E-Mini S&P 500 (June)
Yesterday’s close (Monday, March 12): Settled at 2789, up .25
Fundamentals: Equity markets are coming out of a mixed session sandwiched in between critical economic indicators; while the E-mini S&P 500 was unchanged yesterday, the Nasdaq gained 0.5% and the Dow lost 0.5%. Friday’s non-existent wage growth is almost enough to halt the Fed’s newfound hawkishness, but today’s CPI read will be equally as crucial. Lost in the tariff noise two weeks ago was a much more assertive and hawkish Fed Chair than his predecessor. Powell’s tone also paved the way for other Fed members to speak more openly. In fact, we believe the sharp selling on Thursday, March 1 had just as much to do with comments from NY Fed President Dudley as it did uncertainty over tariffs; he said, “four hikes this year would be gradual.”
Former Chairwoman Janet Yellen had spent the better part of the last two years defining what “gradual” had meant, and, it was certainly not four hikes in one year. CPI is due at 7:30 a.m. Central and the Core read is what we are watching most closely. Expectations are for 0.2% this is slower than last month’s MoM gain of 0.3%. YoY is expected to stay at 1.8%. As we navigate through today’s volatility, we will be watching reactions in the Dollar and Treasuries as well as any developments to who will be appointed to head President Trump’s National Economic Council. A favorable candidate such as Larry Kudlow will be supportive to recent bullish momentum. We also await Industrial Production and Fixed Asset Investment data out of China tonight.
Technicals: The S&P did the bare minimum yesterday, it held first key support at 2788.75-2789.50 on a closing basis. Although, price action failed to maintain above the pivot, buyer stepped in ahead of major three-star support at... Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and proprietary bias and levels.
Crude oil (April)
Yesterday’s close: Settled at 61.36, down .68
Fundamentals: Risk-on enthusiasm took a step back early in yesterday’s session. We cited that a failure for Crude to hold Friday’s close or Sunday’s opening range was enough for us to neutralize our sharp turn bullish after the jobs report Friday. The EIA released their monthly drilling Productivity Report yesterday and as price action stalled out early, this was viewed as a headwind on the session given the boom in output. They revised production growth expectations higher to 131,000 bpd in April from 110,000 bpd. With today’s CPI data in the crosshairs, the Dollar Index is sitting stable at the psychological 90 level. The direction of the dollar will be key for today’s trade as we sound like a broken record, but its impact on Crude has been underestimated. Inventory expectations will come into the picture as the day develops and API data is due at 3:30 p.m. Central.
Technicals: Price action settled right in at our 61.42 level and yesterday’s session completely neutralized the tape. Right now, we can make an argument in either direction depending on the Dollar.
Yesterday’s close: Settled at 1320.8, down 3.2
Fundamentals: Gold surprisingly lost ground overnight, yesterday’s session should have been constructive enough to keep the sellers at bay through CPI data at 7:30 a.m. Central. This is as critical a read as they come. With wage growth missing on Friday’s Nonfarm report a CPI miss would crush the dollar. It would force the Federal Reserve to make a complete 180 from their recent attempt at being more hawkish than the market had priced in. In fact, that attempt has set the Dollar up for a larger fall if otherwise ahead of next week’s March hike. It would pave the way for a dovish hike like December and Gold would be a major beneficiary. Now, if Core CPI beats the 0.2% MoM expectation it would put pressure on gold, but it is important to remember only a 0.3% read is in line with the last two months. Expectations for the YoY read are at 1.8%. Stronger CPI will hurt gold as it strengthens the Dollar, but our bullishness is also due to the strong technicals just below here in which we expect Gold to fight against.
Technicals: Price action traded to a high of 1326.8 last night and failed to hold first key resistance at.
Natural gas (April)
Yesterday’s close: Settled at 2.778, up .046
Fundamentals: Natural gas is finding strong support as forecasts through much of the United States have gotten colder in recent days. Furthermore, another massive Nor’easter snow storm is making its way to New England and is expected to bring two feet to some areas. The colder weather lasting through the back half of March has gotten the bears nervous as yesterday’s price action smelled of short covering.
Technicals: While we have said it will be tough to time, we have maintained that the risk is to the upside as a weather surprise late in March is not priced in. Price action is now... Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and proprietary bias and levels.
10-year Treasuries (June)
Yesterday’s close: Settled at 120’065
Fundamentals: The 10-year saw a bid yesterday on decent demand from the auction. Still, the market is in a consolidation ahead of a crucial CPI read this morning at 7:30 a.m. Central. Yields have again backed away from the 2.90% area but a strong read on CPI today will reinvigorate this storyline ahead of next week’s FOMC meeting. We don’t want to get ahead of things too much, but a miss today is likely to lay the groundwork for a short covering rally if the price gets out above recent highs at 120’23. This would push yields back in the direction of 2.7%. There will be a 30-year auction at noon Central.
Technicals: While there is little edge ahead of today’s CPI read, we could imagine getting slightly Bullish on momentum. We still maintain that the intermediate and long-term downside remains... Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and proprietary bias and levels.