US equities indexes are higher today. Crude may recover from 3% loss Monday, with a view of U.S.-China talks. Bill Baruch, president and founder of Blue Line Futures, previews E-mini S&P, Gold, Crude, Forex and Treasury markets and today’s economic calendar.
Bill Baruch’s FX Rundown for Dec. 10-11 here.
Euro retreats. Pound slips. Yen spikes, fails. Aussie lower, CAD bleak.
Bill Baruch’s Midday Market Minute short video for Dec. 11 here.
Stocks start to slide into the afternoon
E-mini S&P (December)
Monday’s close: Settled at 2643, up 7.00.
Fundamentals: U.S. benchmarks are higher this morning; clearly we weren’t the only ones finding value in the bottom-half of the 2600’s and below. More importantly, the world did not fall apart when the S&P (SPX) took out the October low of 2603 and by nearly 1%, mind you. We will dive deeper in the ‘Technical’ section below, but in Monday’s Midday Market Minute, we discussed how there was tremendous volume traded in the 2580-2590 region in the first half of the year and said that should be and it was supportive. Furthermore, the NQ took out its October low during the Thanksgiving week and the market did not roll over. Ultimately, our line in the sand, considerably a generational line that defines the broad uptrend in U.S stocks (discussed below) held a direct test Monday.
Early momentum was created through Monday’s hold and recovery, but today’s tailwind comes from positive news on the U.S. and China trade front. There are reports that Treasury Secretary Mnuchin, U.S. trade representative Lighthizer and Chinese Vice Premier Liu He had a productive call to reassure that the path set forth at the G-20 Summit is still being trekked.
Markets are also finding a boost from reports that this new round of trade talks will remain separate from the noise surrounding the Huawei arrest. To get the ball rolling, this morning China announced it plans to reduce tariffs on U.S. car imports to 15% from 40%.
On our radar this morning is a meeting between President Trump and top Democrats in an attempt to make headway to avoid a partial government shutdown set to begin on December 21. Also, we continue to keep an eye on the Brexit news; the British pound (GBP) is recovering a bit as it is reported the Parliament plans to vote on UK Prime Minister May’s framework before January 21. She will use this time gather support. We maintain that the potential of a failed Brexit deal has been weighing on markets.
Today’s economic calendar brings Producer Price Index reports for November. The Producer Price Index for final demand edged up 0.1 percent in November, seasonally adjusted, the U.S. Bureau of Labor Statistics said. Final demand prices advanced 0.6 percent in October and 0.2 percent in September.
A number that has been hot of late given the increased producer prices because of trade war costs. Also, an inversion culprit, the 3-year Treasury, gets auctioned at 1 pm EDT. The more closely watched CPI read is due tomorrow.
Technicals: Monday’s recovery stopped exactly at our major three-star resistance at 2648.25-2651.75 but the consolidation pullback was extremely constructive holding ground at crucial support at ...
Crude Oil (January)
Monday’s close: Settled at 51.00, down 1.61.
Fundamentals: Crude lost 3% Monday with the global risk appetite and stronger U.S. dollar (USD) dragging commodities. A failure to technically get out above major three-star resistance also led to liquidation of longs. The market is regaining a portion of Monday’s losses with positive developments on the U.S. and China trade front bringing support. Another hold at the $50 level is acting constructively and early expectations for a drawdown in Crude stockpiles by 2.94 mb has also brought a bit of tailwind. Traders want to keep an ear to the ground on developments between the U.S. and China, this is certainly taking the reins on the global risk appetite this morning. The private API inventory survey is due later today at 4:30 pm EDT.
Technicals: As we noted here Monday, we expected a test to the $50 mark. Monday’s low was 50.53 and a higher low of 50.70 on today’s session has led to a technical tailwind to couple with fundamental developments. The technicals are straightforward; we have multiple key levels that bring headwind from ...
Gold (February)
Monday’s close: Settled at 1249.4, down 3.2.
Fundamentals: Gold is again holding ground above the psychological $1250 area and seeing a boost from dollar weakness. First and foremost, the positive developments on the U.S. and China trade front have again strengthened the Chinese yuan (CNY/USD) by 0.2% against the dollar. Better than expected Sentiment data from German has boosted the euro (EUR) while the British pound is seeing a bounce from Monday’s news and an overall good jobs report from the UK. Given the good news and strength in equity markets broadly, Treasuries are off their overnight highs and this dynamic will be crucial to watch for Gold as we near the ECB’s policy meeting Thursday and the Fed’s next week. U.S. PPI data was higher than expected this morning as producer prices continue to surge due to the trade war. Tomorrow’s CPI read is much more crucial.
Technicals: Our narrative is that of a broken record, we remain unequivocally bullish Gold. Still, traders must realize that major three-star resistance at ...
