This week’s outlook and technical levels from Bill Baruch.
E-mini S&P (ESM)
Last week’s close: Settled at 2846.50, down 0.50 on Friday and down 82.00 on the week.
Fundamentals: U.S benchmarks are surging higher ahead of the opening of the week. Despite the S&P 500 losing 2.8% last week and merely flat Friday, sellers were unable to keep price action suppressed. Due to this, there was a sense of momentum carrying into the week. That momentum found tailwinds from Fed Chair Powell in a 60 Minutes interview last night, strength across the energy sector, more stimulus talks and reports this morning Moderna has had positive Covid-19 vaccine trial data.
In his 60 Minutes interview last night, Fed Chair Powell said not to bet against the U.S. economy adding that the Fed is not out of ammunition. He has also been vocal calling for more on the fiscal front. This morning, White House adviser Hassett said the administration is ready to increase measures if needed. A larger response is not only expected from the United States but markets are also pricing in support from China. For now, risk sentiment is queuing off these positive tailwinds and the fact that the World Health Organization is defending China’s Coronavirus response. Although White House adviser and hawk Peter Navarro continues to be on the offensive, a U.S-China trade clash seems to be taking a back seat.
In the week ahead, we are scheduled to hear more from Fed Chair Powell and get May Flash PMI data.
Technicals: The move this morning is bullish across all time frames. Both the S&P 500 and Nasdaq 100 have ripped through all levels of resistance and are now facing lines in which they struggled before last week’s pullback. For the S&P this is major three-star resistance at 2940-2953.75 and for the NQ, it is 9263-9279. Each respective level aligns with high closes on the recovery from the March lows. Give such steadfast early strength it seems probable, barring adverse news, that price action closes above here today securing the next leg of a breakout. The S&P 500 is bullish across all time frames while out above support at 2909.50-2911.50, but per usual we are not suggesting chasing such a move and instead pick your spots and stick to your game plan. Remember, there is now a large air-pocket from Friday gap close and risk must, must be managed tightly despite such strength.
Bias: Neutral/Bullish
Resistance: 2940-2953.75***, 2968.75**, 2988.75**, 2998.50-3000***, 3052.75***
Pivot: 2922.75
Support: 2909.50-2911.50**, 2897*, 2875.75-2886***, 2846.50***
NQ (June)
Resistance: 9369.50***, 9439-9477.50****
Pivot: 9263-9279
Support: 9200-9212.50*, 9154.75-9173***, 9078.25-9096.50***
Crude Oil (CLN)
Last week’s close: Settled at $29.62, up $1.64 on Friday and $3.35 on the week.
Fundamentals: Crude oil is surging along with all risk assets this morning. As more state and local economies reopen for business or set forth a plan to do so, a wave of normalization across the globe has flipped the demand narrative back the other way. Whereas crude oil exacerbated even the worst of fears upon the May contract expiration it is doing so the other way ahead of June’s tomorrow. On Friday, data from Baker Hughes showed another 19 Rigs falling off. Furthermore, data from Seevol points to a potential drop of 5.5 million barrels at Cushing last week. Decreases in production from both the United States and Canada coupled with jawboning from OPEC has lifted front month crude to the highest level since March 16.
Technicals: Price action on Friday closed above our second wave of major three-star resistance and overnight shredded through the psychological $30 mark. The Managed Money net-long position continues to grow and as of Friday’s Commitment of Traders (COT) data for the week ending last Tuesday is at the highest since September of last year. Price action is now testing into levels of resistance from mid-March.
Bias: Neutral
Resistance: 32.96***, 34.36**, 34.72-35.18****
Support: 30.25**, 29.42-2962***, 28.14-28.46***
Gold (GCM)
Last week’s close: Settled at $1,756.3, up $15.40 on Friday and $42.40 on the week.
Fundamentals: The risk-on chase this morning has left gold and silver in the dust. Gold and silver were sharply higher overnight on the heels of Fed Chair Powell essentially promising to do anything needed to support the economy, but news of Moderna’s positive Covid-19 vaccine trial data flipped what was a supportive stimulus narrative on its head. If risk-assets continue to surge at this pace, it is likely to weigh on gold and silver in the near-term. With such a sharp reversal, what matters from here is technical construction.
Technicals: As always, you do not want to buy gold when everyone is screaming for it, but instead capitalize on Gold you already own. After closing last week with a bullish wedge breakout, the metal stuck its nose out above major three-star resistance overnight at 1760-1764 before failing to overtake a critical level bringing the swing high of 1788.8 with 1800. On this fall back, we want to see gold respond to major three-star support at 1734-1735.5 which aligns the 50% with its breakout area. Ultimately, a response here can lead to a settle above 1743 which would help encourage a consolidation higher. However, a close below 1734-1735.5 pins gold back to where it was before midweek last week and leaves the door open for waves of selling due to the failed high. Lastly, we want to be patient with gold as the June contract expires next week and we believe this brings a fresh wave of buying.
Bias: Neutral/Bullish
Resistance: 1760-1764***, 1775.8**, 1788.8-1800****
Pivot: 1743
Support: 1734-1735.5***, 1723-1725.8***, 1708-1711.8**, 1702.5***
Bill Baruch provides technical levels on all markets throughout the week at BlueLineFutures.com. Please sign up at Blue Line Futures to have our entire technical outlook, actionable bias and proprietary levels emailed to you each day. Email us at info@bluelinefutures.com to start the conversation and set up a phone call with our experts.
