E-mini S&P (December)
Yesterday’s close: Settled at 3132.75, up 21.25
Fundamentals: The old saying goes, ‘keep your friends close, and your enemies closer’. China is certainly doing its best to buddy up to Washington and it’s not because they want a Thanksgiving dinner invite. With the December 15th deadline to impose a new round of tariffs quickly approaching, China is throwing the kitchen sink at negotiations to avoid these new tariffs which would further damage their economy. By kitchen sink, we mean intellectual property. On October 7th, the Chinese Commerce Ministry said IP is not on the table and changes to protect it never will be. While both sides show a strong willingness to achieve this interim “Phase One” trade deal that is ‘oh so close’, what caused China’s change of heart? Maybe it’s their deteriorating growth and the potential of having current tariffs rolled back, or maybe it’s just an open-ended promise to keep negotiations at the forefront. Although we don’t trust the entire validity of what a “Phase One” deal includes, what matters most to this market is avoiding those December 15th tariffs and China seems to be on track to accomplish such.
Last night, Fed Chair Powell was very upbeat on the economy saying he sees the “glass as much more than half full”, when referring to the economic expansion. He expects rates to stay on hold and expressed the committee’s data dependence. The next 24 hours brings a full slate of economic data ahead of the holiday. Case Shiller Home Price Index is due at 8:00 am CT and Consumer Confidence follows at 9:00 along with New Home Sales and Richmond Fed Manufacturing. There is 5-year Note auction at noon and Fed Governor Brainard is expected to speak then. Tomorrow, we get the second look at Q3 GDP, the Fed’s preferred inflation indicator Core PCE Index and Durable Goods all at 7:30 am CT.
Technicals: Yesterday, a client called in and asked why we were Neutral in Bias the S&P upon this potential breakout. My first answer was that we have been Bullish in Bias many times throughout this year and steadily Bullish to some degree since the Labor Day breakout. But more importantly, although the Bias is Neutral, we are writing with a very Bullish tone and you must read the details. Yesterday, right here, we made two points:
1. Support is at 3111.50-3114.25 and the tape is overall bullish in the near-term as long as it can hold out above here.
2. The bulls have a clear advantage in setting fresh records into the close while holding our 3118.50 pivot
We also made similar points for the NQ. When we begin to use a Bullish or Bearish Bias at least two things must be present. Clear momentum through a major level of support or resistance that paves a path of least resistance to our target or a market in a clear trend that tests and holds support as a buying opportunity in an uptrend or tests and holds resistance in a downtrend. Additionally, a feeling that fundamental landmines are not actively present. Let’s get this out of the way, we certainly feel that fundamental landmines at these elevated levels are certainly present. Secondly, we have been Bullish in Bias and our upside target was 3115, the rising trend line from April which the S&P had yet to close out above until yesterday. Another underlying factor is we do not want to exude chasing a market and feel we would do our clients more damage by doing such.
Both the S&P and NQ closed right at the top-end of major three-star resistance yesterday. Our momentum indicator in the S&P aligns ... 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 (January)
Yesterday’s close: Settled at 58.01, up 0.24
Fundamentals: Crude Oil withstood waves of selling yesterday and the 200-day moving average held. The energy sector broadly finished well off session lows as risk-sentiment remained strong and equity markets finished at new records. The hopes of an interim “Phase One” trade deal that now could include intellectual property and lead to tariffs getting rolled back is driving risk assets higher again today. Adding support are estimates of drawdown in Crude inventories ranging between 0.347 and 0.800 mb. Furthermore, developments of a Canadian rail workers strike has weakened Canadian Crude and strengthened WTI.
Technicals: Crude Oil dipped right into major three-star support yesterday, the 200-day moving average before recovering and closing out above first key resistance which aligned Friday’s settlement with our momentum indicator. Although this gives the bulls a ... 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 1456.9, down 6.7
Fundamentals: The U.S and China are nearing an interim trade deal, earnings have been great and the Fed cut interest rates by 0.75 basis points this year. While the latter is supportive to Gold, this has all lead to fresh record highs in equities on nearly a daily basis. Furthermore, the looser monetary policy has foreseeable solidified better than expected economic data which has also weighed on the metal during this seasonally weaker time of year. Last night, Fed Chair Powell was certainly upbeat on the U.S economy. We look to Consumer Confidence and New Home Sales at 9:00 am CT today followed by a 5-year Note auction at noon CT along with Fed Governor Brainard. Tomorrow brings a full slate with the second look at Q3 GDP, Durable Goods and Core PCE Index all at 7:30 am CT. We maintain that patience here will be rewarding.
Technicals: Gold is holding steady at major three-star support at 1450-1454, a level it has not closed below. Yesterday’s jump was kept in check by our momentum indicator which has now slipped 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.
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