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.
Stocks and oil surge higher. Watch for 2900. Crude testing $69. Gold bouncing back $1204.
E-mini S&P (September)
Monday’s close: Settled at 2880.25, up 5.50.
Fundamentals: Equity markets around the globe are lower this morning and the international trade conflict has weighed heavily on the Asian region. Today, the Hang Seng entered a bear market finishing 20% from its January peak. The MSCI Emerging Market Index (futures contract symbol MMEU8) has been flirting with bear market territory for the better part of the last month and after losing another 1% today it has undoubtedly secured such.
Europe is vastly in the red this morning and talks in Brussels Monday between U.S and EU officials failed to yield substance. Today’s weakness comes despite stronger than expected German and Eurozone ZEW Sentiment. In July, this critical data point reached the lowest level since August 2012. However, it has beaten expectations for the last two months.
Investors are clearly taking a more cautious approach with major U.S benchmarks losing ground overnight. Weighing on the risk appetite is China’s promise to retaliate to any new sanctions. We have pointed here many times that China only imported $187.5 billion in U.S goods last year and this begs the questions, what measures will they take.
Today, they promised to respond to the third wave of tariffs worth $200 billion in Chinese goods, what we have called the official start of a trade war, with $60 billion in tariffs on U.S goods. Chinese officials said they will ask the World Trade Organization for permission to impose sanctions on the U.S for violation of anti-dumping policies.
In short, dumping is when a country sells products in another country for cheaper than its home market. China first raised this issue in 2013. All in all, tensions are slowly coming to a boil and though price action in the S&P has been somewhat constructive since Friday considering the landscape (trade and wages), investors’ risk appetite now seems to be catching up.
On today’s economic calendar, we look to JOLT's Job Openings at 10:00 am EDT. Domestically, traders want to keep an eye on Hurricane Florence. It is a category four storm but expected to grow stronger before making landfall Thursday. It will be important to keep an ear to the ground on this development.
Technicals: Monday, price action managed to stay above the 2873.75-2876.75 pivot in what was a constructive session. However, first key resistance at 2887 kept rally attempts in check. Broader global weakness, fundamentally and technically, is weighing on U.S benchmarks and this is priming another test to major three-star support at ...
Crude Oil (October)
Monday’s close: Settled at 67.54, down 0.21.
Fundamentals: While Crude Oil remains in a long-term uptrend, this consolidation phase over the last week has been extremely technical; price action struggled Monday to move through our major three-star resistance (detailed in the Technical section below).
Fundamentally, Iranian supply coming off the market has kept this Crude Oil in a buy the dip mode. Analysts expect Iranian exports to drop by 1.2 mb from their peak of 2.8 mb this spring. The larger issue has become the uncertainty as to where this will be made up. Saudi Arabia promised raising production by 1.5 mbpd in late June, however, we have seen their numbers instead fall.
Washington is pulling out all the stops to encourage countries to increase production; U.S Energy Secretary met with the Saudi Energy Minister Monday and is set to visit Moscow to meet with the Russian Energy Minister this week. Washington does not want gas prices to rise ahead of the mid-term elections.
Tomorrow morning, OPEC releases their Monthly Report.
Hurricane Florence is gaining strength and set to make landfall in the Carolinas on Thursday. While this may not affect Crude prices, there is a pair of storms developing out in the Atlantic that traders should keep an eye on; these could head through the Gulf and add a premium to prices.
Technicals: On Friday, we laid out a roadmap for Crude to repair the damage from last week’s reversal. While price action was constructive into the start of the session, major three-star resistance at ...
Gold (December)
Monday’s close: Settled at 1199.8, down 0.6.
Fundamentals: Gold has continued to battle at the $1200 mark but remains on loose footing given the uptick in trade tensions between the U.S and China. The Chinese yuan (CNY) is weakening again this morning on speculation that China will continue to devalue their currency to make their exports more attractive. This pins the U.S dollar (USD) back to the strongest level against the yuan since August 24. Additionally, Treasury yields have continued to grind higher into this morning after Friday’s read on wage growth beat expectations and this is also not favorable for the price of Gold. JOLTs Job Openings is out.
Technicals: As we said Monday, we are upbeat on Gold until a close below major three-star support at ...
View a short video: Bill Baruch: Trading Futures. Gold, USD, yuan.
Recorded: TradersExpo Chicago July 24, 2018.
Duration: 4:34.
