Bill Baruch, president and founder of Blue Line Futures, previews E-mini S&P, Gold and Crude markets today and today’s economic report calendar. Follow his reports Monday-Friday on MoneyShow.com. Attend his presentation at TradersExpo Chicago July 24 on Risk Management.
E-mini S&P (September)
Monday close: Settled at 2779.75, down 4.75
Fundamentals: Risk-off sentiment is sweeping through global markets after President Trump fired back at China Monday night. He instructed the U.S trade representative to identify $200 billion worth of Chinese goods to impose a 10% tariff. In the “tit for tat” fashion that we said was not priced into the broad market with the NQ only 0.5% from its all-time high in Sunday’s Tradable Events this Week, China retaliated right back.
China’s Commerce Ministry said it will protect its interests and take “qualitative and quantitative” counter measures if the U.S publishes additional tariffs. Folks, if this becomes official and each side moves forward with these new threats, we then have a full-blown trade war and one not wholly priced into the market.
The true question becomes: who can hold their breath the longest?
The Shanghai Composite is down 3.8% Tuesday and 8.9% over the last month.
The Hang Seng is down 2.8% Tuesday and 5.1% over the last month.
The S&P 500 (SPX) and NQ are both only 2% from their recent highs, for the NQ that was a record. Now, we do not want to compare China’s and Hong Kong’s benchmarks to that of the U.S., they are apples and oranges; U.S equity markets are the most promising asset class in the world.
On Sunday and Monday, we officially introduced a Bearish Bias for only the second time since late January; with uncertainty freshly in the air we remain very cautious as we await more news.
In other news, the dollar (USD) is higher Tuesday morning as trade uncertainty drags down the likes of many currencies across the globe.
Today’s economic calendar
Comments from ECB President Mario Draghi added pressure to the euro (EUR), that they will remain patient before raising rates and will only do so gradually. This morning, Draghi was dovish emphasizing patience before hiking rates and only doing so gradually.
St. Louis Fed James Bullard was to speak at 7 am EDT.
May building permits were 4.6% below April 2018 and May housing starts were 5% above April 2018.
Wednesday morning, we look to a panel with Draghi and Fed Chair Powell.
Technicals: The S&P traded to an overnight low of 2735.75 before bouncing to 2751.50. Ultimately, the tape is trading around our major three-star resistance level.
Crude Oil (August)
Monday close: Settled at 65.69, up 0.84
Fundamentals: Crude Oil recovered very well Monday as speculation mounted that OPEC will only raise production 300,000 to 600,000 bpd. However, Tuesday morning, Crude Oil is a casualty of the risk-off, trade war fears.
This pins the market back near Friday’s settlement at 64.85 as U.S inventories also come into the picture with estimates and API after the bell. The trade war is the major focus and will stay such through much of today, although OPEC will close out the week and we will surely continue to hear jawboning and gamesmanship for all sides.
Technicals: Crude Oil traded to a high of 65.82 and stalled squarely at key resistance at 65.64-65.80 before failing overnight. There are two levels close together that we are watching to the downside.
Gold (August)
Monday close: Settled at 1280.1, up 1.6
Fundamentals: Gold is losing further ground Tuesday morning despite investors reaching for safe-haven assets such as Treasuries and the yen (JPY) The metal is at the lowest level since December and its appears that Gold is less concerned about a trade war and more concerned with the rising dollar (USD) and four hikes this year. Additionally, the technical landscape has gone from very constructive to extremely poor.
Technicals: Price action is moving below major three-star support at 1277.5-1278.3 which held last week’s selling in check. A close below here keeps the bulls in the driver’s seat. While we see only a minor level at 1267, there is a probably the biggest level of support we have seen in Gold since it neared $1000 that comes in at ...
