Digesting Gains

E-mini S&P (December) / NQ (December)

S&P, yesterday’s close: Settled at 4511.25, up 33.75

NQ, yesterday’s close: Settled at 15,398.50, up 108.00

Fundamentals: U.S. benchmarks have paused to digest recent gains. Yesterday, we detailed a bullish scenario paving the way to 4620 in the S&P. Healthy consolidation days will be necessary on this path and we may be at the onset of such a stretch.

President Biden’s spending agenda is back at the forefront as Congress trims the price tag from $3.5 to $2 trillion in an attempt to rally support. Chuck Schumer, the Senate Majority Leader, said a framework could be reached by the end of the week. This would also pave the way for the $550 billion infrastructure bill already passed by the Senate.

Progress in Washington could bring added risk-taking, but markets also have an eye on earnings. Netflix was the first FAANG stock to report, after the bell yesterday. The company met revenue estimates despite crushing on subscriber growth at 4.4 million versus 3.5 million. However, the surge came from the lower subscription cost Asia Pacific region. After an initial spike, the stock settled down nearly 2% overnight. Johnson & Johnson missed on revenues yesterday morning, but the stock gained 2.3% on a broadly strong session. Among a deluge of reports this morning, Abbott Labs may stand out most. The company crushed estimates and the stock is +3.5%. Verizon topped earnings estimates but missed on revenues; the stock is still +1% premarket. The focus shifts to Tesla who reports after the bell along with IBM.

Today’s economic calendar is light. The final read on Eurozone CPI for September was in line with expectations at 3.4%. Inflation data from the U.K., CPI and PPI, both came in soft. U.S. MBA Mortgage Applications fell 6.3% WoW. Weekly EIA data is due at 9:30 am CT. We look to comments from Chicago Fed President Evans at 11:00 am CT and Fed Governor Quarles at noon CT, both are 2021 voters. The Treasury auctions $24 billion 20-years at noon CT. The Fed’s Beige Book is due at 1:00 pm CT.

Technicals: Price action remains firm while attempting to build a higher floor of support. Still, our line in the sand remains the same; while the S&P is above 4472-4478.50, the path of least resistance is to our target of 4620. The session low of 4504 is above what is now first key support at 4502.75. As for the NQ, it is holding above newly formed major three-star 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.

Crude Oil (December)

Yesterday’s close: Settling at 82.44, up 0.75

Fundamentals: Crude Oil is retreating from overnight highs ahead of today’s slate of EIA data. Last night the private API survey printed another higher build for Crude Oil than expected at 3.294, but this was more than offset by the products, -3.5 mb of Gasoline and -3.0 mb of Distillates. Official expectations are for +1.857 mb Crude, -1.267 mb Gasoline, and -0.70 mb Distillates. Today’s data will certainly dictate the appetite for added risk above $80 and we have taken a cautious approach this week, advising followers of our very Bullish Bias to capitalize on the move and await a pullback to reposition. Still, the path of least resistance is higher and over-compliance from OPEC+ has underpinned the market even at these elevated levels. This morning Iraq’s Oil Minister said prices could hit $100 in the first half of 2022 and Morgan Stanley raised its target for Brent to $95 in the first half.

Technicals: An overnight push higher on the heels of a larger than expected composite draw from API failed at first key resistance at 82.50-82.78. The failure has set price action on course for another test into major three-star 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.

Gold (December) / Silver (December)

Gold, yesterday’s close: Settled at 1770.5, up 4.8

Silver, yesterday’s close: Settled at 28.883, up 0.619

Fundamentals: Yesterday’s early spike brought another disappointing finish as Gold and Silver were both contained by our major three-star resistance levels. There is fresh life this morning though and each has battled back to trade above yesterday’s high. Can it hold? The U.S. Dollar is lower on the week and off session highs. The spike in the rates that seemed to dominate things late last week and through Monday seems to be subdued. These are components needed to sustain strength across precious metals, but we must see a healthy settlement today and ideally through Friday. We look to comments from Chicago Fed President Evans at 11:00 am CT and Fed Governor Quarles at noon CT, both are 2021 voters. The Treasury auctions $24 billion 20-years at noon CT. The Fed’s Beige Book is due at 1:00 pm CT.

Technicals: Gold and Silver are showing signs of waking up, but technically this is so far simply a move to towards the top-end of their respective ranges. Gold did trade above what is a second test of key resistance at 1786 today. Still, there is tremendous work to be done at $1800. Silver’s higher high today has yet to breach 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.

—

Originally Posted on October 20, 2021 – Digesting Gains