E-mini S&P 500 (June)
Yesterday’s close (Thursday, May 24): Settled at 2727.50, down 3.25
Fundamentals: Yesterday’s roller coaster ride ended very favorably for the bull camp. What began as a solid open at 2730 quickly became a retest to Wednesday’s session low of 2704.50 after the White House announced the cancellation of the North Korea Summit. For us, the key to being a buyer on that pullback was that Treasury prices barely budged. The overnight high in the 10-year was 119’18 and upon the news and equity market weakness, it traded to 119’22. The 30-year which had already traded to a new session high before the news, inched up no more than five ticks. Furthermore, anyone who thought there could not be at least one gamesmanship cancellation must be living in a cave. Price action bottomed with a higher low ahead of President Trump’s press conference and before we knew it the S&P 500 was back above 2720. We will dive deeper into the technicals of this price action in the section below.
One thing that will likely remain in the forefront are the ties between a North Korea Summit and China trade and the belief that they went hand and hand; this could weigh on market sentiment but there is no real substance of such. Looking ahead, today’s economic calendar brings Durable Goods data at 7:30 a.m. Central and Fed Chair Powell at 8:20 a.m. Central. Powell’s speech will be crucial, and his tone will be picked apart after the Fed Minutes implied they are willing to let inflation run past their 2% target without forcing their hand at speeding the pace of rate hikes. Remember, in January he was very hawkish, and he has softened this up quite a bit since. An arguably dovish tone, or more than expected, from the Fed Chair would be supportive to equity markets ahead of the long weekend. Also, on today’s calendar is the second look at May Michigan Consumer data at 9:00 am CT. Fed Presidents Evans, Bostic and Kaplan all take the stage at 10:45 am CT.
Globally, the broader European benchmarks are trading well, and the DAX is up 1%. However, Spain and Italy are both down heavily as politics remain in the forefront; this could weight on sentiment. Additionally, Crude Oil usually finds support ahead of long weekends but has shed more than $3 from its recent high and is down 2% today as Saudi Arabia and Russia point to loosening supply curbs at the OPEC Meeting next month; this is another factor weighing on today’s tape.
Technicals: Price action traded to an overnight high of 2737.75 on a sign of great strength to finish out the week. Wednesday and Thursday left tow decisive tails with yesterday being a higher low laying the groundwork for a bull flag breakout. As fundamentals again begin to weigh on the tape this morning, there is now another decisive technical move... Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and proprietary bias and levels.
Crude oil (July)
Yesterday’s close: Settled at 70.71, down 1.13
Fundamentals: Crude oil is down more than 2% this morning on news that Saudi Arabia and Russia are looking to reduce supply curbs at the OPEC Meeting next month. This would mean more supply coming on the market but is this new news? In fact, it was expected in the wake of the Iran Nuclear Deal outcome and the ongoing issues with Venezuela. Weighing on the market more so is the technical violation of major three-star support and the reduced but still large net-long position abandoning ship. It is Friday and there is a long Memorial Weekend ahead, however, we Neutralized our Bias once our target of $72.35 per barrel was hit; traders must remain nimble. Baker Hughes Rig Count data is due at noon, Central.
Technicals: Yesterday, we pointed to a buy opportunity at major three-star support which bounced very well from such. However, the weak finish to yesterday’s session began to neutralize any trade. Remember, our Bias has remained more Neutral; this means traders must stay nimble. Our next big level comes in at... 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 1304.4, up 14.8
Fundamentals: Yesterday was gold’s highest settlement since May 14th. We have been outright Bullish in Bias the metal all week and it finally has begun to pay off. The metal should sustain a bid considering the geopolitical environment ahead of the long weekend; North Korea, China, Italy, Turkey, Spain and more. Today’s economic calendar will be crucial though with Durable Goods due at 7:30 a.m. Central and Fed Chair Powell at 8:20 a.m. Central. His comments come on the heels of Wednesday’s dovish FOMC Minutes where they are willing to let inflation run past their 2% target without forcing their hand in speeding up hikes; we have been talking about this all month though. The second look at May Michigan Consumer data is due at 9:00 am CT. Fed Presidents Evans, Bostic and Kaplan all take the stage at 10:45 am CT. Yesterday, Bostic pointed to the Fed allowing finishing their hiking cycle next year. Furthermore, he said that inflation above 2% is not bad as long as it is a slow grind higher, spikes in inflation would be worrisome.
Technicals: We remain Bullish in Gold but have Neutralized our Bias a bit in order to exude that one must trade this market and should be capitalizing on long positions from the mind 1280’s. Resistance does come in at ... Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and proprietary bias and levels.
Natural gas (July)
Yesterday’s close: Settled at 2.971, up 0.016
Fundamentals: Yesterday’s storage report showed a build of 91 bcf this was on the low end of tight expectations (91-92 bcf). Nonetheless, the path of least resistance is and has been higher with the likeliness of more than expected cooling days over the next 90 days. So, given that the storage came in at 91 bcf, prices have remained elevated but now face a key psychological level at $3 and major three-star resistance just above.
Technicals: As stated above, the path of least resistance has been higher to $3. However, the value as we have achieved $3 is very limited. We remain only slightly Bullish in Bias but pullbacks to... Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and proprietary bias and levels.
10-year Treasuries (June)
Yesterday’s close: Settled at 119’16, up 0’035
Fundamentals: Price action has stayed elevated on budding geopolitical headwinds from North Korea to Europe and as the FOMC Minutes vindicated our dovish interpretation of the statement earlier this month. Durable Goods data was mixed this morning with the Core read beating but the headline missing. However, revisions were favorable. The big event on today’s calendar will be Fed Chair Powell. His comments will be crucial on the heels of the FOMC Minutes. The second look at May Michigan Consumer data is at 9:00 am CT and Fed Presidents Evans, Bostic and Kaplan speak at 10:45 am CT.
Technicals: We continue to like the Treasury complex in the intermediate to longer term but have exuded caution given the current market conditions. We have favored a flattening yield curve play more than being outright long. Price action settled above major three-star resistance at ... Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and proprietary bias and levels.