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E-mini S&P (March)
Yesterday’s close: Settled at 2708.25, up 2.00
Fundamentals: U.S benchmarks are ripping higher this morning on news that a second government shutdown could be averted as bipartisan legislation makes its way through Congress ahead of Friday’s deadline. However, this deal agreed to in theory by Congressional Democrats and Republicans only includes $1.375 billion for the U.S-Mexico border. This falls well short of the elephant in the room, President Trump’s $5.7 billion request for border security. Today’s headline driven session is just getting started. As we await further details on a spending bill, both U.S Trade Representative Lighthizer and U.S Treasury Secretary Mnuchin arrive in Beijing to begin trade talks Thursday but as early as tomorrow. Lower-level deputies began talks yesterday and the March 1st deadline is quickly approaching where the White House can increase tariffs on $200 billion worth of Chinese goods from 10% to 25%. Today’s schedule boasts Fed Chair Powell at 11:45 am CT. We at Blue Line Futures have been in the camp that the Fed overcompensated at their January meeting, exuding an unnecessarily dovish rhetoric. With recession fears in the U.S dissipating and the overall data pretty solid, we expect Fed Chair Powell to slide back into arguably hawkish territory. In other words, the potential of a March hike is underpriced at 0% and Fed Chair Powell must keep the market on its toes by finding a middle ground as the Fed has been known to do during this hiking cycle (ultimately bringing it upwards to 10-15%). Other supportive headlines to risk sentiment come from OPEC’s Monthly Report and Saudi Arabia. The Saudi’s announced they will cut production by about 500,000 bpd in March which combats the Report’s demand revision lower. JOLTs Job Openings are due at 9:00 am CT. Kansas City Fed President George, a 2019 voting member speaks at 4:30 pm CT.
Technicals: Yesterday’s tape was unenthusiastic at best given the overnight spike ahead of Monday’s open. However, the Russell 2000 traded constructively finishing at session highs and this cannot go unnoticed. In fact, it is ... Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and proprietary bias and levels.
Crude Oil (March)
Yesterday’s close: Settled at 52.41, down 0.31
Fundamentals: OPEC’s Monthly Report coupled with the announcement of additional cuts from Saudi Arabia in March have lifted Crude by nearly 3% this morning. In their closely watched Monthly Report, OPEC was able to confirm they made good on the promised cuts at their December meeting, bringing production down by 797,000 bpd. While Saudi Arabia digested the bulk of these cuts, they upped the ante in trying to lift prices by promising to cut an additional 500,000 bpd from their current 10.311 target down to 9.8 bpd. In November, Saudi Arabia nearly reached 11.1 mbpd in production, this would mark a significant cut from those levels and appears they would reach the lowest production level since February 2015. Topping things off they are following through with slashing exports which ultimately trickles into U.S inventories.
Technicals: Yesterday’s low was 51.23 before reversing more than a dollar into the close. Price action pinged support at 51.05-51.33 and although it did not get to our target of 50.63-50.84, we Neutralized out Bias from yesterday’s reversal and failure to stay below 51.95-51.25. This level also aligned with downtrend resistance which has now been taken out. Strong resistance comes in at ... Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and proprietary bias and levels.
Yesterday’s close: Settled at 1311.9, down 6.6
Fundamentals: Gold is trading higher this morning capitalizing on the Dollar coming back in a little. As we said yesterday, the global growth picture is not pretty and Gold is struggling in the near term due to those currencies being directly hit with growth fears (Pound, Euro, Yuan) losing value against the Dollar. However, the Dollar was not increasing for its own reasons and once this levels-out, Gold will be able to capitalize. JOLTs Job Openings are due at 9:00 am CT. We anticipate a headline driven session due to Washington and Beijing but maybe the most important will be Fed Chair Powell at 11:45 am CT. Also, Kansas City Fed President George, a 2019 voting member speaks at 4:30 pm CT.
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