E-mini S&P 500 (June)
Yesterday’s close (Tuesday, May 8): Settled at 2670.25, up 0.25
Fundamentals: All major U.S. benchmarks are firmly higher this morning. Price action chopped around and consolidated through much of yesterday’s session ahead of President Trump’s decision on the Iran Nuclear Deal. His plan to not renew the deal was well-assumed prior to the official announcement. One might ask, if this was so, why did equities struggle to gain footing ahead of the press-conference and even trade to a new low after to then see a relief rally?
To be frank, as much as the media wants to eat the President alive, the address was well-delivered. Additionally, Iranian President Rouhani followed with his own press-conference and though he said Iran will be ready to enrich uranium within weeks, he did no retaliate with comments of war. This was a relief for the equities and the tape knee-jerked higher from session lows back above 2660. The landscape of this decision now allows European parties and Iran to rework specifics for a new deal in the coming weeks and months; the market sees this as a near-term risk averted. The strong finish to yesterday’s session and overnight follow through is certainly a relief rally for a market who shook the monkey off its back.
Remember, U.S equities posted a tremendous session on Friday and had strong follow through into Monday; it was the rescheduling of this decision from Saturday to Tuesday that made forced recalibration. Looking forward, today should be much quieter with PPI data due at 7:30 am CT, Thursday’s CPI data will be more crucial. There is a 10-year Note auction at noon CT and Atlanta Fed President Bostic speaks at 12:15 pm CT. CPI and PPI are due out of China this evening. The Nasdaq has been much more constructive than the S&P as tech is trying to lead broader markets higher. The energy sector posted a strong session yesterday and the XLE is up more than 1% this morning. The banking sector is on a solid three-day run. For us the strength upon these three sectors is a recipe for the S&P test above 2700 this week.
Technicals: We remain Bullish in Bias and the S&P is testing our pocket of major three-star resistance which we have now adjusted to... Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and proprietary bias and levels.
Crude oil (June)
Yesterday’s close: Settled at 69.06, down 1.67
Fundamentals: Crude oil surged to a new swing high above $71 per barrel this morning after President Trump did not renew the Iran Nuclear Deal yesterday. Walking away from the deal now means that sanctions upon Iran will go into effect on November 4th. However, importers of Iranian Crude Oil are urged to winddown such immediately. Taking Iranian Crude off the market will reduce supply in what has slowly become a balanced market. Saudi Arabia announced its support for the decision and it will be key to hear what they say regarding the OPEC production accord moving forward; OPEC’s Monthly Report is due Monday and they are scheduled to meet in June. Geopolitical tensions in the region are now heightened and have contributed to this price increase. The private API inventory survey came out last night and further supported prices with -1.85 mb Crude, -2.055 mb Gasoline and -6.674 mb Distillates. This is an overall drawdown of over 10 mb and sets a bar for today’s official EIA read while the official expectations are for -0.719 mb Crude, -0.45 mb Gasoline and -1.375 mb Distillates. As one can see the API read was very bullish the energy sector but now the EIA read must come within the same ballpark because many participants who are willing to buy solely because of inventories have already bought. We maintain that a steady increase of 25,000 bpd in production is priced in.
Technicals: Yesterday’s Crude Oil volume appears to be near a record, though not quite. However, the sharp volume spike on the low and reversal to new highs while the market is at record open interest is very bullish. We have pointed to the large net-long position as worrisome for to our Bullish Bias, however, our thesis heading into 2018 was that we will see ... Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and proprietary bias and levels.
Yesterday’s close: Settled at 1313.7, down 0.4
Fundamentals: Gold stabilized well late in yesterday’s session after President Trump announced his decision to leave the Iran Nuclear Deal. We pointed to this event as potentially bringing geopolitical premium back into the metal and that is exactly what happened. However, equity markets quickly stabilized and the U.S Dollar Index marched to a new swing high overnight; Gold traded about 1% from its high yesterday to a low of 1304.2 early this morning. We are now looking at a reversal in Gold from that low as very constructive and the metal is seeing further support after a miss on U.S PPI data. We remain extremely upbeat on Gold in the long-term. There is a 10-year Note auction at noon CT today and Atlanta Fed President Bostic speaks at 12:15 pm CT. Tomorrow’s CPI read is crucial.
Technicals: We are now monitoring the potential of a bearish engulfing pattern in the Dollar Index upon a move below 92.505 today. This would be extremely ... Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and proprietary bias and levels.
Natural gas (June)
Yesterday’s close: Settled at 2.732, down 0.009
Fundamentals: Our intermediate to long-term fundamental view on Natural Gas remain bullish. Our belief is that we will see hotter than average temperatures beginning in the back half of June and lasting through July which will cause higher demand for cooling. Additionally, exporting Natural Gas will remain a quiet but long-term bullish catalyst.
Technicals: Price action is undeniably building a base.
10-year Treasuries (June)
Yesterday’s close: Settled at 119’165, down 0’055
Fundamentals: The 10-year yield is back above 3% this morning as today 10-year auction at noon CT comes into the picture. There is certainly a fear that demand will be light today. Additionally, the well-delivered announcement from President Trump on the Iran Nuclear Deal and no heightened surprises from Iran’s response have dissipated price action. PPI data missed this morning but the reaction across the board has been more muted, CPI tomorrow will be crucial.
Technicals: Price action is testing into our rare major four-star support a... Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and proprietary bias and levels.