With Chaos Come Record Highs? | Actionable Analysis for Stocks, Crude Oil, and Precious Metals
E-mini S&P (March) / NQ (March)
S&P, yesterday’s close: Settled at 3740.50, up 22.25
NQ, yesterday’s close: Settled at 12,616.75, down 176.75
Fundamentals: Chaos on Capitol Hill delayed the confirmation of Joe Biden’s election as President, but Congress reconvened through the night and finished the job. The acts in Washington yesterday, led by Trump supporters and even fueled by the outgoing President himself, were despicable. There is rampant hatred and mistrust in this country, but just like the rioting, looting, and destruction that began this summer, there is a larger power somewhere in the world sowing this divide.
Such anarchy yesterday ignited some volatility, but all things considered, most U.S. benchmarks approach the opening bell within range of their all-time highs. In fact, the Dow touched a fresh record overnight and the S&P missed the record it set yesterday by a couple of points. A wave of buying overnight came as relief once Congress confirmed Joe Biden’s election, but tech still lags after Georgia’s Senate elections reinvigorated the uncertainties we have been touching on in recent days.
Yesterday’s private ADP Payroll survey certainly underwhelmed showing jobs were lost in December. However, all eyes will be on Nonfarm Payroll which is on deck for tomorrow. The interesting thing is Jobless Claims have steadily improved in recent weeks. This morning Initial Claims came in below 800,000, quietly a new benchmark, for two weeks running and has beaten expectations over the last three. Continuing Claims, something we have said is just as important given the landscape, has now improved for four weeks in a row after this morning’s read. The fourth quarter was expected to be tough on jobs as pandemic stimulus funds ran out, but the picture seems to be turning a corner right on cue.
We now look to comments from Philadelphia Fed President Harker at 8:00 am CT. He was a voter in 2020, but not in the new year. Yesterday’s FOMC Minutes were not expected to bring anything new and almost went under the radar given what was happening at the Capitol. However, their reiteration of the utmost patience soothed any worries. Chicago Fed President Evans, a 2021 voter, speaks at noon CT.
Let us not forget that ISM Non-Manufacturing is due at 9:00 am CT. The final Services PMI read for December slipped from its initial post of 55.3 to 54.8 yesterday. Unless today’s results deviate far from the 54.6 expected, when this week is said and done jobs will be certainly be remembered, but so will the blowout ISM Manufacturing report from Tuesday.
Technicals: The S&P set a fresh record high yesterday and the NQ has held critical levels of technical support. Is this enough to get us super Bullish in Bias once again? Listen, the path of least resistance is higher, there is no doubt in our mind of this fact. However, in typical fashion to the start of any year, we will continue to wave the cautious flag and especially so given the news flow. All things considered, we still hold upside targets of 3976 and 4621 over the longer-term. Today, we would like to see the S&P continue to build a shelf above major three-star support now defined at 3728-3730. Furthermore, we are looking to an added layer of major three-star support at 3699-3703 aligning multiple indicators as well as the apex of a wedge. Overhead, the record highs fall just shy of what has been our overhead resistance 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 (February)
Yesterday’s close: Settled at 50.63, up 0.70
Fundamentals: Crude Oil has found a number of tailwinds, from OPEC+ coordination and Saudi’s voluntary cut to U.S. Dollar weakness, more fiscal stimulus and strong Refinery Utilization. On December 10th, after a surprise 15.189 mb build in Crude, we said that we anticipate draws through December to offset such and it will be a bullish tailwind. This has played out perfectly as Crude is at the highest level in 10 months and out above the $50 mark. After Crude Oil’s initial spike towards $50 on December 18th, we have taken a more cautious tone because we cannot ignore the potential of demand destruction due to the ongoing Covid-19 pandemic and the threat of added lockdowns and restrictions. Furthermore, simply put, we felt the easy money had already been made. We remain heavily allocated within the energy space from the portfolio management side but are now coming to a point of considering paring such back for the near-term; this move has done everything we wanted to see.
Technicals: Price action has completely cleared a massive hurdle of technical resistance at $50, where many indicators aligned. In fact, if we were not so internally Bullish in Bias, it had all the makings of a rare major four-star level. Today, our momentum indicator 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.
Gold (February) / Silver (March)
Gold, yesterday’s close: Settled at 1908.6, down 45.8
Silver, yesterday’s close: Settled at 27.042, down 0.598
Fundamentals: The 10-year yield has hit a high of 1.08% and is moving closer to our 1.25% upside target. The move has certainly taken the wind from Gold’s sails as it lost 2.34% yesterday. However, the more volatile Silver lost only 2.16% and Platinum only 0.84%. There is no doubt that rising Treasury yields are holding back the metals complex, but the U.S. Dollar is still lingering near its new low. If we get a combination of the two, rising yields and a strengthening Dollar, then metals bulls must step aside. ISM Non-Manufacturing just blew the doors off with a 57.2 and this comes on the heels of ISM Manufacturing on Tuesday that did the same. Traders must keep a close eye on the Dollar, however, the clear uptick in economic activity continues to support our thesis that Silver and Platinum will outperform Gold.
Technicals: Listen, Gold hit our intermediate-term upside target of 1964.7 early yesterday morning and we warned traders who caught the rally that we predicted to lock in profits in one way or another. Because of such, we are sitting here welcoming weakness with two hands. Our Pivot today is 1912-1916, previous support. Yes, it was disappointing to see Gold slice through it so quickly, but it is working along with 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.
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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.