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Our daily research overs the S&P, NQ, Crude Oil, Gold, Silver, Currencies, Corn, Soybeans, Wheat, Livestock, and Softs markets. 

Went out to brokerage clients before the bell

 

Russell 2000 futures, as described below.

Is TSLA breaking out? Shows strong risk-sentiment and would be a precursor to China turning a corner.

E-mini S&P (June) / E-mini NQ (June) S&P, yesterday’s close: Settled at 4289.75, up 8.75 NQ, yesterday's close: Settled at 14,586.50, down 2.25   Blue Line Futures provides daily actionable research and a professional trade desk. Sign up for a Free Trial here.

Fundamentals: E-mini S&P and E-mini NQ futures continue an extremely healthy consolidation, but E-mini Russell 2000 futures broke out yesterday. Between Industrials and Financials outperforming over the last week and the surge in small caps, we believe it is safe to say the rotation is upon us. However, if there is one thing we have learned in the last 18 months, it is that being nimble and staying vigilant pays. This rotation could last a week, it could last through the summer and into October’s seasonal Tech strength. We could also see a quick deterioration of sentiment via next week’s CPI and Fed. The stocks that are showing signs of new leadership are cyclical and therefore depend on improving economic forecasts. Given the fickle environment, these factors could quickly become tailwinds or headwinds. A prime example is Monday when ISM Services data missed expectations. The E-mini Russell was the worst performer of the indices -1.36%, while Industrials and Financials were each down more than 0.5%, but this price action was quickly shaken for the broader emerging trend, this rotation. As we lean into it, we must ask how many datasets like Monday could it withstand.

 

Trade Balance data from China last night showed less-worse Imports than expected, at -4.5% versus -8.0%, highlighting may peak China negativity is in. However, Exports were much worse than expected at -7.5% versus -0.4%. As China reopened, Exports surged each of the prior two months, by 14.8% and then 8.5%, and therefore a reprieve was due. While last night’s whiff does sound the alarm on a global slowdown, it more importantly ups the ante on June’s data released next month.

 

The Bank of Canada will announce a policy decision at 9:00 am CT. U.S. Trade Balance data was nothing to write home about, and the U.S. economic calendar is quiet other than weekly EIA data.

 

Technicals: E-mini S&P and E-mini NQ futures are consolidating well and have remained buoyant off first levels of support. At this crossroad, we view our Pivot and point of balance as a critical determinant of near-term direction; continued price action above here will pave a path of least resistance in the underlying bullish trend. The heavy lifting has come from the E-mini Russell 2000 which secured a breakout above the 200-day moving average and the .382 from the February high yesterday, while strength into the opening bell also has it above the 50% retracement. With the E-mini Russell underpinning risk sentiment, continued buoyance in the E-mini S&P should invite a showdown at rare major four-star resistance at 4303-4309, which a close above would start the breakout process.

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Crude Oil (July)

Yesterday’s close: Settled at 71.74, down 0.41

 

Fundamentals: Crude Oil futures are snapping back from a retest of the psychological $70 and finding bullish tailwinds from stronger-than-expected China Imports, which was the third-highest month on record, totaling 12.11 mbpd. Saudi Arabia moved proactively to jawbone cuts in order to stave off global growth fears tied to a slow China. The market saw through such a move and erased strength dating back to Friday, before the OPEC+ meeting, helping to explain the impact of China’s Import data. This bullish tailwind will be carried into today’s weekly EIA report at 9:30 am CT. Expectations re for +1.022 mb Crude, +1.328 mb Distillates, and +0.88 mb Gasoline. Last night’s private API survey showed -1.71 mb Crude, however, large builds in the products totaling 6.917 mb offset the impact.

 

Technicals: Price action in Crude Oil futures responded to major three-star support at 70.10 yesterday and have now cleared a critical area of resistance aligning many, many technical indicators at 71.74-72.25. While we see continued price action above this mark as renewing bullishness, there is still significant headwind at major three-star resistance at 73.02-73.17.

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Gold (August) / Silver (July)

Gold, yesterday’s close: Settled at 1981.5, up 7.2

Silver, yesterday's close: Settled at 23.67, up 0.35

 

Fundamentals: Gold and Silver have continued to show life from Friday’s indiscriminate selling. Although last night’s strong China Import data theoretically helps buoy the Chinese Yuan and the lack of Exports signals global growth fears, a favorable environment for Gold, we are not seeing added strength into this morning. All things considered, we may see a wide-range consolidation and great trading range through this week, barring a surprise on tomorrow’s Jobless Claims data, as we head into Tuesday’s CPI and the Fed meeting to follow.

 

Technicals: Gold and Silver futures have responded to waves of selling in front of critical areas of support, highlighted in the levels below. However, they are struggling to extend gains through major three-star resistances at 1983.4-1985.6 in Gold and 23.74-23.85 in Silver. Still, we believe continued construction above support and furthermore above our Pivot and point of balance will help pave the way for a retest to the pre-Nonfarm Payroll highs at $2000 and $24 before the end of the week.

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Silver (July)

 

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