E-mini S&P (December)
Yesterday’s close: Settled at 3075.75, up 12.50
Fundamentals: U.S benchmarks are holding at record highs and the risk-environment remains very healthy amid fresh U.S and China trade anecdotes. Expectations are mounting for President Trump and President Xi to sign an interim “Phase One” deal this month. Listen, we have been bullish to cautiously bullish this market and continue to be, but we cannot ignore this Kansas City Shuffle taking place before our eyes (a bait and switch confidence game). Last night, President Xi lauded the county’s newfound commitment to global trade and their plans to open the border, level the playing field to foreign competition and reduce import tariffs. Sounds great right? Whatever happened to those October 7th comments that intellectual property (leading us to believe other substance) will never be on the table. Last night, President Xi never referred to the country’s dealings with the U.S but referred to working towards the “common good of humanity”; well put, keeping your eyes on the prize. While both sides jawbone the “Phase One” deal in the headlines, there is reason to believe things aren’t so smooth behind closed doors. In fact, when have they been? The equity market is queuing off headlines that point to the U.S rolling back the new tariffs implemented in September for additional commitments involving intellectual property rights. If one simply takes a step back, the only clarity we truly have is that there is no clarity at all. This does not mean the market is bearish, but it is an ever-present reminder to stay vigilant.
Nonfarm Payroll drowned out the poor ISM Manufacturing read that followed and worse than expected Factory Orders yesterday. Goldman Sachs to revised Q4 GDP from 2.2% to 2.1% following Factory Orders. Manufacturing has been trending lower, its not secret, but services has held ground at reasonable levels. Final October Services PMI is due at 8:45 am CT and followed by the more closely watched ISM Non-Manufacturing at 9:00. It is widely believed that at the onset of a recession, the services sector is the last shoe to drop. Expectations are for it to improve to 53.5 from last month’s 52.6.
Technicals: Price action is firm and holding well out above the pivots for each the S&P and NQ. These levels combine yesterday’s settlement with where our momentum indicator is this morning; holding out above here is bullish and paving the path of least resistance to ... Please sign up for a Free Trial at Blue Line Futures to have our entire technical outlook, actionable bias and proprietary levels emailed to you each morning.
Crude Oil (December)
Yesterday’s close: Settled at 56.54, up 0.34
Fundamentals: Crude Oil melted higher yesterday ahead of U.S hours but was stagnant for much of the session before slipping into settlement. OPEC released their World Oil Outlook early this morning and it was highlighted by revisions lower for demand growth. One might say, why did Crude jump at 3:00 am CT if this was the case. First, there is an argument here that OPEC is setting the table to cut production in December if it so wishes. We find this unlikely and nearly impossible to for OPEC+ to agree on given that January Brent is trading above $62. Secondly, OPEC Secretary General Barkindo emphasized deceleration of supply growth in the U.S and the many headwinds faced by the sector in that region. Additionally, there is the slowly (or quickly, given your previous expectations) escalating situation with Iran as we yesterday detailed the new centrifuges. The country didn’t expand this capacity to leave it dormant, President Rouhani announced today they will start injecting uranium gas and thus take strides in nuclear capabilities.
Technicals: We talked about it here yesterday and reemphasized such in the Midday Market Minute; line in the sand support now comes in at 56.20 and given yesterday’s range it aligns with the .382 retracement at 56.01. We are not turning Bullish in Bias as price action is still below the 200-day moving average and this does not align with our intermediate to longer-term fundamental bias at these price levels but bulls could have clearly leaned on this line in the sand support as a buy opportunity overnight, aggressive order would have been filled for a swing. Listen, momentum coming on the heels of Friday’s surge is strong, this is undeniable. For the most part, price action has held out above our rising momentum indicator which comes in at ... Please sign up for a Free Trial at Blue Line Futures to have our entire technical outlook, actionable bias and proprietary levels emailed to you each morning.
Yesterday’s close: Settled at 1511.1, down 0.3
Fundamentals: Gold is taking it on the chin this morning and back to a one week low. The metal held ground tremendously well yesterday given equities, the Dollar and Treasury yields all had a strong start to the week. Gains in each of those assets have continued into today and ahead of ISM Non-Manufacturing, and Gold simply could not stave it off any longer. Maybe someone has a hunch on this crucial Services sector read at 9:00 am CT. Furthermore, the odds of a cut next month have dissipated to a mere 5%. Lastly, it is important to remember this is typically a seasonally weaker time of year for Gold and patience opens the door for the late December buy opportunity, our favorite seasonal trade across the board and one that has worked like clockwork through January.
Technicals: Gold could not gain out above major three-star resistance at 1511.6-1515.6 and failed. When it began reversing this morning, once it took out first key support at 1505 the selling picked up. Truly, support now only comes in at our major three-star level at ... Please sign up for a Free Trial at Blue Line Futures to have our entire technical outlook, actionable bias and proprietary levels emailed to you each morning.
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