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 and short Midday Markets video.
Bill Baruch’s Midday Market Minute video here.
U.S. and China set to resume trade talks. Market impact?
E-mini S&P (September)
Monday’s close: Settled at 2803.25, down 14.25.
Fundamentals: The market has dived head first into a critical stretch. On this last day of the month, the Federal Reserve begins a two-day policy meeting and their preferred inflation indicator, the Core PCE Index, is due at 7:30 am CT.
The Apple (AAPL) earnings report after the bell is arguably the highlight of the day. Last night, data showed manufacturing in China expanded less than expected and the Bank of Japan left their ultra-loose monetary policy open-ended.
Headlines this morning point to slowing European growth and while this is true, it is the least important part of their data set to know; Eurozone CPI was stronger than expected at 2.1% and no one is talking about how German Retail Sales crushed expectations. From a currency perspective, this puts pressure on PCE to show up at or better than the 2% expected.
A slew of earnings before the bell include Procter & Gamble (PG), Pfizer (PFE) and Charter Communications (CHTR). It is easy to forget amid this jam-packed stretch that the White House is expected to impose $16 billion in tariffs on Chinese goods Wednesday. This brings a cloud of uncertainty because while this has been expected, the next steps could be the official start of a trade war between the U.S and China. From our lack of value call here before the open on Friday, equity markets have settled in well. On CNBC’s Trading Nation on Friday afternoon we further emphasized for traders to be patient and when discussing the NQ, we pointed to strong support at 7175-7200 aligning with that from Apple at 188-190. Bill Baruch talked about Gold on CNBC's Trading Nation on Friday, click this link to watch.
Given the resilience from Monday’s weakness as long as inflation does not run very hot, we believe the market is due for a consolidation day slightly higher at minimum as investors look ahead to Apple’s earnings coupled with a Fed drift. However, the caution flag must be raised tomorrow.
Technicals: Price action settled below major three-star support at 2812-2814.25. As we said Monday, this damages the immediacy of the buy-the-dip mode. Furthermore, this level now brings headwind. We have not turned bearish but must be cautious on a technical basis and this means it is more important than ever to not chase a rally today. Traders can look for a buy opportunity upon a test into ...
Today’s economic calendar
Personal Income and Outlays: personal income increased $71.7 billion (0.4%) in June.
S&P CoreLogic Case-Shiller Home Price Indexes 20-city composite was 211.94, up 0.72%.
Chicago Business Barometer ISM rises to 65.5 in July, with new orders and production bolstered as prices paid hits 10-year high.
Conference Board June Consumer Confidence Survey decreased to 126.4 now following an increase in May.
State Street Investor Confidence is 101.7, down 2.1 points on June 26.
Crude Oil (September)
Monday’s close: Settled at 70.13, up 1.44.
Fundamentals: End of the month volatility is kicking in and Monday WTI outgained Brent by nearly a dollar on the session. This came despite the planned 12-hour strike by oil and gas workers in the North Sea, something that could have been seen as a bullish catalyst for Brent. WTI put in a tremendous session but has given back some gains to dip back below the $70 mark this morning.
Monday’s move could be an indication of a bullish inventory report around the corner on that has been simply followed by profit taking. A miss on Chinese Manufacturing data last night has likely dented the complex. With a deluge of data and central bank policy over the next 24 hours to accompany inventories, the U.S dollar will be critical to the trade.
Technicals: Monday’s rip higher cleared major three-star resistance intraday and on a settlement, however, weakness into this morning is concerning on a technical basis after price action failed dead-on at our next key resistance at 70.44 with a high of 70.43. Major three-star resistance at ...
Gold (December)
Monday’s close: Settled at 1231.5, down 1.2.
Fundamentals: The Dollar Index (DXY) continued its slide Monday and into this morning, but Gold is not benefiting. As we sound like a broken record, the Chinese yuan remains the key focal point for trading Gold; this is its third straight session at the lowest level since last June and Chinese Manufacturing missed expectations last night.
U.S PCE data this morning came in light 1.9% versus 2.0% expected and Gold saw a firm spike before settling in. The soft PCE data coming on the heels of stronger than expected Eurozone CPI (2.1% versus 2.0% expected) is something that could gain traction in the currency markets ahead of tomorrow’s Fed policy statement.
Still there is Case Shiller Housing, Chicago PMI and a crucial read on Consumer Confidence this morning. Lastly, after all the hype ahead of last night Bank of Japan meeting, they ultimately left their ultra-loose monetary policy open-ended. However, BOJ Governor Kuroda did say they will allow the JGP to trade off zero. U.S Treasuries have found some support from this and this is another catalyst that could help Gold but takes a back seat to the yuan.
Technicals: The PCE spike hit first key resistance dead-on before falling back. The wall here is clear and concise; we must see a close above ...
