|Blue Line Morning Express|
E-mini S&P (December) / NQ (Dec)
S&P, yesterday’s close: Settled at 4348.25, down 73.50
NQ, yesterday’s close: Settled at 15,009.50, down 316.50
Fundamentals: Yesterday’s bloodbath ended on a positive note. Not only did the S&P pare losses by 1%, but there was also more volume in the E-mini S&P in final 30 minutes than in the opening 30 minutes. Such an occurrence is not uncommon upon selling into the close, but fairly rare in such a rebound. The MOC activity tells us that investment advisers and fund managers are still extremely confident in this market and expect strong seasonal tailwinds to stay on track through earnings season in the coming weeks.
We are looking to the July selloff as a roadmap. Selling began in the prior week and picked up heavily through Asian and European hours on fears of Delta and an economic slowdown on Sunday night. It also came ahead of a Fed meeting, although in the next week. Selling in the U.S. benchmarks persisted through much of the session but rebounded strongly into the final 30 minutes, just like yesterday. The volume on the way down was above average for July but dwarfed by quarterly roll-offs in both June and last week. Following the strong close in July, price action drifted higher overnight and only briefly knee-jerked lower on the open to test into the prior day’s closing range before rallying sharply to fresh records in the coming days. Ultimately, the wipe-out in July paved the way for buyers to exude their confidence in this market and more importantly the Fed to appear more dovish at their meeting the following week.
Similarly, there was weakness in the prior week. Heavy selling took place Sunday night in overseas hours and lasted through much of the U.S. session. The move was capped off with a sharp rebound into closing bell. Tomorrow’s Federal Reserve policy statement is almost certainly not going to appear as hawkish as markets were predicting after data earlier this month showed strong Wage Growth and record job openings. Furthermore, last week’s CPI was lukewarm relative to expectations, highlighted in our Top Three Things to Watch this Week. This does not mean inflation is not here or not going to persist, but it allows the Federal Reserve to do exactly what they have told us they want to; stay behind the curve.
Technicals: We are beginning to believe yesterday’s rebound sets the stage for a strong rally. Still, price action must withstand any waves of selling in the first hour this morning. Our momentum indicators are denoted as our Pivot and point of balance below; the bulls regained an edge late yesterday and will hold such while out above here. Doing so would lay the groundwork for buyers to steadfastly step in. Overhead, there is strong resistance that price action stuck its nose above overnight in each the S&P and NQ at 4387.50-4390 and 15,149-15,160. Regaining these levels and holding out above here would be bullish, but the level that matters most aligns multiple technical indicators at rare major four-star resistance in the S&P at 4416.50-4421.75; a close above here is very bullish. 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.
Resistance: 4387.50-4390***, 4416.50-4421.75****, 4445.50**
Pivot: 4357Support: 4338.50-4349.25***, 4305.25***
Resistance: 15,149-15,160**, 15,254**, 15,263**, 15,326-15,360***
Support: 15,009*** 14,920-14,935**, 14,807-14,841***, 14,700**
Crude Oil (November)
Yesterday’s close: Settled at 70.14, down 1.68
Fundamentals: Like equities, Crude Oil rebounded late yesterday. However, despite an overnight run-up, it is paring a chunk of those gains. Bringing a bullish tailwind are expectations for a drawdown of inventories and reports that OPEC+ is 116% compliant with their production curbs. We expect bullish tailwinds to show up from the risk-landscape in the near-term. From there, we do believe a subsiding Delta narrative can bring a strong yearend rally. The U.S. has begun laying a plan to lift travel bans for international travelers and we expect this to be an ongoing narrative in Q4. Furthermore, two weeks ago, data from China showed a strong rebound in August Crude Imports. Overnight, data from India showed Crude Imports at a four-month high.
Technicals: Price action has struggled at key resistance levels overhead, but more importantly it responded to strong key support at 69.96-70.18 yesterday. This is now major three-star support. Our momentum indicator comes in at 70.67 and continued action above here should lay groundwork for a retest into resistance. At the same time, constructively holding supports on the heels of last week’s bullish trend line break should also build for higher prices in the day and weeks to come. 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.
Resistance: 71.03-71.07**, 71.42**, 71.75**, 72.50-72.87***, 73.23-73.58***, 75.00**
Support: 69.96-70.18**, 68.53***
Gold (December) / Silver (December)
Gold, yesterday’s close: Settled at 1763.8, up 12.4
Silver, yesterday’s close: Settled at 22.204, down 0.133
Fundamentals: Gold and Silver are gaining ground into U.S. hours and we find the landscape both fundamentally and technically constructive. The U.S. Dollar, like clockwork failed to hold its spike highs yesterday. It is likely seeing added selling today ahead of tomorrow’s Fed meeting and like we described yesterday, expectations are mounting for them to appear less dovish given recent events. Silver has been beaten down, and Gold has helped dig the two out of last week’s bludgeoning. If there is a risk-on move, Silver must respond and now do some heavy lifting for Gold.
Technicals: Gold finished firmly yesterday, out above the 1753-1756.4 Pivot that is now again major three-star support. Gold is also displaying a bullish inverse head and shoulders per our description here yesterday from June, August and now September’s left shoulder. Today’s strength is testing into a larger area of strong resistance and price action cannot fail against this level at 1775.4-1784. Silver is battling at the 22.58 mark this morning, it is resistance, but we have moved it to a Pivot; decisive action above here is bullish and paves the way to 23.35. 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.
Resistance: 1775.4-1784***, 1808.9-1810***
Support: 1760.5-1763.9**, 1753-1756.4***, 1742.3-1745.5**, 1731.7-1737.4***
Resistance: 23.35***, 23.88-23.95***, 24.28-24.40***
Support: 22.02-22.35***, 20.99-21.25****
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