Bill Baruch's Midday Market Minute short video for Oct. 5 here.
Bill Baruch’s FX Rundown short video for Oct. 4-5 here.
E-mini S&P (December)
Thursday’s close: Settled at 2907.75, down 23.75.
Fundamentals: Thursday, we went outright Bearish and our timing was impeccable. We have had a minor Bearish Bias for three weeks now and traders could have capitalized by selling rallies. This was only our third such Bearish instance this year as we are long-term Bulls.
Still, traders must remain nimble; more details in the Technical section below. Thursday, we said the new big elephant in the room is rising Treasury yields which will impact the bottom line of companies.
To the further the point, it is not the higher yields themselves, it’s the velocity in which they rise. In January, the 10-year yield rising by 0.50% over two weeks was a major catalyst in the sharp correction. Although the 10-year did stabilize Thursday and so did the broader equity market, it still has risen nearly 0.40% in two weeks.
Pushing yields has been robust economic data and hawkish Fed speak. These narratives are front and center this morning. Nonfarm Payroll is out. Wage growth is the key component and the August read at 0.4% in September showed the best growth since December.
The question this morning will be whether we see a stable follow-up number. Furthermore, will August be revised? Revisions lower have been the trend in 2018. A strong number will again accelerate yields as it speculatively solidifies at least quarterly hikes by the Federal Reserve.
It’s tough to say whether a miss would immediately boost stocks given the comments from Fed Chair Powell and other strong data points; call our trade desk to talk about it, 312-278-0500.
Job growth will be watched, expectations are for 185,000. The private ADP survey on Wednesday printed 230,000. This was largely a surprise given Hurricane Florence. While a weak number is likely to be written off, a strong number will only support the recently robust data.
Technicals: Thursday, we said, “The technical and fundamental landscapes are colliding in a manner that signals lower prices are on the way.” Once first key support at 2919-2922.50 which aligned with a crucial trend line from the June lows was taken out intraday Thursday, the selling picked up. Furthermore, it accelerated below last week’s lows and 2899 just as we expected.
In true fashion, traders must be nimble, especially after seeing a range of 38.50 points Thursday against our third tier of support when the 14-day Average True Range is 21.50. Below (SPX) 2884.50-2887.75, there are two significant layers of support that cannot go unnoticed and the first aligns multiple technical indicators as well as an initial swing high, a recent swing low and most importantly a trend line from the May 3 low. Major three-star resistance now comes in at ...
Crude Oil (November)
Thursday’s close: Settled at 74.33, down 2.08.
Fundamentals: After being Bullish for weeks and months, we went completely Neutral on Crude Oil Thursday and this was a good thing. The market shed 2.7% and while several direct bearish market factors encouraged our decision to do so, it was also dragged down by a much softer risk sentiment.
It was only a matter of time before Wednesday’s bearish EIA report trickled into the tape to encourage profit-taking at minimum. Maybe the catalyst was Saudi Arabia and Russia saying they will add production. Whatever the key narrative is, we are not bearish Crude Oil. This is a healthy correction; the longer-term fundamentals remain bullish and we will wait for a strong technical setup to again step to the plate. Baker Hughes rig count is at 1 pm EDT.
Technicals: Thursday’s settlement fell beautifully right at our second tier of support. This is our pivot today and a close below here will encourage further profit taking down to ...
Gold (December)
Thursday’s close: Settled at 1201.6, down 1.3.
Fundamentals: Nonfarm Payroll was a mixed report; Average Hourly Earnings was in line with expectations at 0.3% but the August growth became the latest casualty to revisions coming back down from 0.4% to 0.3%. Although job growth came in shy of expectations, Hurricane Florence was known to hold this back.
The biggest highlight was that August’s job growth was revised higher from 201,000 to 270,000. Overall, we can make the argument that this was soft given the Average Hourly Earnings revision.
We have been upbeat Gold, and this certainly gives us no reason to change that opinion. What we do love is the fact that Gold has held extremely well this week during China’s Golden Week. Gold has traded lower for the last four years upon this week only to see a relief rally after.
This could be laying the groundwork for a potently bullish technical setup.
Technicals: As stated above, Gold has been extremely constructive through this week and Thursday it settled right at first key support at 1201.6. Although the failure to hold higher prices was disappointing on the session the marginally lower highs and lower lows have developed a miniature bull-flag setup and a move above what is now resistance at ...
Bill Baruch's FX Rundown for Oct. 2-3: Euro bottoms. Yen listless. Aussie subdued. CAD eyes rally.
View a short video: Bill Baruch: Trading Futures. Gold, USD, yuan.
Recorded: TradersExpo Chicago July 24, 2018.
Duration: 4:34.
