U.S Benchmarks Extended Gains Overnight

04/16/2019 11:41 am EST

Focus: MARKETS

Bill Baruch

President and Founder, Blue Line Futures

Bill Baruch President of BlueLineFutures.com, breaks down moves in major markets.

E-mini S&P (ESM)

Yesterday’s close: Settled at 2909.50, down 3.00

Fundamentals: U.S benchmarks extended gains overnight and the S&P 500 and Nasdaq 100 are within 1% of its all-time high. Earnings from the likes of UnitedHealth (UNH), Bank of America (BAC) and Johnson & Johnson (JNJ) have helped keep momentum intact early with solid reports.

Better than expected German and Eurozone ZEW Sentiment data has also provided a bit of a tailwind. The German DAX is up 0.65% after the first positive ZEW read since last March. Netflix is chipping-in, gaining more than 1.5% premarket on upgrades ahead of their earnings report after the bell today. The Federal Reserve’s accommodative monetary policy is the largest catalyst for this momentum. We have said for years they are in the driver’s seat and dovish comments from Chicago Fed President Evans yesterday likely buried any thoughts of fading higher prices. But we certainly must not underestimate hopes that slowing growth has bottomed and hopes that earnings defy low expectations.

The market focuses on what it wants and right now it is dialed-in on the growth story, ignoring any hurdles in the way. Yesterday, both Treasury Secretary Mnuchin and President Trump made unfavorable comments toward the ongoing trade talks with China. Mnuchin back-peddled on enforcement while Trump said either way the U.S will win, even if there is no deal. To put this in perspective, there have been many occasions over the last six months that such comments would undermine this positive tape.

On today’s economic calendar, we look to pivotal reads on Industrial and Manufacturing Production at 8:15 am CT. NAHB Housing Market Index is due at 9:00 am CT and Dallas Fed President Kaplan speaks at 1:00 pm CT. Tonight will be crucial as China releases Q1 GDP data, Unemployment and the trio of Industrial Production, Fixed Asset Investment and Retail Sales all at 9:00 pm CT.

Technicals: Price action stayed in check yesterday; there were not new highs in either the S&P and NQ and first key support in both held. We defined the day’s range and there were opportunities to trade from either side of the tape. That hold against key support yesterday underpinned today’s strong tape in which it has skipped over minor resistance at Friday’s high of 2914.75.

Crude Oil (CLK)

Yesterday’s close: Settled at $63.40, down 0.49

Fundamentals: Crude oil saw pressure early yesterday as this week’s OPEC meeting comes into the picture (Wednesday and Thursday). Although Saudi Arabia has steadfastly held to its production cuts and sees no reason to make immediate changes, there is a belief that Russia may not completely agree. Overall, yesterday’s weakness was not groundbreaking stuff and as we discussed here, more likely than anything, this is a simple consolidation lower recalibrating the market profile after last week’s surge could not extend gains. Today’s U.S Industrial Production data contracted, and this may weigh on commodities, however, inventory data is quickly coming into the picture. Look for analyst expectations to trickle out today and move the tape. API is due at 3:30 pm CT.

Gold (GCM)

Yesterday’s close: Settled at $1,291.3, down 3.9

Fundamentals: Gold is nose-diving again this morning and has now broken below support. Better than expected German ZEW Sentiment data has revved up global sovereign debt yields which in-turn has pressured gold lower and even so more since the euro is not green and the metals technicals have given way. The dollar is holding ground today despite a contraction in U.S Industrial Production. NAHB Housing data is due at 9:00 am CT. Tonight will be crucial as China releases Q1 GDP data, Unemployment and the trio of Industrial Production, Fixed Asset Investment and Retail Sales all at 9:00 pm CT.

Bill Baruch provides technical levels on all markets throughout the week at BlueLineFutures.com

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