Why Is This Not a Blow-Off Top?

E-mini S&P and E-mini NQ futures must digest a week in which they gained 2.3% and 3.4%, respectively, states Bill Baruch of BlueLineFutures.com.

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

S&P, last week’s close: Settled at 4536.75, down 6.75 on Friday and up 102.75 on the week
NQ, last week’s close: Settled at 15,694.25, down 17.25 on Friday and up 512.50 on the week 

That began Friday when stronger than expected fresh July Michigan Consumer data supported rates and the idea that more rate hikes are needed. As this new week unfolds, China, earnings, and the Fed are all front and center. Last night, a slate of economic data from China was broadly better than expected, with Industrial Production and Fixed Asset Investment beating. However, GDP underwhelmed y/y at 6.3% versus 7.3% and set off a slew of bank downgrades that are now grabbing headlines. After a strong start to earnings season from PEP, JPM, WFC, and UNH, that calendar picks back up tomorrow with BAC, MS, LMT, NVS, and others. This morning fresh NY Empire State Manufacturing eked out a beat at +1.1 versus -4.1 expected. Tomorrow brings Retail Sales, one of the centerpieces of economic data this week, along with a deluge of housing data Wednesday and Thursday. This all will lead into next Wednesday’s Fed policy decision, where odds show a 96.1% probability they hike by 25bps and a 58.7% probability they hold at the level through yearend.

On Friday, we took an outright Bullish Bias, not calling for you to chase the tape, but highlighting the next bull leg is imminent as long as E-mini S&P futures hold out above major three-star support at 4507-4509. Similarly, we have rare major four-star support in E-mini NQ futures at 15,444-15,475. As this morning unfolds, we will get a quick sense of risk appetite in how well each battle at the respective Pivot and point of balance.

Bias: Bullish

Resistance: 4541.75-4543.50, 4551.50-4555, 4560.50, 4572.75, 4585-4588.75, 4603-4606

Pivot: 4531-4536.75

Support: 4521.25, 4507-4509, 4497-4500, 4483.75-4488.25, 4471-4476

NQ (Sept)

Resistance: 15,762, 15,811-15,857, 15,979-16,009

Pivot: 15,679-15,722

Support: 15,621-15,663, 15,552-15,560, 15,528, 15,444-15,475, 15,344-15,374, 15,309-15,314, 15,250-15,276

Crude Oil (August)

Yesterday’s close: Settled at 75.32, down 1.44 on Friday and up 1.55 on Friday on the week

Crude Oil futures bled lower overnight on the soft slate of China's economic data and the ensuing GDP downgrades. However, we cannot ignore such construction and strength last week. This morning the main catalyst for such strength, Saudi Arabia’s latest production cut of one mbpd this month, was again front and center after Saudi Arabia’s Minister of Energy said that the cut will last through the end of December 2024.

Crude Oil futures sold off Friday morning upon the Michigan Consumer data beat, as it extrapolates a more hawkish Federal Reserve. Furthermore, the Chinese Yuan finished the week bleeding to its weakest of the session. As price action retreats, the breakout point of 75.10-75.32 will stand as our Pivot and point of balance; regaining this level exudes underlying breakout tailwinds that are still alive. Upon a move lower, we have three critical areas of support highlighted in the levels below, which the bulls must defend to stave off a failure.

Bias: Bullish/Neutral

Resistance: 76.08-76.42, 77.87-78.45, 80.00-80.39

Pivot: 75.10-75.32

Support: 73.92-74.15, 72.95-73.37, 72.21-72.37

Gold (August) / Silver (September)

Gold, yesterday’s close: Settled at 1964.4, up 0.6 on Friday and 31.9 on week
Silver, yesterday’s close: Settled 25.194, up 0.245 on Friday and 1.905 on the week

Gold and Silver futures are on their backfoot this morning as the US Dollar strengthens against the Chinese Yuan, putting the CME’s CNH back into the thick of Wednesday’s selloff. Additionally, the Treasury complex edged higher overnight, meaning rates softened, but that has reverted into the onset of US hours after NY Empire State Manufacturing for July eked out a beat. Although inflation data was crucial last week, traders must not underestimate how pivotal this week could be, both fundamentally and technically ahead of next week’s Fed policy decision. Tomorrow brings Retail Sales, and Wednesday marks the start of a deluge of housing data.

Last week’s strength, with Silver futures hitting a more than two-month high, is certainly a jolt of life to the bull camp, but the hard part will be a constructive consolidation at these new elevated levels. A perfect scenario could be each building out a bull flag, with slightly lower lows, before making the next move. It is ok if price action tests major three-star supports at 1938.7-1942.9 in Gold and 24.39-24.51 in Silver, but we do not want to see it immediately, and the bulls must show up.

Bias: Neutral/Bullish

Resistance: 1961.7-1963.6, 1971.2, 1977.6-1980.4, 2000.7-2001.4

Pivot: 1955.7

Support: 1952.4, 1949-1949.6, 1944.5-1946.3, 1938.7-1942.9

Silver (September)

Resistance: 25.00-25.22, 25.76-25.88

Pivot: 24.92

Support: 24.72-24.83, 24.66, 24.39-24.51, 24.06-24.15

Learn more about Bill Baruch at Blue Line Futures.