E-mini S&P (September) / NQ (September)
S&P, yesterday’s close: Settled at 4349.75, up 1.75
NQ, yesterday’s close: Settled at 14,802.25, up 26.75
Fundamentals: U.S. benchmarks are down sharply on the heels of yesterday’s FOMC Minutes and ahead of a pivotal read on Jobless Claims. In fact, a light slate of U.S. data to finish out the week will mount emphasis on today’s report. We also believe dissipating unemployment support from state to state has encouraged many people back into the workforce and the data has begun to show it. Although yesterday’s Minutes continued to show the Fed’s patience, there was a sense that more committee members than previously discounted could see a rate hike before 2023. This undertone is certainly a culprit in today’s weakness, but Treasuries and the U.S Dollar are not confirming it. The NQ has definitively led since last month’s Fed meeting sparked a peak inflation narrative, outpacing the Dow with a gain of 6.3% in June versus -0.33%. In financial media, all one can hear is that Growth stocks are the only place to be, and Value is going to take a back seat for the foreseeable future; Growth, Growth, Growth. This is usually the top of a rotation. The thing about rotations is, they typically cannot happen without a flush. Given today’s early weakness and a pivotal read on Jobless Claims (that must beat), this could be the start of that rotation.
Technicals: We began pointing to the need for caution on Tuesday, but the S&P continued to hold a floor of support, even setting a fresh record high yesterday. It has now broken below major three-star support at 4307-4310.50, completely neutralizing our Bias. Also, below 14,713 the frothy NQ is negative on the week. Each of these levels, for the S&P and NQ, now create major three-star resistance and the bears are starting to create a very near-term edge while below here. Still, given the directional ascent there are many levels of strong support below the market. The S&P and NQ are both battling at our first waves of major three-star support at 4286-4289.25 and 14,520-14,550; a break below here paves the way for … Sign up for a Free Trial at Blue Line Futures to have our entire fundamental and technical outlook, actionable bias, and proprietary levels for the markets you trade emailed each morning.
Crude Oil (August)
Yesterday’s close: Settled at 72.20, down 1.17
Fundamentals: Crude Oil’s sharp reversal through the first half of the week seems to have exhausted itself as price action is rebounding from overnight lows despite equity benchmarks trading down more than 1% ahead of the opening bell. For the Energy space, today’s weekly EIA data will be pivotal. Crude Oil has set a new high for 13 consecutive weeks into Tuesday’s top. Hefty draws in Crude stocks have certainly played a role, but lukewarm Gasoline demand has watered-down its significance. Much of the rally can be attributed to no Nuclear Deal with Iran and OPEC’s stronghold on the global production narrative. Since the June 3rd inventory report Gasoline stocks have grown by more than 9 million barrels. Expectations for today’s EIA report have underpinned prices as they neared $70; -4.033 mb Crude, -2.176 mb Gasoline, and +0.171 mb Distillates. Yesterday’s private API survey showed a large headline draw for Crude but another build in Gasoline; -7.983 mb Crude, +2.736 mb Gasoline, and +1.086 mb Distillates. Gasoline stocks must be watched closely today, we believe a draw is necessary and it must do the heavy lifting in forming a bottom at the $70 region.
Technicals: Price action slipped below the $71 mark overnight but quickly stabilized. Our momentum indicator is sloping lower and aligns with yesterday’s settlement at 72.20 to bring first key resistance. If the market continues to build higher from the overnight low, steady resistance comes in at Tuesday’s low at 72.94 and then major three-star resistance just overhead at … Sign up for a Free Trial at Blue Line Futures to have our entire fundamental and technical outlook, actionable bias, and proprietary levels for the markets you trade emailed each morning.
Gold (August) / Silver (September)
Gold, yesterday’s close: Settled at 1794.2, up 10.9
Silver, yesterday’s close: Settled at 26.129, down 0.045
Fundamentals: Gold and Silver are both higher, feeding off U.S. Dollar weakness and Treasury strength. As a long-term Gold bull, it is terrific to see the precious metals space respond to a risk-off tone in equity markets. The metal has also found solace with the ECB matching the Fed’s notion of symmetrical inflation targeting above their old 2% target. However, we are beginning to find it very concerning the yield of the 10-year Treasury has dropped more than 50 basis points from its March peak to test the round 1.25% overnight and Gold is not only not above $1900, it has yet to repair any damage from the Fed bloodbath in June on a technical basis. For this reason, we are taking a very neutral approach, even believing one could find a strategic short opportunity until Gold can prove near-term stability on a weekly close. Today’s miss on Initial Jobless Claims has helped further underpin the overnight rally, but if U.S. Treasuries or the Dollar reverse course, we find Gold and Silver very vulnerable.
Technicals: Gold is again testing major three-star resistance at 1812-1815, trading to a high of 1819.5, but let us see it on a daily closing basis at minimum. Even so, there is strong major three-star resistance overhead at 1828-1835 and only a close above here will begin repairing the damage from June’s Fed meeting. Both Gold and Silver are trading out above our momentum indicators at … Sign up for a Free Trial at Blue Line Futures to have our entire fundamental and technical outlook, actionable bias, and proprietary levels for the markets you trade emailed each morning.
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