Blue Line – Morning Express September 23rd, 2021
| Blue Line Morning Express E-mini S&P (December) / NQ (December) S&P, yesterday’s close: Settled at 4384, up 40.75 NQ, yesterday’s close: Settled at 15,163.50, up 139.50 Fundamentals: The Federal Reserve threaded the needle perfectly yesterday by not surprising markets. They did not announce a taper and given recent events the market did not want such. However, the market also did not want the bank to recede from its current path, buckling at the first sign of minor turbulence. Powell and committee emphasized conditions to taper their monthly asset purchases are near, but most importantly continued to disassociate those conditions from that of a rate hike. Furthermore, they lowered their growth forecast this year while increasing it slightly for the next two years. Also, they raised their inflation expectation slightly this year to 3.7% from 3% but signaled their expectation for it to fall back in line with their longer-term 2% target over the next two years. In the aftermath, U.S. equity markets traded strongly, while Treasuries were stable, and the U.S. Dollar gained slightly. Strength across equities continued overnight and all four major U.S. benchmarks traded into positive territory on the week. Hong Kong came out of holiday today and led markets overnight gaining 1.2% after being closed during the Tuesday night reversal. The strength continued into early this morning U.S. benchmarks slipped from strong technical resistance amid a deluge of news. China was said to tell local governments to prepare for Evergrande’s eventual failure. Also, September Flash PMIs from the Eurozone came in below expectations. Within the same hour, the ECB said sticky inflation may force an end to PEPP as early as March. The U.S. Dollar and yields have since strengthened. U.S. Jobless Claims unexpectedly rose for the second week in a row. We now look to U.S. Flash PMIs at 8:45 am CT. Technicals: Price action is in positive territory but peeling back from overnight highs on the deluge of news flow described above. The NQ has quickly pared all its overnight gains with rising yields weighing most on Tech. Both the S&P and NQ surrendered our Pivots. For the S&P this aligned with unchanged on the week and for each it was the post-FOMC high yesterday. The bulls will look to defend first key support in each 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 (November) Yesterday’s close: Settled at 72.23, up 1.74 Fundamentals: Crude Oil responded yesterday amid risk-on tailwinds and an overall bullish EIA report. Although it was not as robustly bullish as the private API survey the day before, a draw of -3.481 mb of Crude puts stocks at three-year lows. Also, despite the surprise build in Gasoline, the data shows demand for fuel at pre-pandemic levels, 21 mbpd. This all plays into the narrative Goldman Sachs has continued to stoke; a cold winter could send Brent prices to $90. Despite a choppy overnight, price action has been very constructive and seems to be building for its next leg. Technicals: There appears to be good support building at the 71.40-71.60 after the overnight pullback. Our momentum indicator comes in at 72.20 this morning and steady action above here will pave the way for higher prices. We will look to a close 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. Gold (December) / Silver (December) Gold, yesterday’s close: Settled at 1778.8, up 0.6 Silver, yesterday’s close: Settled at 22.907, up 0.296 Fundamentals: Gold and Silver both spiked immediately following the release of the Federal Reserve’s policy statement but price action quickly came in as the U.S. Dollar strengthened to session highs. The failure is picking up steam this morning despite U.S. Dollar weakness. It would seem precious metals cannot catch a break and the culprit this morning is rising Treasury yields on hawkish comments from the ECB in ending their PEPP program as early as March due to rising inflation. The stage is set for U.S. Flash PMIs at 8:45 am CT. Technicals: The spike in Gold post-FOMC failed directly at trend line resistance cited here yesterday at 1788 and price action quickly slipped back below major three-star resistance at 1782.8-1784. The lower price action is now testing into major three-star support at 1753-1756.4. Silver is more in line with where it was early yesterday and battling at the 22.58 mark. There is strong 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. Silver (Dec) Resistance: 22.70**, 22.93**, 23.35***, 23.88-23.95***, 24.28-24.40*** Pivot: 22.58 Support: 22.02-22.35***, 20.99-21.25**** |
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