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 short video here.
Are stocks set for a surge higher?

E-mini S&P (September)

Monday’s close: Settled at 2825.50, down 11.25.

Fundamentals: This morning brings a reprieve from turmoil; the Turkish lira (TRY) has bounced back as much as 8% before settling in. The story will continue to develop and an agreement to release the American pastor will certainly be favorable for the global risk appetite.

While the damage to the world’s currency market has been done, we maintain that it is important to not get stuck in the forest so that you can see the trees; there can be a lot of noise in the headlines, especially during slower summer months.

Major U.S benchmarks battled Monday and while banks, materials and energies were under pressure, tech was a bright spot. The NQ is up almost 0.5% this morning and both it and the S&P 500 (SPX) never traded down to Monday’s settlement in the overnight hours; this can set a bullish tone through today. In last night’s FX Rundown, we pointed to economic data out of Europe today as an opportunity to shift gears away from the turmoil in Turkey.

Stronger than expected GDP data from both Germany and the Eurozone has helped this cause and offset weak numbers out of China last night. Even more importantly, earnings are back in focus with a blowout announcement from Home Depot (HD). The stock is up almost 2% and unofficially kicks off a stream of retail earnings this week.

Technicals: Do not ever doubt how technically driven this market is. We have minor resistance and minor support surrounding our major three-star level at 2836-2837 and much of the range over the last 24 hours has stayed contained within here. Support at ...

 

Today’s economic calendar

Import and Export Price Index: Prices for U.S. imports recorded no change in July as export prices decreased 0.5% in July following a 0.2% increase in June.
Retail Sales tomorrow morning is the headliner this week.

 

Crude Oil (September)

Monday’s close: Settled at 67.20, down 0.43.

Fundamentals: There are two characteristics about Monday’s failure at resistance, 3% drop, rejection of a new swing low and reversal to retest unchanged.

The first, it was about as technical as it gets. (We will discuss in the Technical section below.)

The second being very bullish. Price action fell out of bed once it broke key support at 67.04, a level in which we said, “will encourage further waves of selling.” Genscape released data Monday pointing to a build at Cushing last week. Over the last several weeks we have emphasized the importance of draws at Cushing and the market did not digest this news very well; hence the exacerbated selling.

In OPEC’s Monthly Report Monday, they said Saudi output dropped by 200,000 bpd in July; headlines this morning point to this drop as a main catalyst in the positive tape. Ultimately, that’s because there is no other narrative to help explain such a vicious recovery. Realistically though, Saudi Arabia’s drop in July’s output was known at 7:00 am EDT Monday, yet the market still sold off.

Emerging market fears along with Cushing led to selling below 67.04 and the buyers were not lining up during a summer session amid uncertainty. Yes, less output from Saudi Arabia (spare capacity issues) and ongoing concerns with Iran are both reasons at the end of the day why the buyers showed up; both are reasons why we have been bullish, remain bullish and believe this market is heading to $80.

Technicals: Price action this morning is out above 67.70 but a failure to close above here today will be very disappointing and would likely lead to profit taking from the bulls. While 67.70 was not a major three-star level, it was a strong resistance. In fact, major three-star resistance sits at ...

 

Gold (December)

Monday’s close: Settled at 1198.9, down 20.1.

Fundamentals: Gold failed to rally as a safe haven but has held ground this morning amid Treasury yields rising slightly and emerging market fears dissipating. The U.S dollar (USD) has inadvertently been used as a weapon in the global landscape. Whether it be in trade talks or sanctions, the U.S dollar has been the safe-haven play as other currencies are rocked due to new waves of uncertainty.

This has been extremely detrimental to Gold which reached the lowest level since March of last year. The Chinese yuan (CNY) nudged a new low against the dollar overnight after Industrial Production and Fixed Asset Investment data missed. However, it has settled in and Gold did not take out Monday’s low, yet. GDP data out of Europe was stronger than expected and this helped stopped the bleeding in the euro (EUR). Import and Export Price Index is mixed today.

Technicals: Gold settled below 1200 for the first time since January 30, 2017. Really, not all that long ago. It is testing into the March 2017 low of 1194.5 and Monday’s washout was basically a necessary factor after Gold could not gain any traction in the 1220s. For now, we once again must Neutralize our Bias in the near-term until a close back above major three-star resistance at ... 

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