E-mini S&P (March)
Yesterday’s close: Settled at 3198.50, up 23.25
Fundamentals: U.S benchmarks are holding steady at record levels after avoiding the highly feared December 15th tariffs. Although details of this “Phase One” deal remain few and far, we discussed yesterday how an actual deal took a back seat to the potential of new tariffs. Amid such a headline driven market, each trader and investor looking for their edge coupled with algos feeding off momentum, one must hand it to the administration for knowingly providing and playing out such bullish catalyst. Ultimately, the White House is dangling this trade deal carrot while the market continues to chase it. Now that there is an interim “Phase One” trade deal with little resolved, “Phase Two” will soon be dangled to keep the market moving. In the end, this trade deal is Schrodinger’s Cat, without opening the box it has simply become a bullish force.
For over a year now, we have said the market underestimates the impact of a no-deal Brexit. Last week’s blowout victory for Prime Minister Johnson’s Conservative Party was assumingly a major step towards achieving a Brexit deal and the FTSE surged to a new record high post-election. Don’t underestimate the tailwind to U.S markets either. This has given Johnson the power to control negotiations on his side, however, the EU does not find it plausible to move as fast reintroducing the possibility of a no-deal Brexit. Traders must keep a pulse on the developments.
Boeing lost 4.29% yesterday after announcing it will suspend production of the 737 Max. It is the largest stock in the Dow and down another 1.5% premarket. There is technical support at 320, the post-January rally low. A break below that level though would likely send the stock another 6.25% lower to 300 which is perceivably a two-year floor. In this case, traders want to keep a very close pulse on the Dow as it could send tremors through the broader indices. What’s also important is the estimated hit to U.S GDP starting at Boeing and working down to its suppliers; Bloomberg reported this as 0.6%.
Technicals: We upped our Bullish Bias yesterday morning as we detailed the path of least resistance to be higher. The S&P has directly pinged major three-star resistance at 3200-3204.25 while the NQ settled yesterday out above what we see as major three-star resistance at 8576.25-8590. Although the NQ achieved the desire bullish close, generally speaking, we tend to lean on the S&P three out of four times for direction; an avid reader would easily pick this up. Given the S&P’s exhaustion at major three-star resistance and the aforementioned worries surrounding Boeing’s price levels being a potential Dow driver we will reduce our Bullish Bias back to only cautiously Bullish. Furthermore, the probability is increasing for a test to .... Please sign up to have 1 or all 4 of our daily Blue Line Express commodity reports emailed to you each morning.
Crude Oil (February)
Yesterday’s close: Settled at 60.14, up 0.16
Fundamentals: Crude Oil is holding out above $60 with February now the front-month contract. A broadly upbeat risk-environment due to U.S-China trade and the continued jawboning which sets the table for “Phase Two” discussions has lifted assets around the world. Better than expected data from China on Sunday night has aided such tailwinds and U.S Industrial Production at 8:15 am CT should be closely watched today. Early estimates for tomorrow’s inventory data are showing a draw of 1.92 mb of Crude. API is due at 3:30 pm CT today and remember last week’s bearish inventory report was drowned out due to U.S-China trade headlines.
Technicals: We have a Neutral Bias on Crude Oil despite it slowly grinding higher and holding out above our momentum indicator in a constructive manner. Still, strong resistance sits overhead and the February chart is different than previous months as the spike in July and more importantly the Saudi attack in September were more subdued in further out months such as February; this brings a visible resistance line aligning with ... Please sign up to have 1 or all 4 of our daily Blue Line Express commodity reports emailed to you each morning.
Yesterday’s close: Settled at 1480.5, down 0.7
Fundamentals: Gold is certainly battling despite daily records being set by U.S equity markets. The Treasury complex is paring some of yesterday’s brutal losses, losses that Gold was able to ignore; if the Treasury complex can continue to hold ground today it will prove favorable for Gold. However, we do not believe Gold could withstand another negative session in Treasuries even half as bad as yesterday without giving up some ground. Building Permits and Housing Starts both beat expectations this morning. Industrial Production is due at 8:15 am CT, JOLTs Job Openings are out at 9:00 am CT and both Boston Fed President Rosengren and NY Fed President Williams speak at 11:30 am CT. It is important to know though that Williams remains a voting member in 2020, whereas slight hawk Rosengren does not.
Technicals: We remain cautiously Bullish in the near-term and expect a favorable rally over the intermediate and long-term through February or March. Our levels below or tight with our momentum indicator coming in at ... Please sign up to have 1 or all 4 of our daily Blue Line Express commodity reports emailed to you 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.