionable bias, and proprietary levels for the markets you trade emailed each morning.
Yesterday’s close: Settled at 1896.2, down 14.2
Fundamentals: Despite losing ground yesterday, Gold is surging into the U.S. session gaining more than 1.5% and trading at two-week highs. The U.S. Dollar is getting hammered, and as we have said, Gold in the near-term will live and die by the U.S. Dollar. The greenback weakness comes despite the Bank of England expanding their QE program by 150 billion pounds and the EU slashing their 2021 growth forecast. The added stimulus come ahead of the conclusion of the Federal Reserve’s policy meeting at 1:00 pm CT and Fed Chair Powell’s press conference at 1:30 pm CT. In a busy week, we then look to Nonfarm Payroll tomorrow. Another aspect to Gold’s rebound is reports (from Bloomberg) that VTB Bank PJSC, Russia’s second largest lender is boosting its Gold and Silver trading. Coincidentally, by rule, the company’s Gold reserves cannot exceed two to three months’ worth of volume traded of Gold. By boosting its trading, it can then stack its reserves.
Technicals: We have remained unequivocally Bullish in Bias over the long-term, despite acknowledging patience is needed during this seasonally softer time of year. Traditionally, Gold’s next bullish leg would not start until late December. However, if the U.S. Dollar Index breaks below 92.46 and the Chinese Yuan holds above its 0.15041 previous high against the Dollar, the path of least resistance is higher for Gold across all timeframes. Still, traders must realize there is strong major three-star resistance at ... Sign up for a Free Trial at Blue Line Futures to have our entire fundamental and techincal outlook, actionable bias, and proprietary levels for the markets you trade emailed each morning.
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