E-mini S&P (December)
Yesterday’s close: Settled at 3565, down 41.75
NQ, yesterday’s close: Settled at 11,897, down 78
Fundamentals: U.S. benchmarks began an itty-bitty rollover late yesterday after New York City announced it will close public schools and go virtual due to an increase in Covid-19 cases. For the S&P and Dow, signs of exhaustion had already begun to set in through the morning. This seemed to coincide with a report from Bloomberg that the New York Metropolitan Transportation Authority may have to reduce service by 40 – 50% and cut 9,300 jobs if it does not get federal aid. On the heels of disappointing November NY Empire State Manufacturing data Monday and October U.S. Retail Sales Tuesday, the call for additional fiscal measures is getting louder. As we have noted here this week, markets have used vaccine news, coupled with a post-election relief rally, and the expectation of fiscal measures in January, to focus on what equates in better economic conditions next year; where we will be, not where we are now. In fact, AstraZeneca is the latest to announce positive vaccine news, maybe this helped stave off added selling overnight. Major benchmarks in Europe slipped by about 0.75%. Still, all things considered, risk-assets are holding ground well in this very healthy pullback. Traders must keep a close eye on the U.S. Dollar. The devaluing of the Dollar has brought enormous tailwinds to risk-assets this year and through the entire month of November the greenback has battled at its September low; equity markets are begging for a break below 91.75-92.00 in the Dollar Index.
Weekly Jobless Claims are due at 7:30 am CT along with Philly Fed Manufacturing. Barring new negative Covid-19 related news, better reads on these two pieces of data will go a long way in turning the session north. Cleveland Fed President Mester, a 2020 voter, is on the schedule for 7:30 am CT and 11:35 am CT. Existing Home Sales follow at 9:00 am CT and ECB President Lagarde speaks then.
Technicals: This week, we have spoken of potential exhaustion, yet we have remained cautiously Bullish in Bias. Remember, the trend is higher, and it has been since April! In this case, we want to buy pullbacks; thus, cautiously Bullish in Bias. Yesterday’s settlement will align to create our Pivots and a point of balance. For the S&P, previous lows on the week will align with Friday’s settlement to create a near-term ceiling; a decisive move and close back above is again bullish across all timeframes. Our momentum indicator is at 3580 this morning but we expect it to grind lower and align with session highs; a move through here is favorable. To the downside, first key support was held intraday yesterday. A hold of this level and response within the first hour will lay healthy groundwork. If not, major three-star support is below 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 (January)
Yesterday’s close: Settled at 42.01, up 0.36
Fundamentals: All things considered, Crude Oil has done a terrific job holding ground despite a wave of selling in equity markets and slight U.S. Dollar strength. Yesterday’s EIA inventory data, with a headline build of only 0.768 mb of Crude versus a the +4.174 from API, helped buoy the tape early and stave off what could have been heavier selling later in the session. Vaccine news has certainly been a tailwind for Crude Oil and the 2021 demand picture. The AstraZeneca news this morning brought added support. Still, although we are upbeat on the landscape for Crude Oil, we acknowledge that the market cannot withstand a continued deterioration of the near-term picture due to a surge in virus cases. This places a heavy spotlight on OPEC+ leading up to the start of their meeting November 30th. Today, the UAE Energy Minister reaffirmed their commitment to OPEC+, despite rumors of frustrations with their allocation.
Technicals: Crude Oil has battled constructively against a supportive trend line from Friday, this brings a floor at 41.30 in which price action responded. Our momentum indicator comes in at 41.91 and yesterday’s settlement was 42.01. Although there is broad headwind in this region, we look to this as point of balance. However, price action must chew through 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.
Yesterday’s close: Settled at 1873.9, down 11.2
Fundamentals: Gold withstood heavy selling yesterday and turned on sizable volume, but its recovery could not ignore broader selling across risk-assets which equate to deflationary fears. At the same time, vaccine news has certainly kept a lid on rebound attempts. Gold is down nearly another 1% today with positive news from AstraZeneca and slight strength in the U.S. Dollar. Some of this week’s landscape should have been supportive to Gold, the weaker economic data in particular. However, the metal has had a difficult time working through the November 9th damage in order to begin repair. Weekly Jobless Claims and Philly Fed Manufacturing are on tap this morning at 7:30 am CT.
The entire complex is not realizing the same near-term struggles. Platinum is at two-month high after the World Platinum Investment Council noted supply is down 18% in 2020, yet demand is only down 5%. Furthermore, strong demand in the third quarter sets the stage for a deficit to last into 2021. Could this laggard become the new Palladium?
Technicals: Gold is again testing our rare major four-star support at 1845.4-1851. Now, for arguably the tenth time! How many times can this level hold? A break below quickly opens the door to 1820-1829.8. As for Platinum, it is breaking out above a trend line from its high of the year and must hold out above 925-930 to continue to find a path of least resistance higher. Silver is also lower this morning. It has struggled at the 50-day moving average at 24.60-24.70, a level that we watch extremely close for Silver. Right now, the path of least resistance is to trend line 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.
Originally Posted on November 19, 2020 – Are Risk-Assets Rolling Over?
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