|E-mini S&P (September) / NQ (Sept)|
S&P, yesterday’s close: Settled at 4213, down 23.50
NQ, yesterday’s close: Settled at 13,972.75, down 49
Fundamentals: A very minor shift in the Fed’s rate hike expectations has roiled risk-assets and strengthened the U.S Dollar. Via their dot plot, committee members now anticipate two rate hikes through the end of 2023. At the end of the day, the shift was very small, but brought to life the reality that one day the Fed will tighten policy. In reaction, the yield on the 10-year Treasury gained as much as 8.5 basis points, but at a high of 1.59% it remains below last week’s high of 1.61%. U.S. equity benchmarks have so far weathered the storm very well with the S&P losing as much as 1.7% from Tuesday’s record high. It is our belief that if the rate landscape remains somewhat stable, then equity markets will only experience a very healthy pullback. However, due to U.S. Dollar strength, many commodity sectors are taking the brunt of the pain. Therefore, it remains to be seen how this will impact some corners of the market. One commodity sector that has held up very well though is Energy and which has helped exude some stability across equity markets. In fact, July Crude Oil is still up 1.5% on the week.
Weekly Jobless Claims missed this morning and came it at the highest since mid-May at 412,000. Also, Philly Fed Manufacturing came in just below expectations at 30.7 versus 31.0. This could work to stop the rise in the U.S. Dollar, buoying risk-assets. U.S. Treasury Secretary Yellen testifies before Congress on the 2022 Federal Budget at 9:00 am CT.
Technicals: The S&P and NQ have done absolutely nothing wrong upon this healthy pullback. Each has held crucial levels of technical support and buyers stepped in. For the S&P, this is our recurring pocket of 4181-4186. In fact, whereas the S&P made a new low last night of 4183, the NQ held yesterday’s low of 13,830. We have major three-star support at 13,799-13,825, a recurring level that has been adjusted only slightly over the last couple weeks; initially acting as a ceiling and now as a floor. Of course, first layers of support were taken out and that is ok. For the S&P, 4197 is now our Pivot and point of balance; continued action above here is supportive, but we do see strong resistance overhead. For the NQ, our Pivot and point of balance is … 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 72.15, up 0.03
Fundamentals: Crude Oil is holding ground extremely well given what is taking place across Metals and Agriculture markets. Yesterday’s weekly EIA inventory was supportive, offsetting U.S. Dollar strength and broader commodity weakness. A larger headline draw than expected of 7.355 mb (versus -3.29 mb) was accompanied by a larger build in Gasoline than expected at 1.954 mb (versus -0.614 mb). Tying the reads together was Refinery Utilization that came in much higher than expected WoW at +1.3% versus +0.3%. Quietly underpinning the Energy space is also the delay in the Iran Nuclear Deal ahead of Iran’s President election tomorrow. Of which, the result could impact Crude Oil. The front runner is Ebrahim Raisi. He has taken an extremely hard-lined approach against the West and was sanctioned by the U.S. in 2019. If he wins, it could be seen as adding further hurdles to the deal.
Technicals: Price action has remained extremely constructive, and we edited first key support to align with overnight lows at 71.33-71.50. Our momentum indicator comes in as our Pivot at 71.95; continued action above here is supportive and paves a way for higher prices and another test into major three-star resistance 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 (July)
Gold, yesterday’s close: Settled at 1861.4, up 5.0
Silver, yesterday’s close: Settled at 27.812, up 0.119
Fundamentals: It is a complete bloodbath today across metals. The losses are mounting, and it is ugly, but nearly half of those losses were incurred yesterday; the Fed announces policy decisions or releases Minutes after metals settle and this can skew the following day’s change. The U.S. Dollar is certainly the leading culprit, trading to the highest level since April 13th. Although Treasury rates have ticked up, the yield on the 10-year has yet to take out last week’s high. Overall, this is a complete unwind of longs and buyers are simply not showing up at all. Copper sold off sharply at the start of the week after China said they would unload reserves. Additionally, Lumber and Ag markets have incurred heavy selling as froth across the commodity space is coming in. A failure in Gold last Friday has also exacerbated today’s downside. At the end of the day, Gold rallied 14% in what was nearly a direct ascent over two months and this is a correction.
Technicals: The uptrend in Gold was neutralized upon the break below rare major four-star support at 1840-1848.4. The speed of this selloff has quick brought Gold to a point of value again, broadly speaking, between 1770 and 1800, however, there is now immense technical damage. Both Silver and Gold have tested our next level of major three-star support 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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