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 for Sept. 19
here.
Are stocks topping out? The Russell 2000 and Nasdaq
are both down on the day.
E-mini S&P (December)
Tuesday's close: Settled 2911.25, up 15.50.
Fundamentals: Major U.S benchmarks ripped higher Tuesday in a move that took many traders by surprise, including us. As surprising as it felt, we cautioned clients on fading the rally until the S&P (SPX) tested the front month record at 2917.50 at minimum.
Although, we have been and are still adamant that this market is in a long-term uptrend, this does not mean we are unwavering buyers at these levels in the midst of such an uncertain landscape.
With quadruple witching looming on Friday and the full implementation of the newest wave of tariffs set to go in effect on Monday followed by China's retaliation, this market officially feels overpriced. We have now referenced how the market feels twice. Feel becomes extremely important in such conditions because there are not many true fundamental or technical indicators that are screaming an alert at this moment. This is where experience comes to the plate.
Tuesday, the S&P trekked back more than 1% off the overnight low to set a new front month all-time high. The Dow (DJIA) extended gains to the highest since the February selloff, however, recent price action in both the NQ and Russell 2000 (RUT) have lagged and they are trading well below their late August record highs. It is important to remember that the NQ and Russell 2000 were both leaders through August and the fact they are lagging 'feels' as if investors are stretching for value without true leadership; one that we have referred to as a 'gasp for air'.
Today's economic calendar brings Building Permits and Housing Starts. We also look to further developments on the trade front between the U.S and Canada as representatives meet today. Though the emerging market picture does look healthy this morning after China promised to not devalue the Chinese yuan (CNY) and major banks have called for value in this sector versus U.S equities, traders must be cautious trusting this bounce.
Technicals: Our tone has shifted to our most cautious yet on this particular rally. Price action tested first key resistance yesterday at 2917.50 with a new front month high of 2917.75. We have also raised our long-term upside target to a rare major four-star resistance level and the line in the sand has been drawn; we like selling this market until a close above here. Today, we must see a close below.
Mike Larson's Trading Lesson: Will China play "Trump Card" in trade war? Watch bonds.
Crude Oil (November)
Tuesday's close: Settled at 69.59, up 0.91.
Fundamentals: Inventory data comes into focus today with the official EIA Weekly Petroleum Report. Tuesday's API data showed a surprise build of 1.25 mb, however, price action has held steady just below the $70 mark as traders await the official and pivotal EIA read.
API also reported the products to be roughly flat against each other (-1.485 mb Gasoline and +1.536 mb Distillates). Overall, this report was more bearish than expectations though traders seem to be in no rush to sell unless it is confirmed today by EIA and furthermore, because of the longer-term supportive fundamentals we spoke of yesterday. We remain unequivocally intermediate and longer-term bullish and a healthy session today will go a long way in supporting constructive near-term technicals.
Technicals: Price action pushed first key resistance yesterday morning and did so again today with a lower high. There is clear hesitance from buyers to step in at these levels ahead of a such a fundamentally driven session. A close above first key resistance will continue to lay strong technical groundwork for higher price action. Tuesday's pivot is now first key support and the bulls will remain in the near-term driver's seat if price action holds this level through today's session.
Gold (December)
Tuesday's close: Settled at 1202.9, down 2.9.
Fundamentals: Gold is higher this morning and responding to comments from Chinese officials that they do not plan to devalue the yuan in order to fight the latest round of tariffs. The U.S. dollar/Chinese yuan (USD/CNY) relationship remains an extremely integral part of the Gold trade, more so that what we see in the Dollar Index (DXY) which is 57% the euro (EUR).
On a technical basis, traders must keep an eye on two levels in both relationships; the 50-day moving average in the dollar/yuan comes in about -0.5% below the current price of 6.852 and the 94.00 floor in the Dollar Index; a move below both of these should encourage follow through and continue to relieve safe haven value from the dollar while breathing life back into Gold.
Also supporting Gold this morning is a much stronger than expected read on UK CPI. Housing data from the U.S. was mixed this morning; Building Permits missed largely and Housing Starts beat largely.
Technicals: Price action is very firm this morning and we are seeing another attempt at first key resistance. Ultimately, there is a strong layer of resistance here and all the way up to ...
View a short video: Bill Baruch: Trading Futures. Gold, USD, yuan.
Recorded: TradersExpo Chicago July 24,
2018.
Duration: 4:34.
