E-mini S&P (December)
Yesterday’s close: Settled at 3035.75, down 12.00
Fundamentals: Stocks have been tested this week and now face one last gauntlet. Nonfarm Payroll is due at 7:30 am CT and ISM Manufacturing follows at 9:00 am CT. With U.S benchmarks at record highs, either better economic data or continued stellar earnings will be needed to fuel the next leg higher. Exxon, Chevron, AbbVie, and Berkshire Hathaway are a few that report before today’s bell. The Federal Reserve and Chair Powell did a terrific job in handing the baton off this week, there is only a 20% probability they cut again in December. Strong earnings have helped offset the fact an interim U.S-China trade deal is slowly slipping away but does the market really even care about a deal that isn’t going to solve anything just as long as fresh tariffs are on hold. With the heart of earnings season winding down though, this means we must see economic data begin to turn a corner. U.S Q3 GDP was better than feared and last night’s private HSBC Chinese Manufacturing PMI was a stark difference from the Wednesday night read. Still, Chicago PMI yesterday was the worst since December 2015. This highlights today’s pivotal economic calendar. The consumer has played an integral role in keeping the economy from the brink of recession but data earlier this week showed Consumer Confidence slipped in October. Furthermore, September’s Average Hourly Earnings did not increase at all. October’s read this morning is expected to increase by 0.3% and help bring the annualized rate back to 3.0%. The bar for Payrolls is already set extremely low at 86,000. Although the headlines will be focused on Nonfarm Payroll and likely record Unemployment, we believe ISM Manufacturing could be the more crucial read. It's expected to contract for the third month in a row but not as bad of a pace as September. The Federal Reserve will add their wisdom; NY Fed President Williams, Fed Vice Chair Clarida and Fed Governor Quarles all speak beginning at 10:00 am CT. All in all, everything truly must be watched closely and as our narrative has been; better data is needed to continue fueling this market.
Technicals: Despite yesterday’s wave of weakness, just as we discussed in our Midday Market Minute, major three-star support in each the S&P and NQ held perfectly, and this allowed the bulls to regain their footing ahead of the close. Momentum remains very strong, but we also must remain headline vigilant, especially given today’s gauntlet of a calendar. The first key support in the S&P comes in at 3032.25-3035.75 and aligns... Please sign up for a Free Trial at Blue Line Futures to have our entire technical outlook, actionable bias and proprietary levels emailed to you each morning
Crude Oil (December)
Yesterday’s close: Settled at 54.18, down 0.88
Fundamentals: Crude Oil slipped again yesterday coming on the heels of weaker than expected Chinese Manufacturing PMI (sixth straight contraction, the worst since February) and continued poor data from the U.S. Furthermore, Chinese official threw doubt over the potential of a long-term trade deal which tells Crude Oil the longer-term growth story isn’t changing. The caveat is, Crude Oil is not in the danger zone at these current levels and going back to last week, we’ve emphasized we do not see any substance behind the OPEC+ jawboning additional cuts in December with Brent at the $60 range. With a star-studded calendar that includes earnings reports from majors Exxon and Chevron followed by Nonfarm Payroll, ISM Manufacturing and Fed speak, price action will be very susceptible to the broader risk appetite.
Technicals: As promised, we have increased our Bearish Bias with a close below major three-star support at 54.61-54.99. This level, adjusted slightly, will now act as major three-star resistance and we will look to hold a stronger Bearish Bias as long as price action remains subdued below... Please sign up for a Free Trial at Blue Line Futures to have our entire technical outlook, actionable bias and proprietary levels emailed to you each morning
Yesterday’s close: Settled at 1514.8, up 18.1
Fundamentals: It took one week, but Gold again dug itself out of the grave and is backtesting a crucial area of technical resistance. Today’s economic calendar will either confirm or deny the latest rally. Nonfarm Payroll is due at 7:30 am CT, ISM Manufacturing follows at 9:00 and Fed speak begins at 10:00. With equity markets at record highs and the odds of a fourth Fed cut in December even slipping slightly to 20%, we would say Gold is on the verge of achieving great things this week; we just need the weekly close to hold ground. Yes, a potential deteriorating U.S-China trade deal is bringing a tremendous wave of support and continued dysfunction in Washington also keeps buyers interested in safe-havens, but today’s data will have the final word.
Technicals: Gold is holding ground steady, below major three-star resistance at 1515.6-1518. Last Friday’s rally attempt was rejected in this region, the fourth such attempt since breaking down late September. This move has the makings of being able to extend but as we noted above, a lot will rely on today’s economic calendar. Our momentum indicator comes in today at 1511 and the bulls have a clear edge above here. However, a break below 1499-1503.2 will... Please sign up for a Free Trial at Blue Line Futures to have our entire technical outlook, actionable bias and proprietary levels emailed to you each morning