S&P Earnings Watch. Crude in Saudi Flux. Gold Climbs. USD, Yuan Weak

10/15/2018 10:21 am EST


Bill Baruch

President and Founder, Blue Line Futures

Bill Baruch, president and founder of Blue Line Futures, previews E-mini S&P, Gold, Crude, Forex 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 Oct. 15 here.
Stocks, oil and gold mixed to start the week Monday. S&P starts to putter. Market struggles with 200-DMA. Watch 2753. Profit taking Crude.

E-mini S&P (December)

Last week’s close: Settled at 2768.50, up 23.00 on Friday and down 125.50 on the week.

Fundamentals: U.S. benchmarks are lower to start the week as they consolidate from Friday’s bump up into settlement. In fact, after Wednesday’s bloodbath, buyers stepped to the plate both Thursday and Friday ahead of the close. On the surface, this is a sign of stability, not one of continued turmoil.

While benchmarks in Europe are unchanged today, those from Asia are getting throttled; the Nikkei is -1.9%, the Hang Seng is -1.4% and the Shanghai Composite is -1.5%, pinning it at the lowest level since November 2014. Stocks from the U.S. and those from around the globe diverged sharply after the selloff in February. Something had to give with many benchmarks entering bear market territory while the U.S. set record highs daily. This will place an even stronger emphasis on earnings; if the numbers show up as we approach a seasonally bullish time of year, U.S. benchmarks can certainly finish the year higher than where we are this morning.

This week, 54 companies listed on the S&P 500 (SPX) report earnings. Bank of America (BAC) is up more than 1% this morning after beating earnings. On Friday, solid earnings from JP Morgan (JPM) led the banks higher early. However, fading the post-earnings rally in banks has become a trend this year and the Financial Select Sector SPD Fund (XLF) traded as much as 3.2% from its session high and down more than 1% before finishing near unchanged. We point this out because with Goldman Sachs (GS) and Morgan Stanley (MS) reporting tomorrow, it will not be the day’s reaction that matters most but where the banks finish the week. A strong finish for the XLF above Wednesday’s close of 27.21 would go a long way in showing stability.

Geopolitical concerns are as relevant as they have been all year. The White House battled weakness last week by pointing to progress on the trade front between the U.S. and China with President Trump scheduled to meet with President Xi next month. However, the disappearance of a Saudi journalist has begun to dampen Saudi – U.S. relations. There are beliefs that the journalist was killed in a Saudi consulate in Turkey and if true President Trump has threatened “severe punishment.”

The market surely has its hands full and in our Tradable Events this Week, we focused on rising Treasury yields as the straw that broke the camel’s back. This morning, Retail Sales was poor while NY Empire State Manufacturing notched a better than expected result.

Technicals: Yes, on Friday we began to introduce a slight Bullish Bias. First, it is important to understand that this is not a daily focus, this is with the view that there is value at major three-star support at 2732-2738. This level held perfectly on Friday and ultimately was a pillar on Thursday. Still, the market has not been able to trade out above major three-star resistance at ...


Crude Oil (November)

Last week’s close: Settled at 71.34, up 0.37 on Friday and down 3.00 on the week.

Fundamentals: The disappearance of Saudi journalist Jamal Khashoggi at its consulate in Turkey has left a lot of questions unanswered and has quickly escalated tensions between Saudi Arabia and the U.S. from what was a very friendly relationship otherwise. President Trump has threatened “severe punishment” if it was found true that the journalist was killed in the consulate. The U.S. provides arms to the Middle East nation and there is now a fear that this turmoil could destabilize Crown Prince bin Salman’s throne.

Crude Oil spiked more than 2% higher on the open Sunday night before paring gains into this morning. Saudi Arabia has also turned and threatened to use Crude Oil as a weapon in tensions; Bloomberg has run an article detailing the threats and impact. Traders must keep an ear to the ground and be aware that inventory expectations will begin to trickle out ahead of Wednesday’s official data. November options also expire on Wednesday and this will make for a volatile session.

Technicals: Price action traded to a high of 72.70 last night and even in the midst of fundamental uncertainties driving the tape, the technicals continue to write a road map; major three-star resistance comes in at ...  


Gold (December)

Last week’s close: Settled at 1222, down 5.6 on Friday and up 16.4 on the week.

Fundamentals: Gold is higher this morning as it continues its push from the lowest level since January 2017. The U.S. dollar (USD) is weaker, equity market volatility is higher and geopolitical concerns have up-ticked; this is a perfect stew for higher Gold. Still, the Chinese yuan (CNY) remains weak and Treasury yields elevated, and both are holding back a true recovery of the metal. In Sunday’s Tradable Events this Week, we laid out the landscape on this week can and will likely be focused on Fed speak. This morning, Retail Sales missed but NY Empire State Manufacturing came in better.

Technicals: Gold opened Sunday night on a very firm note but is seeing profit-taking and repositioning from the bears well ahead of the psychological barrier at 1250. Ultimately, major three-star support at ...  

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View a short video: Bill Baruch: Trading Futures. Gold, USD, yuan.

Recorded: TradersExpo Chicago July 24, 2018.
Duration: 4:34.

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