The stars are forecasting lows in gold and the S&P 500, a high in soybeans and a shift in debt m...
This Week's Major Market Update
04/15/2019 9:30 am EST
Bill Baruch President of BlueLineFutures.com, breaks down moves in major markets.
E-mini S&P (ESM)
Last week’s close: Settled at 2912.50, up 20.75 on Friday and up 16.50 on the week
Fundamentals: U.S benchmarks are holding Friday’s gains as we await earnings from Goldman Sachs (GS) and Citigroup (C). The pair follows a strong showing by JPMorgan (JPM), which gained 4.69% Friday and led broad strength in the banking sector. Coming out of the weekend, positive comments from the IMF that global growth will “firm up” have added to those aforementioned hopes that the downtrend in growth is bottoming (discussed in yesterday’s Tradable Events this Week). Leaders at the IMF pointed to easing tensions on the U.S.-China trade front, accommodative central bank policy and stimulus from China as reasons to be upbeat in the second quarter. Speaking of trade, talks between the U.S and EU are expected to get underway today. Despite threats from each to implement fresh tariffs, markets believe the two sides will hash out their differences.
On today’s economic calendar, we look to a pivotal read on NY Empire State Manufacturing to start a busy week. U.S manufacturing data has disappointed in recent months and this number has missed three out of the last four. Chicago Fed President Evans, a 2019 voter, speaks at noon CT and this evening, Boston Fed President Rosengren, also a 2019 voter, speaks at 7:00 pm CT. These speeches come after President Trump again fired shots at the Federal Reserve on Twitter. This time for holding back growth and stock market gains through Quantitative Tightening. Also, Treasury International Capital flow data is due at 3:00 pm CT.
Technicals: Price action is holding strongly after settling above 2907 on Friday. We believe that doing such paints a path of least resistance to major three-star resistance at 2922.25 as we continue to hold a slight Bullish Bias. Friday’s high of 2914.75 is minor resistance. However, as long as price action holds the 2907 pivot, the bulls are in the clear driver’s seat. In the NQ, our first key resistance level at 7664.75 held perfectly on Friday as the high was 7665. Now, the NQ outpaced the S&P in recent weeks and the bulls are in the driver’s seat above 7604-7617.25. Still, price action must look to feed the bulls’ appetite by getting out above first key resistance today or it certainly faces a reason to consolidate lower and recalibrate its market profile; find a level that does attract fresh buying.
Resistance: 2914.75*, 2922.25***, 2944.75-2947****
Support: 2900-2902.50**, 2891.75***, 2878.50-2882.75**, 2866-2867***
Resistance: 7664.75**, 7703.75**, 7728.75***
Support: 7604.25-7617.25**, 7556-7561**, 7498.50-7519.25***, 7442-7447.50**, 7400.50-7414.50***
Crude Oil (CLK)
Last week’s close: Settled at $63.89, down 0.31 on Friday and up 0.81 on the week
Fundamentals: In the S&P ‘Technicals’ section, we described higher prices in the NQ as a necessity to feed the bulls’ appetite. This is true for any market after elevating. The market profile consolidates and if fresh buying does not show up, the risk of a consolidation lower, at minimum, becomes higher. Many times, we and others attribute this to profit-taking. Simply, this is what we are seeing in Crude Oil as prices have been elevated but unable to ‘feed the bull’s appetite’ by trading to and holding out above the highs set last Tuesday. Although this is very technical, a number of fundamental factors have encouraged this consolidation lower. On Friday, data from Baker Hughes showed the Rig Count bouncing back for the second straight week, now to the highest level in a month. Additionally, there was certainly a fear that violence in Libya could lead to further supply disruptions. This was being priced in Thursday and early into Friday as it left a potential cliffhanger into the weekend as market participants don’t have market access if violence did disrupt supply. Coming out of the weekend, some of those question marks have been answered. Also, traders are in fact taking profit on this run ahead of the start of a two-day OPEC Wednesday. Although the committee is meeting to decide on whether to continue their supply cuts, it is unlikely to decide for at least another month. Lastly, options expiration is tomorrow and after such a run that balloons buying interest, it is typical for the market to establish a ceiling ahead of options expiration.
Technicals: Much of the above discusses a technical theory. As for straight price action, it has now traded below our major three-star support and a level that defines the immediacy of this uptrend at $63.44-$63.70. A close below here today will further encourage a consolidation lower, one that could healthily stretch to our next major three-star support at 61.82-62.27. Only a close back in the green today will neutralize this early weakness and keep the bulls in the term driver’s seat. For now, we are outright Neutral.
Resistance: 64.60-64.79**, 65.74**, 66.43-66.60**
Support: 63.44-63.70***, 62.99-63.08*, 61.82-62.27***, 60.39-60.77***
Yesterday’s close: Settled at 1295.2, up 1.9 on Friday and down 0.4 on the week.
Fundamentals: The price of gold is withering away despite U.S dollar weakness Friday and another lower session so far today. Upbeat comments from the IMF that growth will “firm up” and broad strength in risk-assets have deterred the need for safe-haven buying. Treasury prices followed losses Thursday by diving to new swing lows on Friday and the uptick in yields has clearly outweighed dollar weakness. Price action shook off a miss on fresh April Michigan Consumer data Friday and now we look to fresh April NY Empire State Manufacturing today and comments from two 2019 Fed voters. Although we were upbeat against major three-star support on Friday, we refrained from turning more bullish until gold can show us some technical construction; discussed below.
Technicals: Gold did not show us that technical construction Friday and could not settle out above first key resistance at $1,299.8. Price action has now taken out first key support but do not forget our longer-term major three-star support sits at $1,280.8-$1,287.5. This is at least the third major test into here and traders who are buying into here must, must, must manage risk and protect their downside. We are again neutral until gold can show us construction.
Resistance: 1299.8**, 1306.4**, 1312-1314.7***, 1320.5**, 1330.3**
Support: 1291.9**, 1280.8-1287.5***
Bill Baruch provides technical levels on all markets throughout the week at BlueLineFutures.com
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