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Morning Express: July 31, 2020

By:

President of Blue Line Futures

E-mini S&P (September)

Yesterday’s close: Settled at 3248.75, down 3.75

NQ, yesterday’s close: Settled at 10,794, up 119.75

Fundamentals: Apple, Amazon, Facebook, and Alphabet slugged a grand slam after the bell yesterday. Premarket, the behemoths are +7%, +5%, +6% and unchanged respectively after beating top and bottom-line expectations. Apple did not provide guidance, but they are escorting the stock above $400 with the announcement of a 4:1 stock split. Amazon, gaining only the third-most among the crew, may have given the best results. After announcing monstrous spending on their Q1 release, the company posted its biggest profit ever and gave a wildly bullish forecast. Facebook’s resilience and innovation amid advertisers boycotting their platform provided a tailwind to a blowout beat. Lastly, although Alphabet topped expectations, it isn’t surging higher like the others due to less enthusiastic headlines and the company posting its first ever decline in revenue.

Exxon and Chevron are both lower this morning after reporting larger than expected losses. Caterpillar is higher after better than expected results.

Q2 GDP data has also been front and center as economies around the world post record contractions amid the worst of the pandemic. Yesterday, the U.S. reported -32.9% QoQ, annualized. Some may look to the European reads and wonder how Germany’s -10.1% QoQ posted yesterday or the Eurozone’s -12.1% posted this morning was so much less worse. That’s because it isn’t, the U.S. results are annualized. From April through June, the U.S. contracted at only a 9.5% whereas the Eurozone’s annualized results are -40.3%.

Next up is the Core PCE Index. This is the Federal Reserve’s preferred inflation indicator and accompanied by Personal Income and Spending data. Final Michigan Consumer data is due at 9:00 am CT.

Washington is still trying to secure additional fiscal stimulus, just as the previous measures are set to be exhausted. One of the hold-ups is employer liability and the Washington Post reported this morning the White House is willing to break from Senate majority leader McConnell in requiring such promises. Yesterday, President Trump said he wants to get a deal done to extend unemployment benefits and the federal eviction moratorium which are set to expire today.

Technicals: Price action in each the S&P and NQ moved out above major three-star resistance levels late in the session and well ahead of earnings. The strong fundamental results and lingering momentum tied to the behemoths have paved a path higher after the bell. The gap from settlement intraday coupled with previous technical levels and our momentum indicator this morning brings a strong floor of support for each upon pullbacks. Major three-star support in the S&P comes in at … Please sign up for a Free Trial at Blue Line Futures to have our entire technical outlook, actionable bias, and proprietary levels emailed each morning. 

Crude Oil (September)

Yesterday’s close: Settled at 39.92, down 1.35

Fundamentals: The bull camp quickly defended yesterday’s wave of weakness that reached a low of 38.72. Price action is again battling above $40 and finding tailwinds from better than expected Chinese Manufacturing PMI and the broader risk environment as tech leads stocks higher. We continue to hold the belief that there is limited upside at these levels. Ongoing virus concerns are hindering demand in the U.S. and those same concerns are rising in Europe. This coupled with the expectation of OPEC+ increasing supply continues to favor looking for a steeper pullback, which we believe is a buying opportunity amid such a strong uptrend.

Bill Baruch joined TD Ameritrade yesterday to discuss energies and markets and general.

Technicals: Price action is battling well at our Pivot at 40.16-40.20 while holding support at 39.64-39.92 and this supports the continued slow grind higher that we’ve become accustomed to. Still, first key resistance comes in at …  Please sign up for a Free Trial at Blue Line Futures to have our entire technical outlook, actionable bias, and proprietary levels emailed each morning.

Gold (December)

Yesterday’s close: Settled at 1966.8, down 9.9

Fundamentals: Gold achieved a new record high overnight hitting 2005.4 but has backed off a bit this morning. The uptrend is very well intact and continued economic uncertainty due to the virus and the impact of shutdowns coupled with unprecedented monetary and fiscal stimulus measures from not only the U.S. but globally paints a path of least resistance higher over the intermediate to long-run. Still, we do not suggest chasing Gold because it is in the news and instead look for optimal levels of value. PCE data this morning, the Fed’s preferred inflation indicator, was overall soft and this supports Gold over that intermediate to long-term timeframe.

Technicals: Gold struggled again at the psychological and historic $2000 landmark overnight. This pullback into U.S. hours will keep the bulls in the driver’s seat today if it can hold above our Pivot at 1974.7-1979. Yesterday’s construction at major three-star support at …  Please sign up for a Free Trial at Blue Line Futures to have our entire technical outlook, actionable bias, and proprietary levels emailed each morning.

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