E-mini S&P (September) / NQ (Sept)
S&P, yesterday’s close: Settled at 4236.50, down 9.25
NQ, yesterday’s close: Settled at 14,021.75, down 95.50
Fundamentals: It is Fed Day, the committee concludes their two-day policy meeting at 1:00 pm CT. They are expected to keep rates unchanged and maintain the pace of their monthly asset purchases. Market participants will dive into the policy statement and economic projections for any clues as to when the committee will begin thinking about, thinking about tapering those purchases. Fed Chair Powell begins his press conference at 1:30 pm CT and will certainly face a gauntlet of questioning. Inflation can now be seen rising through the Fed’s metrics and has shown up in everyday lives around the globe. This is the perfect time to remind you of the bank’s dual mandate of maximum employment and stable prices. Job growth has been tepid after March’s blowout report and although prices in a growing number of assets have risen, there has yet to be proof that it is anything other than transitory. At the turn of the year, the Fed called for a rise in inflation to begin this spring and last through the summer. This is exactly what we are seeing, but from day one the Fed has also believed this rise will be transitory. Furthermore, last year they made a drastic policy shift to Symmetrical Inflation Targeting; they will allow inflation to run as hot as it was cold. Through their communications, they have furthered the notion by promising to be patient and essentially behind the curve as they wait for proof that inflation is not merely transitory. It is for these reasons we expect them to hold policy steady and this should support risk-assets.
Technicals: Price action struggled to hold ground at record highs yesterday and it is overall no surprise to see things consolidate slightly lower ahead of today’s policy decision. It is very fitting to find both the S&P and NQ tethered to their respective breakout areas, denoted as our Pivots below. These levels will bring a point of balance and a close above here should help build groundwork for higher prices. Now, we must point out that it is not uncommon to see a delayed reaction the next day. For instance, the S&P could whipsaw around today and settle at 4240, above our Pivot, but the firm tape may not be received well through the week’s close. Therefore, traders must stay nimble and although we remain Bullish in Bias, we find it advantageous to go into this afternoon’s decision… 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 (July)
Yesterday’s close: Settled at 72.12, up 1.24
Fundamentals: Crude Oil is trading higher for the fourteenth straight session. Last night’s private API survey brought added tailwinds after posting a massive surprise draw of 8.537 mb. However, they reported Gasoline inventories up 2.852 mb and Distillates up 1.956 mb. The rise in product inventories highlights the ongoing trend of week to week increases in Refinery Utilization. The backbone of the latest rally has been cemented by increased demand expectations given vaccinations and reopenings, but that demand must begin to show up and continued builds in Gasoline could derail things. Expectations for today’s official report are -3.29 mb Crude, -0.614 mb Gasoline, and +0.186 mb Distillates. We anticipate a volatile session from inventories at 9:30 am CT and the Fed policy decision that begins at 1:00 pm CT.
Technicals: We took the rare stance of outright Bullish in Bias as of last Friday, citing a higher floor in order to manage risk. Given that Crude is 3% higher from Thursday’s close and has now perfectly achieved our next major three-star resistance, coupled with today’s fundamental deluge, we will revise our Bias to Bullish/Neutral in order to begin exuding some degree of caution. Still, our momentum indicator is rising and while the market holds above this level denoted as our Pivot below, the bulls are in the driver’s seat across all timeframes… 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 (July)
Gold, yesterday’s close: Settled at 1856.4, down 9.5
Silver, yesterday’s close: Settled at 27.693, down 0.346
Fundamentals: Gold and Silver settled lower both days this week as managers and traders unwind bullish bets on the metals and bearish bets on the U.S. Dollar in order to manage risk ahead of today’s Fed policy decision. We do expect the committee to hold policy steady, and this theoretically would be supportive to Gold and Silver. However, the Fed’s statement, economic projections and Fed Chair Powell’s press conference will be dissected in every which way as market participants extrapolate a timeline for tapering and this means their policy announcement may not be so cut and dry. We do anticipate an overall supportive rhetoric and this all pins importance on the technicals; if Monday’s low can hold, we believe Gold can finish higher on the week.
Technicals: We pared back or Bias to cautiously Bullish upon Monday’s bloodbath, but imagine reinvigorating a more Bullish tone if Monday’s lows hold through today and price action responds. Our momentum indicators will bring a point of balance as our Pivots at 1860.5 in Gold and 27.80 in Silver; holding out above here for much of the session and through the Fed will help build for higher prices. Still, yesterday’s rebound was met with strong overhead resistance at our major three-star levels 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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