E-mini S&P (June) / NQ (June)
S&P, last week’s close: Settled at 4171.50, up 43.75 on Friday and down 4.75 on the week
NQ, last week’s close: Settled at 13,927, up 176.75 on Friday and down 102.50 on the week
Fundamentals: U.S. benchmarks finished last week strongly and are clinging to those gains at the onset of a new one. In a jam-packed week ahead, we look to the Federal Reserve’s policy decision Wednesday and earnings from the six largest companies, by market cap, in the U.S. The Fed is purchasing $120 billion in assets per month; $80 billion in Treasuries and $40 billion in mortgage-backed securities. Given the economic rebound and recent job gains, a Bloomberg poll of 49 economists showed 59% of them expecting the Fed to begin tapering those purchases in the fourth quarter or sooner. Fed Chair Powell has been steadfast in the notion of patience in removing the Fed’s unprecedented accommodations, but he did signal the economy has begun to turn a corner. Listen, the data right here, right now, has certainly displayed a strong rebound, but the taper discussion cannot take hold until we see a continuation of those job gains from March. The inflation data will matter less, we have already realized everyday inflation and know inflation from last year’s base numbers will show up in the coming months, but the Fed believes it is transitory. What matters now is the stage the Fed sets this week heading into April’s jobs report next week. Will markets participants interpret willingness from the Fed to taper before the first half of 2022?
Tesla releases earnings after the close today. The company is expected report EPS of 79 cents and revenue of $10.4 billion, up sharply from one year ago, but down slightly from the fourth quarter. Regulatory credits will be a major factor and investors are eager for an outlook amid growing competition. Microsoft and Alphabet report tomorrow, Apple and Facebook Wednesday, and Amazon reports Thursday. This is the heart of earnings season and just tomorrow names like Visa, Starbucks, UPS, and many more also report.
On the economic calendar, Durable Goods is due at 7:30 am CT. The Treasury will auction $60 billion in 2-year Notes and $61 billion in 5-year Notes today at noon CT, before tomorrow’s dreaded 7-year auction. Treasury prices are trading lower in anticipation ahead of the bell. German Ifo Business Climate fell shy of expectations earlier this morning, and tonight both China’s Industrial Profit is due, and the Bank of Japan releases a policy decision.
Technicals: Our rare move to a slightly Bearish on Friday did not pan out as anticipated, and our move to Neutral today does not deter our belief that volatility will continue this week. Our major three-star resistance upside target of 4186 has proven its worth by keeping the tape contained and halting a second rally attempt that pinged a new record on Friday. Furthermore, major three-star resistance at 14,035 in the NQ has kept a lid on strength. However, we cannot ignore Friday’s terrific session and while holding out above first key support at 4159.50 in the S&P and 13,840 in the NQ, the bulls are clearly in the driver’s seat. Our rising momentum indicator in the S&P aligns with that first key support, but shallower rally in the NQ has allowed our momentum indicator to catch up there and align with our Pivot. The Pivots for each will bring a point of balance and continued action above there for the first hour will signal a continuation of Friday’s strength, encouraging a breakout to the next leg. To the downside, the line in the sand this week is a floor of support 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)
Last week’s close: Settled at 62.14, up 0.71 on Friday and down 1.05 on the week
Fundamentals: Crude Oil is down sharply to start the week. The loose footing, which eroded Friday’s gains, comes as the pandemic deepens in India, the worlds 3rd largest consuming country. The daily case count is now above 350,000 with many believing this is an underreported number. Traders do want to keep a pulse on vaccine developments for the struggling nation as the U.S. plans to send materials for vaccines. Reuters estimates that lockdowns in India will account for a 300,000-bpd hit to demand. Let us also not forget lockdowns and restrictions in Japan as the country also battles the virus; Japan is the 4th largest consumer country. This comes ahead of an OPEC+ meeting this week to set course for bringing production back online and the JMMC meeting, which started today, will give a formal recommendation. The cartel is expected to bring back 2 mbpd through Q2, but the move lower in prices will certainly force a tough decision. The cartel is expected to form a decision on Wednesday, with EIA inventory data due that morning and the conclusion of the Fed’s policy meeting that afternoon.
Technicals: A weak open last night sliced through our momentum indicator that now stands at 61.70. The tape remains very rangebound after heavy selling nearly one week ago and now Friday’s settlement of 62.14 will bring a line in the sand this week. To the downside, last week’s low of 60.61 will continue to come in as first key support, but below there is the big line in the sand, major three-star support 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 (May)
Gold, last week’s close: Settled at 1777.8, down 4.2 on Friday and 2.4 on the week
Silver, last week’s close: Settled at 26.075, down 0.105 on Friday and down 0.03 on the week
Fundamentals: Gold and Silver are both clinging to gain from the week before last but were unable to sustain rally attempt last week. All in all, it was a healthy consolidation week, but slightly disappointing to not see either extend gains given strength in Treasuries and weakness in the U.S. Dollar. The stage is now set for Wednesday’s Federal Reserve policy decision; per our discussion in the S&P section, will the Fed markets participants interpret willingness from the Fed to taper before the first half of 2022? At the end of the day, the Fed’s rhetoric Wednesday could only be coupled with April’s jobs report next week. Economic data has overall been strong, and Flash PMIs Friday were no different, but precious metals have seen a rebound from session lows today after a disappointing read on Durable Goods this morning.
Technicals: We remain upbeat on Gold and Silver, but introducing added caution given this week’s importance and the failure to extend gains last week. The bulls have so far responded to early weakness in each, with major three-star support proving to be crucial at 1763.5-1769.8 in Gold and the 50-day moving average in Silver being remaining pivotal. For Gold, last week’s settlement aligns as our Pivot with our momentum indicator and will bring a point of balance on the session; there is a trend line from the March 31st low in Gold that price action briefly stuck its head below this morning and continued action below the Pivot will leave the tape ... 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.