Major Market Levels for the Week

Bill Baruch breaks down fundamentals and technicals for stock indexes, crude and gold.

E-mini S&P & Nasdaq 100

Last week’s close: S&P settled at 3307, down 63.75 on Friday and down 52.50 on the week; NQ settled at 9865.50, down 222.75 on Friday and down 58.00 on the week.

Fundamentals: U.S. benchmarks opened lower Sunday night but have pared losses, turning positive ahead of the opening bell. A record rise in Covid-19 cases across the United States last week weighed on risk-sentiment. This steepening curve halted the reopening process in many southern states, but with price action turning, investors seem to be more focused on the slowing rate of infections over the weekend. Also adding tremendous pressure to the tape has been social media boycotts. Companies including Verizon, Coca-Cola and Starbucks have either halted or plan to pause all social media advertising because platforms have ‘failed to stop the spread of hate’. Facebook (FB) and Twitter (TWTR) lost 8.3% and 7.4% respectively Friday and are each down another 2.5% premarket. Traders must keep a pulse on this narrative as it could quickly become more dominant amid a risk-off wave.

There is a jam-packed economic calendar in this holiday shortened week. Today, sentiment data from the Eurozone was just below expectations, although the closely watched German reads broadly improved last week. CPI data from Germany this morning was stronger than expected. Today is a bit quieter overall. From the U.S. we look to Pending Home Sales at 9:00 am CT and Dallas Fed Manufacturing at 9:30 am CT. Tonight, June Chinese Manufacturing PMI is out at 8:00 pm CT and this leads into U.K. GDP, Eurozone CPI and U.S. Consumer Confidence Tuesday. ISM Manufacturing is Wednesday, and Nonfarm Payroll has moved up to Thursday to avoid Friday’s holiday hours.

Technicals: The S&P 500 and NQ pinged major three-star support levels on the open Sunday night before paring losses entirely. On Friday, each also settled at crucial levels of support and those settlement prices will be a key barometer for sentiment, sitting decisively in the red and below our momentum indicators for the first half of the day will keep the tape under pressure. For the S&P we have first key support at 3005-3007 and a pivot of 3014-3020 that encompasses the 200-day moving average, our momentum indicator and a volume pocket.

For the NQ, major three-star support at 9832-9845 held Friday’s close and price action is tethered to here this morning. Our momentum indicator aligns to bring first key resistance at 9885-9900. We are neutral in the near-term and see better value buying lower given last week’s continued lower lows. Only a move out above and close above major three-star resistance at 3058-3063.25 in the S&P and 10,082-10,088 in the NQ will become bullish across all timeframes.

Bias: Neutral
Resistance: 3044.25**, 3058-3063.25***, 3070.75-3075.25**, 3092**, 3108.75-3110.75**
Pivot: 3014-3020
Support: 3005-3007**, 2993.75-2995.75**, 2981-2986.25***, 2971.50**, 2943.75-2956.25***, 2817-2838****

NQ (September)
Resistance: 9885-9900**, 9969.25-9984**, 10,082-10,088***, 10,196-10,221***, 10,296**
Pivot: 9832-9845.25***
Support: 9754.25-9788.50***, 9722.75**, 9587.25-9603.50***, 9328-9368.25***

Crude Oil (CLQ)

Last week’s close: Settled at $38.49, down 23¢ on Friday and down $1.34 on the week.

Fundamentals: Crude oil has battled demand fears due to the sharp increase in U.S. Covid-19 cases and has done a tremendous job in holding ground. At the onset of this week traders will be keeping a pulse OPEC+ compliance heading into July, inventory data in the United States, given the rise in cases and of course Chinese demand. Monday, Chinese Manufacturing PMI for June was due at 8:00 pm CT. Crude oil demand from China has been a bellwether in the complex’s recovery. Refiners in China also produced record output of products last month and this again signals healthy imports. However, reports that the five biggest importers are teaming up to bargain for prices could begin to cool the narrative. All in all, Chinese Manufacturing PMI and analysts inventory expectations will swing the tape over the next 24 hours. On Friday, Baker Hughes reported Oil Rigs dropped by one.

Technicals: The Managed Money Net-Long position has dissipated marginally over the last two weeks from its peak the first week of June but remains elevated at the highest since July 2018. This leads us to believe that even if crude oil had higher to go, there must be a shakeout first in order to gather fresh buying. Price action is trading around our Pivot which includes Friday’s settlement and our momentum indicator. Buyers have steadfastly defending major three-star support at $36.59 to $36.96. The aforementioned shakeout would foreseeably break this level of support and test $33.47 at minimum, and quickly. Still, while above $38.20 on the session, the bulls remain in the driver’s seat across all timeframes.

Bias: Neutral/Bearish
Resistance: 39.40-39.85***, 40.35**, 42.33****
Pivot: 38.20-38.49
Support: 37.50*, 36.59-36.96***, 34.66-35.15**, 33.47***, 30.95-31.28***

Gold (GCQ)

Last week’s close: Settled at $1,780.3, up $9.70 on Friday and up $27.30 on the week.

Fundamentals: Gold posted a tremendous session on Friday; it battled a washout to major three-star support exactly and then recovered strongly and finished nearly $30 from the low. On a fundamental basis, there is renewed safe-haven demand with a sharp increase in Covid-19 cases across the U.S., however, it also reinvigorates deflationary fears. The economic calendar in this holiday week is jam-packed. We look U.S. Pending Home Sales at 9:00 am CT today, Chinese Manufacturing PMI at 8:00 pm CT tonight, U.S. Consumer Confidence tomorrow, ISM Manufacturing Wednesday and Nonfarm Payroll Friday.

Technicals: Gold held a head-on test to major three-star support and our buy target at $1,748.60 on Friday and reversed sharply to finish strong on the session. This support aligns multiple technical indicators with a trend line breakout on the continuous front-month contract. Price action is above our Pivot of 1780.3-1781 which is healthy and paves a path of least resistance higher. Still, major three-star resistance 1794.8-1804.4 has kept rallies in check and only a close above here will confirm the next leg.

Bias: Bullish/ Neutral
Resistance: 1794.8-1804.4***, 1820-1825***
Pivot: 1780.3-1781
Support: 1770.6-1771**, 1761.7**, 1748.6-1753***, 1733.9-1737***

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.