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 brief video here.
Oil prices rise ahead of inventory data.
E-mini S&P (September)
Monday’s close: Settled at 2858.50, up 6.25.
Fundamentals: U.S equity benchmarks extended gains overnight and after settling at the highest level since the record close on January 26. The S&P 500 (SPX) is trading at the highest level since the day it set the record on January 29.
Fundamental anecdotes continue to add fuel to the rally and it was reported Monday that President Trump criticized Fed Chair Powell for moving forward with rate hikes and that he has not been the “easy-money” Fed Chair he expected. He also fired shots at China and Europe for weakening their currencies.
The one-two combination added downward pressure to a U.S. dollar (USD) that had been retreating after reaching the highest level since last June, last week. The dollar’s flight, which is still at 12-month highs, can begin to weigh on multinationals who receive a bulk of income from overseas; a strong dollar can make U.S goods more expensive and thus less attractive.
Although, it has not appeared to hold back the S&P, a weaker dollar would certainly be a tailwind. Furthermore, we expect this weakness to continue; Bill Baruch broke it down Monday on CNBC’s Trading Nation.
Today’s economic calendar is again bare. However, this encourages a stronger emphasis on headlines. President Trump added Monday that he did not think the talks with China this week would go anywhere. He continues to play hardball, that’s his game.
What is most important to the market though is that the third wave of tariffs, $200 billion on Chinese goods, is delayed from next month’s expected implementation. For now, we understand that there is a road map to resolve this dispute by November and stocks are responding. Tomorrow, we look to Existing Home Sales and the FOMC Minutes from the August 1 meeting.
Technicals: Price action pulled back perfectly to first key support at 2849.50. We reemphasized in Monday’s Midday Market Minute that pullbacks to and near this level are buying opportunities. Our Bias is outright Bullish and will remain so unless the market closes below this key level. First key resistance at 2864.50 continues to pose a barrier; look for a close above here to ...
Crude Oil (October)
Monday’s close: Settled at 65.42, up 0.21.
Fundamentals: Crude Oil is edging higher this morning. Today, the untradable September contract falls off the board and this could help encourage a relief rally. Although this is a seasonally vulnerable time of year for price, the market has held in tremendously well. Especially so considering the bearish inventory reports and mountains of Crude Oil being imported by the U.S; but if the last two weeks could not bring the straw that breaks the camel’s back, we just do not see it happening. Ultimately, we believe that this lower price action is opening the door to a longer-term buy opportunity and Bill Baruch laid it out last week on CNBC’s Trading Nation.
Technicals: Crude settled above major three-star resistance at 65.09-65.35 Monday and this opens the door to higher price action. Minor resistance comes in at 65.81 and this held the tape back on Friday, but the bulls are now back in the driver’s seat as long as they can maintain a close above that 65.35 level. While there are headwinds at ...
Gold (December)
Monday’s close: Settled at 1194.6, up 10.4
Fundamentals: Gold started the week off on firm footing and extended gains to an overnight high of 1203.1, but technical resistance (discussed in the Technical section below) has held the metal back from further gains. The dollar has shed about 1.5% against both the Chinese yuan (CNY) and the euro (EUR) and today will find itself at an immediate-term inflection point. In Sunday’s Tradable Events this Week, we broke down what has been driving a safe-haven flight to the dollar. Monday, we further emphasized this narrative on CNBC’s Trading Nation, discussing that the dollar’s best days of this rally are behind it. Monday, President Trump criticized Fed Chair Powell for raising rates and called out China and Europe for weakening their currencies; his proactive stance on keeping the dollar rally in check is great for Gold’s cause. Headlines will remain critical on this quiet day. Tomorrow, the U.S and China are expected to restart talks in Washington though President Trump added he does not think anything will come of it this week as he continues to play hardball. FOMC Minutes from the August 1 meeting are also tomorrow.
Technicals: Price action extended fell shy of key resistance at 1204; we have said Gold must close above here in order to neutralize last week’s move. However, we must ultimately see a move above major three-star resistance at ...
