Culminating Into Nonfarm Payrolls

Articles From: Blue Line Futures
Website: Blue Line Futures

By:

President of Blue Line Futures

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

S&P, yesterday’s close: Settled at 4156.25, up 62.50

NQ, yesterday’s close: Settled at 13,271.50, up 347.00

Fundamentals: U.S. equity benchmarks lifted yesterday after a two-day consolidation, finding tailwinds from surprisingly strong ISM Non-Manufacturing. With Federal Reserve committee members on the offensive this week, talking down the idea of a dovish pivot, maybe bad news won’t stave off added hikes from what’s already been discounted. This allowed a complete divergence in ISM’s Services data at 56.7 for July versus SPGI’s 47.3 contraction to lift sentiment; things are not slowing as bad as initially thought. The dataset also bubble-wrapped the headline strength by signaling a slower rise in Prices for July at 72.3, down from 80.1 in June, while Employment contracted for the second month in a row and third out of four. The yield on the 10-year spiked to a high of 2.85% upon the release, but the two-day rise has pared back below 2.70% this morning. Odds for the Fed’s September meeting are balancing towards a coin flip, showing a 57.5% probability the bank hikes by 50 basis points with the remaining signaling 75. Today, Initial Jobless Claims came in higher than expected for ninth consecutive week. Fed speak is up next, with Cleveland Fed President Mester, a 2022 voter, scheduled for 11:00 am CT, but others are likely to pop up. This will lead into tomorrow’s Nonfarm Payrolls report, which we will discuss further in this afternoon’s Midday Market Minute.

Check out yesterday’s Morning Express where we highlight Bond volatility and our shift from being Bearish to cautiously Bullish U.S. equity benchmarks in May.

Technicals: Yesterday’s strength likely began squeezing some of the bears, but this could be just the start. However, construction through the first two days this week and stability overnight speaks to a more robust tape and not just strength sparked by short-covering. Additionally, the two-day consolidation created a bull-flag pattern and laid the groundwork for yesterday’s move. There are next areas of key resistance being tested, but as long as price action holds above our Pivot and point of balance (highlighted below) through the first hour, there is no reason not to believe this run will continue, targeting our next major three-star resistance levels at … Click here to get our (FULL) daily reports emailed to you!

Crude Oil (September)

Yesterday’s close: Settled at 90.66, down 3.76

Fundamentals: Crude Oil has nearly pierced the $90 mark, trading to an early session low of 90.15. Price action was slammed yesterday after an early post-OPEC+ rally attempt and bearish EIA report. Although there is no argument around whether the EIA report was bearish yesterday, there is one on whether such jockeying is sustainable. The major drivers for such a large headline build in Crude of 4.467 mb, was a surge in Net Imports adding 15 mb WoW, a 4.69 mb add from the SPR and Refinery Utilization dropping for the third week in a row by -1.2% (prior -1.5% and -1.2%). Clearly, there are forces manufacturing a softer price environment and the seasonality allows for that. We remain intermediate to longer-term very positive on this market, however, many have been conditioned to believe Crude can only go higher, therefore, downward volatility can quickly exacerbate in order to squeeze out longs before finding its rightful path back north.

Technicals: Price action is soft, meagerly bouncing off yesterday’s lows and unable to test near major three-star resistance, previous support, at 92.83-92.97. Traders should be prepared for added downside in the near-term as long as price action stay decisively below our Pivot and point of balance at 90.90. Although we do have key support at 90.00 and again at the July low, we do not have major three-star support until … Click here to get our (FULL) daily reports emailed to you!

Gold (December) / Silver (September)

Gold, yesterday’s close: Settled at 1776.4, down 13.3

Silver, yesterday’s close: Settled at 19.894, down 0.245

Fundamentals: Yesterday’s reversal in Bonds helped stave off added selling in precious metals from Tuesday’s failure. The U.S. Dollar Index has pulled back about 0.50% from yesterday’s spike, and more importantly the USDCNH has also pulled back about 0.50% from Tuesday’s high. Along with Initial Jobless Claims coming in higher than expected for the ninth straight week, we believe the aforementioned dynamics to be supportive, however, we expect the environment to be very volatile through tomorrow’s Nonfarm Payrolls report.

Technicals: Price action has rallied steadily since pinging supports yesterday. Gold did not quite get to the area that we would really like to see as a buy opportunity at 1749.7-1756.4. As for Silver, it held extremely constructive at and above major three-star support at 19.78. This morning’s strength is already cooling off from major three-star resistance in Gold and rare major four-star resistance in Silver. Look for stability in Gold above first key support and Silver to battle above our Pivot and point of balance at … Click here to get our (FULL) daily reports emailed to you!

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