The S&P 500 settled yesterday below our resistance level at 2709.75. A close above there today will encourage a path to the 200-day moving average at 2751.25, note Bill Baruch, president of Blue Line Futures.

E-mini S&P (ESH)

Yesterday’s close: Settled at 2704.50, up 22.00

Fundamentals: U.S benchmarks have settled in a bit ahead of today’s employment situation report. Especially after the Federal Reserve arguably crossed into dovish territory on Wednesday or at the least showed the willingness to do so. The data has bounced back from borderline worrisome. We believe three’s as a trend and the economic data in the U.S did not ‘trend’ negative. The December jobs report earlier this month blew the doors off with +0.4% average hourly earnings and 312,000 jobs created. Although that report sent equity markets higher as it offset recession fears, another of this nature would instead push the pendulum of perception on the Fed back into hawkish territory. As of this morning, there is a zero probability that the Fed hikes in March, however, there is a 1.3% probability they cut in March. We plan to monitor this closely through today. The economic data abroad is another story; overnight, Chinese Caixin Manufacturing PMI contracted worse than expected and both German and Italian Manufacturing PMIs also contracted. U.S PMIs were overall better than expected, however, yesterday’s Chicago PMI missed. Today, we look to the more important ISM Manufacturing PMI at 9:00 am CT.

Overall, earnings have come in better than expected but pinch yourself and remember, these are lowered expectations. Last night, Amazon (AMZN) beat across the board but it’s down 4% premarket after issuing lower first quarter guidance. Honeywell (HON) is in the green after reporting this morning. Exxon (XOM), Chevron (CVN) and Merck (MRK) also report.

On the U.S and China trade front, equity markets surged late in the day on positive jawboning. Same old rhetoric, ‘big progress made on this round of talks’ and ‘China promises to buy more U.S agriculture and energy products. We’ve seen this time and time again, there is no substance. We have heard absolutely zero on the structural issues; copyright infringement, forced technology transfer and intellectual property rights. Without substance, we will soon see the law of diminishing returns to this jawboning. The March 1 deadline is only one month away.

Technicals: The S&P traded to a high of 2713 but settled below our resistance level at 2709.75. A move and close out above here today will potentially encourage a path to the 200-day moving average at 2751.25. Yesterday, the NQ traded to a high of 6943 after surging on the open with Facebook leading a risk-on run in tech. However, key resistance held and outside of the initial run, the NQ arguably barely stood clearly out above major three-star resistance at 6897-6905 for the other half of the session before settling at 6914.75. With price action lower, we will look to 6914.75 to now act as major three-star resistance, however, with less emphasis on its strength and more on the steadiness of a bullish tape on the session if price action holds out above here. To the downside, the S&P battled against what is now first key support at 2691.75-2695 yesterday before getting the late boost on upbeat trade jawboning; this level will remain such through today and move below here would certainly open the door to major three-star support at 2672.50-2677.75; a close below here will signal a failure and open the door for immediate weakness to begin next week. The NQ has a similar line in the sand with major three-star support at 6800-6818.25.

Bias: Neutral/Bearish

Resistance: 2706-2709.75****, 2714-2719.50**, 2751.25***

Support: 2691.75-2695**, 2672.50-2677.75***, 2662.75-2663.50**, 2650.75**, 2636.25-2640.50***

NQ (NQH)

Resistance: 6914.75***, 6943-6955.50**, 6999.75***

Support: 6866*, 6837.25**, 6800-6818.25***, 6779.75*, 6721-6741.25**, 6592.25-6616.75***

Crude Oil (CLH)

Yesterday’s close: Settled at $53.79, down 44¢

Fundamentals: Crude Oil elevated higher yesterday on tailwinds from U.S sanctions on Venezuela and an arguably dovish Fed with the cherry on top being an inventory report that was not bearish. In an interview with Bloomberg on Wednesday, I said that the formal announcement of the sanctions was to be expected and priced in. While the U.S has imported 500,000 barrel-per-day from Venezuela to meet a grade demanded by refiners, many located in the southern Gulf, tightening pipeline capacity and production from Canada was a double whammy encouraging a path of least resistance higher. However, there are reports that Canada is looking to reestablish production, and this is a storyline that could add pressure to the tape. On Wednesday’s EIA report, overall U.S imports dropped drastically with the Saudi cuts trickling in; this is a bullish factor if it continues at such a pace, however, over the next week and half the full impact should be felt. Lastly, traders must keep an eye on overall risk-sentiment with trade talks continuing, equity markets may be a barometer but in recent weeks it’s tough to say if the tail (Crude) wags the dog at times.

Technicals: Price action melted higher and achieved one of the most technically significant indicators that we use on a long-term basis. Major three-star resistance stood at $55.51-$55.55 and this is the .38.2% Fibonacci retracement from the October highs to the December lows. We firmly believe that in a well-constructed technically trending market, a 38.2 retracement holds. Yesterday’s high was $55.37, and we are nearly $2 from there this morning. We remain Bearish and if price action continues to hold below $53.79-$53.82 the path of least resistance points to key support at $51.33-$51.50 and then major three-star support at $50.51-$50.93.

Bias: Bearish/Neutral

Resistance: 54.50**, 55.51-55.55***

Pivot: 53.79-53.82

Support: 51.33-51.50**, 50.51-50.93***

Gold (GCJ)

Yesterday’s close: Settled at $1,325.2, up $9.70

Fundamentals: Gold has easily been a top perform since December. The Fed’s dovish rhetoric has certainly been a major catalyst coupled with their reasoning; slower growth. Today, this extended market gets tested by the jobs report. The most closely watched component is average hourly earnings and expectations are for +0.3%; a number higher then this would easily halt gold’s recent ascend and encourage a wave back towards the psychological $1,300 mark. Also, a gain of 165,000 jobs is expected. We remain unequivocally bullish. However, we remain cautious until the next pullback which we view as a strong buy opportunity.

Technicals: More important than any of our technical levels today is the first release of the CFTC’s Commitments of Traders report in over a month. It will be critical to see how the positioning of Managed Money is after a rally of more than $100 since breaking out of its range in early December. Gold will remain immediate-term bullish with a continued close above $1,321.7-$1,323.4. First key support is certainly a spot to buy, but traders should be prepared for a pullback to major three-star support at $1,306.3-$1,306.5 to back up the truck.

Bias: Bullish/Neutral

Resistance: 1337**

Pivot: 1321.7-1323.4***

Support: 1312.1**, 1306.3-1306.5***, 1300.5**, 1281.5-1284.5***