E-mini S&P (March)
S&P, last week’s close: Settled at 3762.25, down 29.00 on Friday and 55.25 on the week
NQ, last week’s close: Settled at 12,802.25, down 98.75 on Friday and 295 on the week
Fundamentals: U.S. benchmarks are rebounding and overnight pared Friday’s losses. After an unenthusiastic reaction to President-elect Biden’s fiscal plan Thursday, a slate of weak economic data Friday added pressures ahead of the long weekend. However, sentiment has flipped as traders anticipate Janet Yellen’s Congressional confirmation hearing for U.S. Treasury Secretary before the Senate Finance Committee today. Here, she is expected to sell Biden’s $1.9 trillion package in order to fast-track it with a 60-vote supermajority in the Senate. Still, an eroding jobs picture and fear the consumer is slipping, after an awful read on December Retail Sales and soft January Michigan Consumer data Friday, has the risk-appetite on edge from elevated levels.
Earnings season is underway this week. Bank of America was mixed this morning, missing on revenue and is down more than 1% premarket. However, Goldman Sachs beat across the board and is up more than 2%. Also, Haliburton was a pleasant surprise with less of a loss than forecast. After the bell, we look to Netflix and JB Hunt.
Elsewhere, better than feared German ZEW Sentiment has helped lift the Euro and reinvigorate U.S. Dollar pressures. The Dollar Index finished at one-month highs Friday on safe haven buying. On Sunday night, a slate of Chinese economic data was mixed. Although the closely watched Industrial Production read beat expectations handedly again, GDP, Fixed Asset Investment and Retail Sales all missed. This opened the door for added selling and commodities took a hit, but renewed U.S. Dollar weakness ahead of Yellen has helped risk-assets reverse course.
Technicals: All things considered, Friday’s wave of weakness into Sunday night was very contained and the S&P held major three-star support at 3738.50-3740.75. This level aligns with the January 6th gap and we have pointed to it helping us define our near-term bullishness. The rebound pins the S&P back above our momentum indicator, which has risen to align with first key support at 3773-3775; the bulls have regained the driver’s seat while out above here. Overhead, we look to Friday’s session high of 3797.75 as bringing first key resistance. Below, we look to major three-star support to align our previous 3758.75 with settlement at 3762.25, as price action has not settlement below. As for the NQ, Friday’s settlement also brings major three-star support at 12,808. In front of that, our momentum indicator is rising to bring first key support at 12,850-12,861. Our Pivot, the 100% extension from the February highs and March lows is a point of balance; the tape is bullish while out above here.
Resistance: 3797.75**, 3804.50**, 3817.75-3827.50***, 3865***, 3894***, 3976-4009****
Support: 3773-3775**, 3758.75-3762.25***, 3738.50-3740.75***, 3728-3730**, 3718**, 3699-3703***
Resistance: 12,949*, 13,028**, 13,118-13,156**, 13,300-13,369***, 13,583**, 14,274****
Support: 12,850-12,861**, 12,780-12,808***, 12,726-12,733**, 12,616-12,646***, 12,434-12,462***, 12,368-12,388***
Crude Oil (March)
Last week’s close: Settled at 52.42, down 1.20 on Friday and up 0.16 on the week
Fundamentals: The IEA Monthly Report is front and center this morning after a slate of underwhelming economic data and fiscal policy uncertainties weighed on price action to close out last week. The group lowered their demand forecast in Q1 as well as for 2021, citing renewed restrictions from Europe to China, and uncertainties due to a new virus strand. Crude Oil finished last week on its back foot along with risk-assets broadly on the heels of poor Retail Sales data and an unenthusiastic reaction to President-elect Biden’s fiscal plan, coupled with rising virus concerns ahead of the long weekend. Economic data out of China Sunday night also was not helpful as everything but Industrial Production missed expectations, including GDP and Fixed Asset Investment. However, risk-assets are rebounding, and are being buoyed by a fresh wave of selling in the U.S. Dollar. Before the focus shifts to U.S. inventory data Wednesday and Thursday, all eyes will be on Janet Yellen’s Congressional confirmation hearing for U.S. Treasury Secretary today and developments on the fiscal front tied to such.
Technicals: Last week, we called for a wave of selling that tested major three-star support at 51.40-51.51 at minimum. This happened through Friday and the bulls have steadfastly defended support through yesterday’s holiday session. Despite the response to a successful test of support, we remain cautiously Bearish in Bias Crude until it can close back above first key resistance that aligns with the breakdown point from Friday. However, price action is above our momentum indicator at 52.33 this morning and continued action above here is constructive for the bull camp.
Resistance: 52.80-52.93**, 53.60-53.94***, 54.66**, 57.52***
Support: 51.40-51.51***, 50.63-50.87***, 49.52-49.84***
Gold (February) / Silver (March)
Gold, last week’s close: Settled at 1829.9, down 21.5 on Friday and 5.5 on the week
Silver, last week’s close: Settled at 24.866, down 0.936 on Friday and up 0.229 on the week
Fundamentals: The bludgeoning continued Sunday night as Gold lost another 1.5% to a low of 1800.8. However, the selling has been so far met with steady waves of buying which has taken Gold positive on the session (since Friday’s settlement). Amid Gold’s panic, all things considered, Silver has incurred only controlled selling that was met with buying near the prior week’s low. Steady strength in the U.S. Dollar due to safe haven buying and an unenthusiastic response to President-elect Biden’s fiscal plan last week certainly weighed on the precious metals complex. However, it cannot go ignored that outside of the prior week’s ISM data and Friday’s Industrial Production, U.S. economic data has overall been very poor, and this is the long-term bullish case for Gold and Silver; at this point a recovery is only sustainable amid continued stimulus measures and ZIRP. Yes, a rise in Treasury yields due to the anticipation of added fiscal measures has had an adverse impact on Gold and thus Silver. Although we called this move in Treasuries, we do not find such sustainable over the intermediate to longer term (through 1H 2021). All eyes will be on Janet Yellen’s Congressional confirmation hearing for U.S. Treasury Secretary today and the U.S. Dollar’s reaction.
Technicals: Minus the normal Sunday night volume, price action exudes a capitulation. The only problem is that a true capitulation is defined by unprecedented volume. However, we did see abnormally large volume on Friday January 8th when the wheels were set in motion. This, coupled with the already abnormally low Open Interest, we can make the technical argument that a low is in. Still, it would be unlike us to announce such given one arguable datapoint. Since that bloodbath on January 8th, we have had major three-star resistance in Gold at 1859-1864.9. As you know, we love to see new levels align with previous levels, and the new .382 retracement from the Sunday low of 1800.8 to this year’s high of 1962.5 aligns perfectly within there. Therefore, we maintain that we must see a close above 1859-1864.9 in order to begin repairing the damage. As for Silver, continued action above 25.03-25.15 is supportive on the session. Still, like Gold, we maintain we must see a close above major three-star resistance, which has been adjusted slightly, at 25.99-26.07.
Resistance: 1859-1864.9***, 1873-1875.9**, 1881**, 1895.1-1900****
Support: 1829.9**, 1813-1820***, 1800***
Resistance: 25.50-25.59**, 25.99-26.07***, 26.41-26.55**, 27.00-27.28***
Support: 24.86**, 24.04-24.30***, 23.41-23.63***, 21.93-22.00***
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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.