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E-mini S&P (March)
Yesterday’s close: Settled at 3293.75, up 5.75
Fundamentals: U.S benchmarks are set to open at fresh record highs. Price action edged north overnight after a strong close yesterday, one that followed another session of gyrating sentiment. Not to say sentiment turned negative or bearish, far from it, but at these levels stocks are arguably priced to perfection and furthermore the U.S-China “Phase One” deal began being priced in December 13th; any doubts, no matter the significance will quickly encourage traders and investors to take chips off the table. With many details widely unknown and little substance truly achieved, the deal in and of itself is more of a truce. Given such, this is arguably a small win for the White House as the U.S maintains tariffs on $360 billion worth of Chinese goods through November to hold China accountable, only halving the 15% tariffs on $120 billion implemented on September 1st.
Today’s economic calendar is jam-packed with Retail Sales, Philly Fed Manufacturing, Import-Export Price Index and Weekly Jobless Claims all hitting the tape at 7:30 am CT. Business Inventories are due at 9:00 am CT and San Francisco Fed President Bowman speaks then, she is not a voter in 2020. At noon, new ECB President Lagarde speaks, this comes after the release of the ECB’s Minutes at 6:30 am CT. Treasury Transaction data is due at 3:00 pm CT. Tonight, we get a deluge of data from China including Q4 GDP and December Industrial Production.
The holiday retail numbers will be watched very closely as the U.S consumer has been the heartbeat of this economy. Target finished down 6.59% yesterday after announcing disappointing holiday sales. Other retailers got tagged yesterday as well; TJX, Nordstrom, Ross Stores and L Brands all finished down by at least 1% and Walmart sank by 0.78%.
The banking sector was also down sharply yesterday, results after JPMorgan all underwhelmed at best. Morgan Stanley reports before the bell today. Lastly, Alcoa is down nearly 3.5% premarket after reporting a 27% drop in sales due to the U.S-China trade war.
Technicals: Yesterday, we spoke of slight exhaustion just below our major three-star resistance target of 3304.75 in the S&P. After a spike to 3299 on the opening bell yesterday, some of that exhaustion played out with the market slipping to a low of 3281.25. However, that strong support below the market we have continued to note buoyed the tape ahead of a final hour surge back into positive territory. Price action extended gains overnight exceeding our upside target and trading to a high of 3308. The NQ extended gains as well but unlike the S&P and Dow has yet to take out last week’s 9114.75 record. This area aligns with the round 9100 to bring first key resistance. The bulls are in the driver’s seat as long as price action holds out above ... Please sign up at Blue Line Futures to receive a Free Trial 1 or all 6 of our reports by email each morning.
Crude Oil (March)
Yesterday’s close: Settled at 57.84, down 0.42
Fundamentals: We are now using the March contract as front month after February options expired yesterday. The EIA data yesterday pressured the energy complex, but it was not the headline Crude read, it was the products; Gasoline and Distillates combined for a build of 14.849 mb, offsetting the surprise draw of 2.549 mb of Crude which sent Crude supplies to 14-week lows. A broadly favorable risk-environment feeding off U.S-China trade tailwinds, reports of potential minor supply disruptions in Iraq and news that OPEC may cancel the March meeting and extend cuts to June were working to buoy Crude Oil’s recent slip and technical damage. As we noted in our Midday Market Minute yesterday, it is Gasoline that must be watched most closely as it has not given up the relative ground that Heating Oil has and cannot chew through a strong area of support at 1.63-1.65. Yesterday’s EIA data certainly pressured Gasoline but it has not been able to crack the technicals just yet. Traders should look to data from the U.S this morning that includes Retail Sales at 7:30 am CT to keep a pulse on the risk-environment. Tonight, a deluge of data from China is due that includes Q4 GDP and December Industrial Production. An uptick in activity in China ahead of the December 15th tariffs lifted Crude a month ago, but is this sustainable?
Technicals: Crude Oil is arguably trying to extend the losses that began last week, however, options expiration and the ensuing contract roll are known to slow directional momentum; what we have seen in recent sessions. For the March contract, we have major three-star support at ... Please sign up at Blue Line Futures to receive a Free Trial of 1 or all 6 of our reports by email each morning.
Yesterday’s close: Settled at 1554, up 9.0
Fundamentals: Gold notched a terrific session yesterday and remained bid into settlement and after such despite a strong finish for equities. We noted that the metals complex has broadly shown tremendous signs of strength in recent days and Platinum is arguably a leader of this wave, trading to the highest level since January 2018. Yesterday, Fed President Harker commented that monetary policy is in a good place but showed concern towards repo turmoil. Dallas Fed President Kaplan also spoke yesterday and emphasized the outsized risk-taking given the looser policy; the concern and of itself can shed some positive vibes towards Gold. Today’s economic calendar is jam-packed with Retail Sales, Philly Fed Manufacturing, Import-Export Price Index and Weekly Jobless Claims all hitting the tape at 7:30 am CT. Business Inventories are due at 9:00 am CT and San Francisco Fed President Bowman speaks then, she is not a voter in 2020. At noon, new ECB President Lagarde speaks, this comes after the release of the ECB’s Minutes at 6:30 am CT. Treasury Transaction data is due at 3:00 pm CT. Tonight, we get a deluge of data from China including Q4 GDP and December Industrial Production.
Technicals: We remain unequivocally Bullish in Bias Gold over the long-term, however, we have noted that Gold is not near-term bullish until settling out above ... Please sign up at Blue Line Futures to receive a Free Trial 1 or all 6 of our reports by email 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.