Blue Line – Morning Express June 1st, 2021
| E-mini (June) / NQ (June) S&P, last week’s close: Settled at 4202.50, up 3.50 on Friday and 50.75 on the week NQ, last week’s close: Settled at 13,686.50, up 21.00 on Friday and 281.50 on the week Fundamentals: U.S. benchmarks are pointing higher ahead of the first opening bell of June. The S&P is less than 0.5% from a new record and the Dow about 0.7%. Over in Europe, the German DAX has already set a fresh record. Tailwinds are certainly coming from new in-flows to start the month, stronger than expected Manufacturing PMI from both China and the Eurozone as well as an improving Covid situation in India. China’s Manufacturing PMI trended lower through March, for what was four straight months, and underpinned fears of a slowing economic rebound, but this was the second straight improvement and the best read since December. Recently, Covid ravaged parts of Asia and India was hardest hit, but signs of a light at the end of the tunnel are emerging. The 7-day moving average of Covid cases in India has been cut in half from its peak and is at the lowest level since mid-April. Local governments have begun relaxing some restrictions by letting some businesses operate at a small capacity. These narratives have brought a tailwind to the Energy space and Crude Oil has gained as much as 3%. This comes as OPEC+ meets today to discuss July production and maybe more importantly the following months. The economic calendar points to a busy week of data and Fed speak that culminates with a pivotal Nonfarm Payroll report on Friday. Today, the closely watched ISM Manufacturing, for May, is due at 9:00 am CT. Final Manufacturing PMI for May is released just before, at 8:45 am CT, and Fed Governor Quarles speaks at 9:00. Technicals: We finished the month of May by holding onto our more Bullish Bias and calling for a resolution higher in the S&P, expecting it to break higher from a bull flag consolidation pattern. Despite some minor weakness through thin holiday hours, major three-star support at 4183.50-4186 continued to hold perfectly and paved the way for a strong wave of buying overnight. The breakout is happening right now and pins rare major four-star resistance aligning with the previous record imminently in the mix. We believe that a decisive close out above here paves a path of least resistance above 4300 and for the NQ, allows it to begin a run to its own record high. Still, the NQ does face major three-star resistance at 13,790-13,818, but such a move is exactly what we write about in how markets can work together, pulling each other through resistance levels as the other exhausts. Our momentum indicators are rising, for the S&P, it will soon align with previous resistance, that is now support, at 4208.75-4210 and for the NQ, it comes in 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. Crude Oil (July) Last week’s close: Settled at 66.32, down 0.53 on Friday and up 2.74 Fundamentals: Broad strength across the Energy sector has been underpinned by better than expected Manufacturing data from both China and the Eurozone, an improving Covid situation in India, and full reopenings throughout the U.S. that include pent up travel demand; Crude Oil, is now breaking out above the March highs. Still, we must remain vigilant to the news flow as OPEC+ just concluded their JMMC Meeting and the main meeting on production is due to start. The cartel is expected to maintain the direction of brining back 2.1 mbpd from April through July with 840,000 of which coming back in July. What traders must keep a pulse on is any indication of added production after July. This narrative will be the focus with the anticipation of an Iran Nuclear Deal that brings added supply to the market. Technicals: After a soft finish to the week, Crude did not decisively breakout above major three-star resistance at 66.45-66.70, but overnight strength has more than secured such. Crude has now also cleared major three-star resistance at 67.98 and is pointing to the psychological $70 mark. Look for a new floor to build 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, last week’s close: Settled at 1905.3, up 6.8 on Friday and 26.4 on the week Silver, last week’s close: Settled at 28.014, up 0.074 on Friday and 0.528 on the week Fundamentals: Gold and Silver are capitalizing off U.S. Dollar weakness and momentum from last week by starting the month on firm footing. It is beginning to seem that short-lived spikes in the U.S. Dollar last week were end of the month flows and a fresh failure is now building. However, we must not forget the Chinese Yuan’s breakout against the U.S. Dollar last week, and there is some Yuan weakness to start the week; this may act as a headwind and does explain some consolidation off the overnight highs in Gold. Regardless, this is a jam-packed week of Fed speak and data, the economic calendar will do the talking, but the current wave of technical momentum is undeniable. Today, we first look to final May Manufacturing PMI due at 8:45 am CT, followed by the more closely watched ISM Manufacturing and Fed Governor Quarles at 9:00 am CT. Nonfarm Payroll is Friday. Technicals: This fresh wave of strength will be defined by overnight lows and align with Friday’s settlement prices at 1904.8-1905.3 for Gold and 27.99-28.01 for Silver. Although these are only key levels and not major three-star supports, there is immediacy for a potential leg higher while holding above here. Overhead resistance is real though, but Gold did stick its neck briefly above major three-star resistance at 1914.3, a level that it now must close above. For Silver, 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. |
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