Bill Baruch, president and founder of Blue Line Futures, previews E-mini S&P, Gold, Crude, and Treasury markets and today’s economic report calendar. Follow his reports Monday-Friday on MoneyShow.com. Join his presentation at TradersExpo Chicago July 24 on Risk Management.

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Stocks are struggling to gain significant ground above 2800, is a top close?

E-mini S&P (September)

Wednesday’s close: Settled at 2816, up 4.75

Fundamentals: Every market participant knew this day was coming; trade tensions return to the forefront. While acquisitions relevant to U.S and China trade negotiations stemming from Larry Kudlow’s interview escalated overnight, the White House chief economic advisor, the true burden is a weakening Chinese yuan (CNY) and the EU preparing a list of counter measures to U.S tariffs on European autos.

First, the People’s Bank of China fixed the yuan at the weakest level in a year. Although this is an attempt to boost their economy, they are essentially exporting deflation as just about every commodity on our board this morning is in the red.

Second, a potential pact on autos between the U.S and the EU was a major catalyst in bullish price action near the July 4th holiday. Many of the largest hedge fund managers have expressed great concern for trade tariffs but the same number of them believe there is a light at the end of the tunnel; this would surely dim that light.

After the bell Wednesday, IBM (IBM), American Express (AXP) and Alcoa (AA) reported earnings. We said these are very closely on our radar for their global heartbeat. American Express and Alcoa are both down in the 2% ballpark this morning. However, IBM is up almost 2% premarket and working to keep things together. Microsoft (MSFT) will deliver a crucial report after the bell today.

Technicals: Price action did close above our rare major four-star resistance Wednesday but not in a breakout fashion.

Judging such is not easy, but the first question one must ask is whether or not the breakout close was convincing.

Secondly, if one is playing a breakout by remaining long (or short), the position must continue to confirm the exact reason you stayed long. Overall, price action did not confirm either of these into the early part of last night.

So where to now? We still have minor support at 2806.25 which provided a great buy the dip Wednesday morning. Be cautious against here, however, if this holds through the morning it should signal that the day will turn bullish. First key support comes in at ...

Today’s economic calendar

Weekly Jobless Claims are 207,000, a decrease of 8,000 from the previous week’s revised level.

Philadelphia Fed Manufacturing Business Outlook: all the broad indicators remained positive this month, with general activity and new orders indexes improving.

Fed Governor Randal Quarles speaks.

 

Crude Oil (September)

Wednesday’s close: Settled at 67.75, up 0.59

Fundamentals: The Chinese yuan has put a large dent into commodity prices and Crude Oil is no exception. Further pressure is being added due to the uncertainty of trade tariffs between the U.S and both China and the EU. Still, with all things considered, which includes Wednesday’s much larger build than expected.

Crude Oil is holding in fairly well. We find the most concerning factor within the energy complex to be Gasoline. Crude’s unexpectedly high build of 5.836 mb was offset by an unexpectedly high draw in Gasoline of 3.165 mb.

Given this, Gasoline should be leading the way and while the September contract traded about 5 cents off its 1.975 low, price action is very unenthusiastic and settled more than a penny from its high. We will discuss this deeper in the technicals. Lastly, as the yuan depreciates, and EU tariffs are back in the mix, the U.S dollar is ripping. The Dollar Index (DXY) is now at a fresh swing high.

Technicals: Crude Oil is down about 50 cents this morning after stalling directly at first key resistance at ... 

 

Gold (August)

Wednesday’s close: Settled at 1227.9, down 0.6

Fundamentals: Fresh highs in the dollar/yuan has brought fresh lows in Gold and it truly is as simple as that. We may sound like a broken record, but this relationship is driving the price of Gold front and center.

China is trying to boost their economy by weakening their currency and implementing relaxed lending standards, however, all they are doing is exporting deflation to the rest of the world. For what it’s worth, Weekly Jobless Claims and Philly Fed Manufacturing both beat expectations, and this will not help the bull case for Gold. Fed Governor Quarles speaks.

Technicals: This is the washout we spoke of Wednesday, however, it has sliced right through the 1216.1 area, but it will remain critical on a closing basis. Today’s low of 1210.7 is significant not only as support but because the ... 

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