Vaccines and PMI in the Driver's Seat | Actionable Analysis, Levels, & Biases | Morning Express
E-mini S&P (December)
Last week’s close: Settled at 3554.25, down 25.75 on Friday and 27.75 on the week
NQ, last week’s close: Settled at 11,905.75, down 81.50 on Friday and 27.75 on the week
Fundamentals: The S&P and NQ incurred a swift wave of selling in the final hour Friday. Pick your poison for the reasoning, but in the end, it was simply a de-risking ahead of the weekend as the Covid-19 pandemic rages on. However, the Russell 2000 Small Cap Index barely budged and has found the best of this morning’s risk-on tailwind amid an overall healthy landscape as U.S. benchmarks broadly snap back. A weaker U.S. Dollar and continued waves of vaccine news (per our discussion last week) have helped lift sentiment. AstraZeneca’s vaccine was announced to be very effective, 70-90%. Whereas less than effective than Pfizer’s or Moderna’s, adjusting the dosage impacts the success rate, it is also much cheaper to manufacture and can be stored at normal refrigeration levels. During development, Oxford and AstraZeneca promised equitable access to the vaccine and the news has lifted assets outside of the U.S. Additionally, the FDA approved an Emergency Use Authorization for Regeneron’s Covid-19 treatment drug.
On today’s economic calendar, Flash PMIs are front and center. In Europe, although Germany’s 57.9 print on Manufacturing continues to drive a recovery in the sector, the Services sector contracted worse than expected across the board. For the Eurozone, this is the third contraction in a row. The U.S. reads are due at 8:45 am CT. San Francisco Fed President Daly, a 2021 voter, speaks at noon CT. Tuesday and Wednesday bring a jam-packed schedule leading up to the Thanksgiving holiday.
Technicals: The S&P and NQ each failed Friday at major three-star resistance, but what that late wave of selling did was reaffirm support. For the S&P, this is key support at 3542-3544 and major three-star support just below in which the bulls continue to step in front of. Similarly, for the NQ this is 11,897-11,923 key support and then major three-star support at 11,775-11,801 that has held for nearly two weeks. Our momentum indicators come in at 3669 and 11,960 this morning with Friday’s settlement below at 3554.25 for the S&P and 11,905 for the NQ, aligning to create first key support. The bulls must respond in the case of a test of here through the morning. Thereafter, holding out above our momentum indicators will pave the way for another test of major three-star resistance at 3582-3586 in the S&P and 12,062-12,098 in the NQ.
Resistance: 3582-3586***, 3602-3606.75**, 3622.75**, 3637-3645**, 3662***, 3700****
Support: 3554.25**, 3542-3544**, 3532.50-3538***, 3513-3518**, 3498.75-3500.75****
Resistance: 12,062-12,098***, 12,225-11,260***, 12,397***, 12,450***
Support: 11,897-11,923**, 11,841*, 11,775-11,801***, 11,703-11,730**, 11,588-11,618***, 11,502**, 11,265-11,304****
Crude Oil (January)
Last week’s close: Settled at 42.42, up 0.52 on Friday and 2.02 on the week
Fundamentals: The continued trickle of fresh vaccine news has helped offset demand fears due to the second wave of Covid-19. All the while, renewed weakness in the U.S. Dollar late last week helped set the stage for a strong finish. In fact, today’s AstraZeneca news is a tailwind to developing nations and thus their currencies which lays a healthy landscape for energy prices. However, news of a military strike on a Saudi storage facility by Yemen Houthi rebels brought an overnight tailwind lifting Crude to the highest since September 2nd. Traders should keep a close ear to the ground on developments of the attack which came on the heels of news of a meeting between the Saudi Crown Price bin Salman and Israeli Prime Minister Netanyahu.
Technicals: The strong finish to last week and added gains today have lifted Crude clearly out above major three-star resistance at 42.15-42.36. Furthermore, our momentum indicator is rising and comes in at 42.50 this morning, a level in which if Crude can hold out above, could power it through major three-star resistance closely overhead at 43.33-43.83. A support trend line we referenced last week now comes in at 41.85 and is rising to align with the now 42.15-42.42 support. If the landscape can hold constructive, 44.60 should be in the cards at a minimum leading up to next week’s OPEC+ meeting. Maybe a buy the rumor, sell the news event.
Resistance: 43.33-43.83***, 44.60****, 46.42***
Support: 42.15-42.42***, 41.85**, 41.26**, 40.81**, 39.78-40.17***
Last week’s close: Settled at 1872.4, up 10.9 on Friday down 13.8 on the week
Fundamentals: That aforementioned trickle of vaccine news we referenced is again weighing on Gold this morning. In fact, Gold is down about 0.5% despite a broadly weaker U.S. Dollar. This is a rare occurrence, but one we have seen quite a bit recently on such news. Although it means the Federal Reserve will have to do less, the news has brought a tailwind to global currencies versus the Dollar. Furthermore, Brexit developments and British Pound strength are weighing on the Dollar. Understanding the factors correlating Gold and the Dollar is the first step in predicting Gold’s path and the timing of a recovery. Most importantly, December Gold and Silver options expire tomorrow, and this is the start of a market cleansing that leads into a seasonally bullish time of year that begins in the second half of December.
Technicals: Gold is waffling at our momentum indicator which comes in at 1869 this morning. It is trading below settlement and has again struggled to hold resistance at 1878.9-1880. This is not a favorable near-term landscape and leaves the door open for another test of rare major four-star support at 1845.4-1851, arguable the eleventh. However, given our longer-term bullish outlook we are patient and looking to position for the longer-term upon fresh weakness.
Resistance: 1872.4**, 1878.9-1880**, 1893***, 1907***
Support: 1845.4-1851****, 1820-1829.8***, 1801.6**, 1788-1790***, 1770***
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