E-mini S&P (June) / NQ (June)
S&P, last week’s close: Settled at 4228.25, up 37.00 on Friday and 25.75 on the week
NQ, last week’s close: Settled at 13,766.75, up 237.50 on Friday and 80.25 on the week
Fundamentals: Turnaround Mondays have often become expected after strong Fridays. There was certainly a green light on Friday, but has the Nonfarm Payroll enthusiasm already dissipated? Rates came in after the Goldilocks jobs report and paved the way for Tech to lead the final leg of the week; the NQ gained 1.76% to the Dow’s 0.51%. On one hand, there has been a consolidation since late April and early May, providing respective resistance that each index is on the brink of chewing through. Does this Goldilocks report bring the needed firepower to do such ahead of Thursday’s CPI report? On the other hand, a pivotal inflation read is lurking around the corner, and an added layer of global tax news over the weekend could have damaged Friday’s momentum. Like last week, do portfolio managers and traders use higher prices at the onset to begin preparing for the worst and hoping for the best?
U.S. Treasury Secretary Yellen led G-7 nations in backing a global minimum tax rate of at least 15%. On the surface, this hits corporation’s bottom line and Tech can be some of the hardest hit, however, there is a long road ahead and many moving parts before this needs to be priced into the market. Furthermore, the Biden Administration had initially discussed a minimum rate of 20%, so by some measures this can be seen as a positive.
This week’s economic calendar starts off slow domestically. Last night, China posted some big Trade numbers for May, but they were still below expectations; Exports 27.9% YoY versus 32.1% expected and Imports 51.1% versus 51.5%. This morning, German Factory Orders for April MoM contracted and tonight we look to GDP data from Japan. The week unfolds into Thursday’s ECB policy meeting, U.S. CPI, and Jobless Claims data. The U.S. Treasury auctions 3-year, 10-year, and 30-years this week.
Technicals: From a fundamental perspective, Friday’s data gave us everything we asked for as bulls, but technically both he S&P and NQ are contained below critical levels of resistance. The ongoing consolidation still being contained below resistance is not the worst case scenario because it has allowed both the S&P and NQ to lay bullish cup and handle patterns. Considering this and ongoing momentum, we will hold our more Bullish Bias, but with a grain of caution knowing that Mondays have been soft. Ultimately, we want both to stay out above major three-star supports that align closely with the opening bell from Friday; for the S&P this is 4202-4206 and for the NQ this is 13,605-13,620. While out above here, we will hold a more Bullish Bias. However, we must note that our momentum indicators are … 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 69.62, up 0.81 on Friday and 3.30 on the week
Fundamentals: July Crude Oil tapped $70 overnight for the first time since October 2018, however, the excitement did not last long as the mark was hit exactly before retreating. Several narratives have underwhelmed the tape into the onset of U.S. hours, and the fear of added production leads the way. Additionally, Trade Balance data from China overnight showed Crude Imports were down 14.6% YoY in May. At 9.65 mbpd, it was the lowest since December. Iran talks are set to start again later this week and as we noted this could add as much as 1 mbpd as early as August. Furthermore, OPEC+ overall is expected to continue bringing back idled production to the market in August. Still, when you take a step back, Crude gained 5% last week and there is clear fundamental momentum behind easy money policy in U.S. at a time of pent up demand hitting the market due to reopening and summer travel.
Technicals: Price action remains firm and despite a failure at $70 exactly the trend is still very bullish. Crude has climbed the stairs higher since the June 1st rip through a ceiling of resistance. That previous ceiling provides us with a line in the sand to define our more Bullish Bias and we will look to pullbacks at the supports defined below as a buying opportunity. As for today, our momentum indicator aligns with the previous … 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 1892, up 18.7 on Friday and down 13.3 on the week
Silver, last week’s close: Settled at 27.896, up 0.419 on Friday and down 0.118 on the week
Fundamentals: The Goldilocks jobs report gave the precious metals camp the green light on Friday, can the strength continue? There was a lukewarm reception through Asian hours overnight with the Chinese Yuan edging weaker and the U.S. Dollar broadly ticking higher. However, the U.S. Dollar has pared overnight gains, and this is buoying the metals in the needed manner to attempt to extend Friday’s gains. Still, CPI looms Thursday and as we discussed last week, portfolio managers and traders want to be short the U.S. Dollar and long commodities like Gold and Silver but unwind positions in front of such dreaded releases in order to manage risk. This allows us to believe there is some fundamental momentum that should carry into the start of the week, but we will then look to capitalize and reposition at better prices.
Technicals: All things considered, Gold and Silver remain contained by overhead resistance. For Gold this is our recurring 1894.5-1896 major three-star resistance and for Silver this is 28.01-28.10 and then 28.47-28.55. On a positive note, each Gold and Silver have regained our momentum indicators, denoted below as our Pivots; steady action above … 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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