E-mini S&P (March)
Yesterday’s close: Settled at 3259, up 28.00
Fundamentals: U.S benchmarks are down sharply after surging to new record highs into yesterday’s close. Last night, the U.S launched an airstrike that killed its target Qassim Suleimani, Iran’s top security and intelligence commander. Suleimani, who led the Quds Force of the Revolutionary Guard and is responsible for the deaths of thousands, was killed along with several other military officials. Tensions in Iraq have been rising for days if not months, culminating with violent protests outside of the U.S Embassy. The White House moved to strike given intelligence that Suleimani was making plans to attack American diplomats. Iran’s supreme leader, Ayatollah Ali Khamenei, has called for three days of mourning followed by retaliation.
The sharp reversal in equity markets and rise of safe-havens conveys the developing uncertainties and markets do not like uncertainties. Crude Oil is up more than 3.5%, trading at the highest level since April. The S&P hit a two-week low before stabilizing at the onset of U.S hours, however, global benchmarks are seeing less damage. One thing to point out is the 0.75% rip to new highs in the last two hours of trading yesterday ultimately exacerbates today’s losses.
Today’s economic calendar boasts the closely watched ISM Manufacturing read at 9:00 am CT followed by EIA inventory data at 10:00 am CT. This comes as Crude Oil is front and center.
Technicals: Both the S&P and NQ surged to fresh record highs yesterday before reversing sharply. So what now? Both achieved major three-star support levels this morning before bouncing and this now brings a line in the sand for the session; for the S&P this is 3200-3204.25 and for the NQ this is 8737.50-8743.50. Above here, the bulls will attempt construction. However, a break below here does not guarantee a windfall of panic selling as we view the ... 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 (February)
Yesterday’s close: Settled at 61.18, up 0.12
Fundamentals: Crude Oil has surged more than 3.5% after the White House launched an attack that killed Qassim Suleimani, Iran’s top security and intelligence commander (see additional details in the S&P section). This quickly escalates mounting tensions between the U.S and Iran, elevating Crude Oil as we await Iran’s retaliation; this uncertainty is the current premium. While some analysts out there are grabbing headlines calling for $80 Crude Oil, first, it must be understood they are referencing the Brent contract which his currently trading around $69. We see these calls as merely attention grabbing and do not agree with this narrative given the landscape we currently know. Additionally, headlines also point to recent joint naval operations between Iran, China and Russia. We view these as stirring fears and furthermore politically motivated. The most likely outcome as of right now are ongoing, but yes dangerous, clashes between Iran-backed and U.S forces.
EIA inventory data is due at 10:00 am CT. The private API survey was released on Tuesday and showed a massive draw of 7.8 mb. Analysts expectations for today’s official EIA report are for -3.288 mb of Crude, +1.823 mb Gasoline and +1.122 mb.
Bill Baruch joined Yahoo Finance yesterday morning to discuss Crude Oil and five reasons why its elevated.
Technicals: Price action in the February contract traded out above 63.87, the April high for February, and to the highest level since November 2018. The front month contract brings a thicker pocket of resistance ranging up to that April high at 66.60. Coming into the session we had major three-star resistance 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 1528.1, up 5.0
Fundamentals: Gold is up 1.5%, trading to the highest level since September 5th after the U.S launched an attack that killed Qassim Suleimani, Iran’s top security and intelligence commander (see additional details in the S&P section). The S&P has pared losses and sits down about 1% while Treasuries and safe-haven assets (Gold) surge along with Crude Oil. The Dollar Index remains about 0.75% off its December 31st low and traders should keep an eye on its strength (or weakness) given that ISM Manufacturing data is due at 9:00 am CT. Traders should also keep a pulse on developments as to Iran’s retaliation; failing to see one (a good thing for this world) by the Sunday night open could take some near-term wind out of Gold’s sails unless equity markets see continued weakness or Manufacturing data whiffs. Gold has had a tremendous rally since the start of what we called a buy on December 23rd, if you have profited on such a move, you should look to capitalize between now and Sunday night as Gold historical takes a breather somewhere between the third and fifth trading day of the year.
Technicals: Gold is flirting out above major three-star resistance at 1549.9 and holding strongly out above our momentum indicator which comes in today at 1537.3 and aligns with 1540 to create first key support and a tradable test. Only a decisive move below ... 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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