Encouraging Bank Earnings. Crude Awaits Saudi Answers. Gold Holds

10/17/2018 11:34 am EST

Focus: MARKETS

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. 17 here.
Crude drops Wednesday after big inventory build. S&P down to 2775, watching that level. Several things weigh on sentiment, including China, FOMC, volatility.

Bill Baruch’s FX Rundown for Oct. 15-16 here.

 

E-mini S&P (December)

Tuesday’s close: 2817.75, up 68.75.

Fundamentals: U.S benchmarks have settled in a bit with overhead resistance in the S&P (SPX) acting as a crucial line in the sand to overnight price action, one in which we have said a close back above is bullish (more details in the Technical section below). Netflix (NFLX) blew the doors off subscriber growth Tuesday and surged the NQ post-bell, it also brought a late tailwind to the S&P.

Though a tremendous emphasis has been placed on the first FAANG stock to report Q3 earnings after missing Q2, some of the heavy lifting went less noticed; the banking sector held its gains. Defying recent fashion, following earnings beats Morgan Stanley (MS) gained 5.68% and Goldman Sachs (GS) 3.01% while leaders JP Morgan (JPM) and Bank of America (BAC) each gained over 2%. The XLF ETF gained 1.63% but still sits below the crucial level we have pointed to at 27.21 and this is another reason to let the aforementioned overhead resistance resonate. Its number six holding, U.S. Bancorp (USB) reports this morning along with some of the more modest banks. Abbot Laboratories (ABT) also reports ahead of the bell. After the close, Alcoa (AA) will certainly be watched closely for their global pulse.

The geopolitical front appears less favorable this morning. Questions that must be answered soon are still surrounding the disappearance of the Saudi journalist. Secretary of State Pompeo left Saudi Arabia for Turkey as he digs. Ultimately, if Saudi’s throne has had answers this entire time, we could see a wave of risk-off. The euro (EUR) and British pound (GPB) are both down sharply this morning with Brexit talks remaining at an impasse. Domestically, we look to the minutes from the Federal Reserve’s September rate-hike meeting at 2:00 pm EDT. Here though, they were not as hawkish when compared to recent comments from Fed Chair Powell. Still, the Minutes will be dissecting and analyzed per usual. Building Permits and Housing Starts are out and Fed Governor Brainard speaks at 12:10 pm.

Technicals: The S&P hit an overnight high of 2824.25 and gains were capped ahead of major three-star resistance at ...

 

Crude Oil (November)

Tuesday’s close: Settled at 71.92, up 0.14.

Fundamentals: Despite a supportive private API survey after the bell Tuesday, Crude Oil’s gains are dissipating and its down nearly 1% this morning. Weighing on the market is technical resistance, options expiration and a statement by the head of the National Iranian Oil Company calling the White House’s move to reduce Iran’s exports to zero by November 4 a “political bluff.”

API data Tuesday showed a surprise drawdown in Crude inventories of 2.13 mb, Gasoline by 3.4 mb and Distillates by 0.246 mb. However, 1.5 mb were added at Cushing, Oklahoma. This was overall a bullish report, but at these more fickle levels, traders are trained to see confirmation from the official EIA data is out. Expectations are for +2.167 mb Crude, -1.074 mb Gasoline and -1.28 mb Distillates.

Traders must also keep an ear to the ground on developments with the disappearance of the Saudi journalist. If actions are taken against Saudi Arabia, analysts expect they could reduce supply by 500,000 bpd.

Technicals: Crude Oil has pulled back sharply from its overnight high after again failing short of major three-star resistance at ... 

 

Gold (December)

Tuesday’s close: Settled at 1231, up 0.7.

Fundamentals: Gold is holding ground extremely well and trading 0.5% from its overnight low despite the Dollar Index (DXY) gaining 0.4% and the U.S. dollar (USD) gaining 0.25% against the Chinse yuan (CNY). Geopolitical uncertainties tied to the disappearance of the Saudi journalist, a Brexit impasse and a softer risk-on sentiment around the globe have all supported the metal. It is great to see Gold exude its safe-haven characteristics in the face of dollar strength. Building Permits and Housing Starts missed this morning and this has kept buyers at the table for the metal. Later today Fed Governor Brainard speaks, Bundesbank President Weidmann speaks at 12:30 pm EDT and the Federal Reserve release the minutes from its September rate-hike meeting at 2:00 pm EDT.

Technicals: Gold has exemplified the characteristics of a commodity in a bull-market, not simply of one that is in a dead cat bounce. Still, we must see more, but this is a terrific start considering that CoT Managed Money was at record net-short position as of last Tuesday. The overnight pullback battled tremendously against 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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