U.S benchmarks consolidated through a quieter session, anticipating Fed Chair Powell’s Congressional testimony and deluge of data, writes Bill Baruch, President of Blue Line Futures.
E-mini S&P (ESH)
Yesterday’s close: Settled at 2791.50, down 5.50
Fundamentals: U.S benchmarks consolidated through a quieter session than anticipated yesterday given Fed Chair Powell’s Congressional testimony and the deluge of data. Powell stayed the course exuding patience in digesting the effects of previous rate hikes before jumping to the next. The odds of a March hike are now back to 0% from 5.2% 24 hours ago. He showed concerns for global growth, especially China although U.S growth remains steady. Housing data yesterday was poor but was offset by a recovery in February Consumer Confidence. The S&P intraday never slipped below the battleground that was Friday’s settlement, however, a late rally failed, and price action dissipated into the overnight. The CME experienced complications last night and the exchange was halted until 9:45 pm CT.
Fed Chair Powell testifies for the second and final day to the Senate Banking Committee at 9:00 am CT, but he is not the only one before Congress. U.S Trade Representative Robert Lighthizer testifies to the House Ways and Means Committee at 8:00 am CT on trade talks with China and potential auto tariffs on the EU. President Trump’s former lawyer Michael Cohen is also in the news testifying before the House Oversight and Reform Committee at 9:00 am CT.
Today, President Trump is expected to meet with North Korean dictator Kim Jong Un in Vietnam where he hopes to take steps in denuclearizing the rogue country. At 9:00 am CT we look to a key read on December Factory Orders and Pending Home Sales. On the earnings front, Chesapeake Energy (CHK), Lowe’s (LOW) and Best Buy (BBY) are all up strongly premarket after reporting this morning. Traders should keep an eye on the banks as they began to show some vulnerability yesterday after closing off a new swing high Monday.
Technical outlook of ES, crude and gold from Monday
Crude Oil (CLJ)
Yesterday’s close: Settled at $55.50, up 0.02
Fundamentals: Crude oil spiked late yesterday after the private API survey posted -4.2 million barrels crude oil and -3.8 million barrels of gasoline, a large draw when a small composite build between the two was expected. The effects of reduced exports from Saudi Arabia and Venezuela coupled with pipeline constraints out of Canada at the onset of a seasonally bullish time of year have clearly begun to trickle into the inventory data. If these API numbers are confirmed by the official EIA report, we are likely to see sustained price action testing last week’s swing high. Production data and levels at Cushing should also be closely watched. As of late yesterday, crude oil did not seem to be affected by rising tensions between Pakistan and India. However, this could be quickly changing, and traders must monitor the situation closely. Still, it does not seem that shipping lanes are in the crosshairs, but the mounting tensions seem to be turning worse this morning.
Furthermore, India is a large importer of crude oil and we could imagine that the weaker Indian rupee could derail imports if it persists.
Technicals: Crude Oil’s healthy pullback over the last two sessions ultimately did nothing wrong and never settled below major three-star support at $55.44-$55.75.
Gold (GCJ)
Yesterday’s close: Settled at $1,328.5, down 1.1
Fundamentals: Gold is trading lower but holding in a tight consolidation range. Treasury prices are sharply lower today for no foreseeable reason other than stable data out of Europe. German 10-year Bund yields are up sharply this morning to the highest level in two weeks. Confidence and climate data from Europe over the last two sessions was much more stable than anticipated and showing a bit of a turn around. However, the dollar is higher today (after the euro finished strongly yesterday) and this creates a bit of a double whammy for the metal. On a positive note though, gold continues to hold ground constructively. Today, we look to the trio of Congressional testimonies from Fed Chair Powell, U.S Trade Representative Lighthizer and President Trump’s former lawyer Michael Cohen; all three could have an effect on currencies, yields and thus gold. At 9:00 am CT we look to a key read on December Factory Orders and Pending Home Sales. We are surprised this morning that the metal has ignored escalating tensions between two nuclear countries; Pakistan and India. Keep an ear to the ground.
For a full view of our technical outlook on these market and more, including specific support/resistance levels throughout the week go to Blue Line Futures.
