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. 19 here.
Oil regains ground as uncertainty looms ahead of the weekend.
E-mini S&P (December)
Thursday’s close: Settled at 2772.25, down 44.00.
Fundamentals: U.S. benchmarks were tagged severely Thursday. In hindsight, Wednesday’s FOMC minutes left investors with a sour taste and this coupled with another drubbing in China set the table for any bit of uncertain news to be the straw that broke the camel’s back; investors were looking for a reason to sell.
ECB President Draghi was perceived to have taken a harder-line stance on Italy’s budget calling out the frivolous spending and violation of EU rules as having no guarantee of bringing prosperity to the country. He added that it risks growth to the region. At the same time Treasury Secretary Mnuchin pulled the U.S. out of “Davos in the Desert.” First, we have seen this with Cyprus and then Greece, the EU is not going to hang Italy out to dry. Was the market really worried, or looking for a reason to sell?
Additionally, it should not come as a surprise that the U.S. pulled out of the Saudi-led summit. JP Morgan (JPM) and the IMF both canceled their plans earlier in the week and Goldman Sachs (GS) had no plans of being involved. The S&P (SPX) lost as much as 2.1% and the NQ (IXIC) 3% with red across the board. Netflix (NFLX) gave up all earnings gains but more importantly, the Financial ETF (XLF) failed at the 27.21 level we have referred to all week and finished down 1.63%.
Thursday didn’t finish as bad though, below major three-star support in the S&P, our next key support level held perfectly, and markets pared losses into the close. Sentiment seems to be trying to turn a corner this morning and the feeling is that all weak hands were shaken out Thursday.
China opened lower last night, GDP and Industrial Production missed expectations, but the Shanghai Composite has swung from -1.5% to +2.58% on a state-led confidence boost; verbiage and physical buying. Adding to a potential tailwind this morning are reports that President Trump and China’s President Xi will hold trade talks at the G20 Summit on November 29. Let’s also not forget that today is option expiration and the market will surely like to find a nice round number: 2800.
On the earnings front, Honeywell (HON) beat and is up 3.2%. Procter & Gamble (PG), Schlumberger (SLB) and others are also due. Dallas Fed President Kaplan is scheduled to speak at 9 am EDT, Existing Home Sales are out and Atlanta Fed President Bostic speaks at noon EDT.
Technicals: Price action is firming into the morning and regaining a crucial level at ...
Crude Oil (December)
Thursday’s close: Settled at 68.71, down 0.99.
Fundamentals: Crude Oil is battling into the green this morning and finding support from a better global risk sentiment. China started the night on weak footing after GDP and Industrial Production both missed expectations but comments and action from regulators quickly turned sentiment and this has acted as a tailwind for commodity prices.
Data also showed that China’s refinery throughput rose to a record of 12.49 mbpd in September. China is the world’s largest importer of Crude and this is a sign of strong demand coming out of the summer loll season. Heading into the weekend, geopolitical concerns due to the disappearance and death of the journalist should invite buyers to the market. Thursday, Treasury Secretary Mnuchin announced that the U.S. is pulling out of “Davos in the Desert” and today President Trump said there will be “severe consequences” if the death and torture are confirmed after the conclusion of their investigation.
Technicals: Thursday, our major three-star support at ...
Gold (December)
Thursday’s close: Settled at 1230.1, up 2.7.
Fundamentals: Gold has held very firm despite U.S. dollar (USD) strength and there seems to be a combination of geopolitical premium entering the market just as shorts are trickling out of positions. The Dollar Index (DXY) is paring overnight gains and the Chinese yuan (CNY) is backing off overnight lows against the dollar, both trends could prove to be powerful tailwinds for Gold if they continue in such a direction into the weekend given the strong technical landscape.
Technicals: Gold nudged a close above the 1230 pivot Thursday and we said this would ...
View a short video: Bill Baruch: Trading Futures. Gold, USD, yuan.
Recorded: TradersExpo Chicago July 24, 2018.
Duration: 4:34.
