Bill Baruch President of BlueLineFutures.com, breaks down moves in major markets.
E-mini S&P (ESM)
Yesterday’s close: Settled at 2926.25, down 4.50
Fundamentals: U.S benchmarks came in a bit overnight but have worked back to unchanged with the first look at U.S Q1 GDP at 7:30 am CT in the crosshairs. Expectations are set at 2.0% and this would be the lowest since Q1 2017 and the third straight lower quarter read since peaking in Q2 last year. Our narrative remains that good news is good news for equity markets given that we are a long way from reinvigorating probabilities the Federal Reserve tightens this year and bad news will weigh on the tape and sentiment. In fact, just last night White House Chief Economic Adviser Larry Kudlow reiterated pressure for the Fed to cut rates this year. This morning, the CME FedWatch Tool shows a 39% probability the Fed leaves rates unchanged in 2019 with the rest of that pie signaling a cut.
On the earnings front, Intel Corp. (INTC) is grabbing headlines plunging more than 7% on a weak outlook in their report after the close yesterday. This has weighed broadly on the chip sector with NVIDIA (NVDA) and Micron (MU) both taking a hit while Advanced Micro Devices (AMD) is holding in. Amazon (AMZN) reported better earnings last night but is up less than 1% with some argument that the better results were already perfectly priced-in. Much anticipated earnings from energy giants Exxon (XOM) and Chevron (CVX) due this morning.
Technicals: Price action across major indices pulled back in a health manner yesterday. The S&P jolted through major three-star support at 2920.50-2923.50 early in the session before finding our next level at 2914.75 and regaining 20 points into midsession. Another wave of weakness ensued ahead of the bell and major three-star support has overall buoyed the tape at the onset of U.S hours despite a session low of 2917.25. There has been a streak of consolidatory lower highs since Tuesday evening which is creating a trend line resistance overhead but also something that could be developing into a bull-flag-like pattern. +
Crude Oil (CLM)
Yesterday’s close: Settled at $65.21, down 68¢
Fundamentals: Crude oil has slipped to last Friday’s level giving up all this week’s gains. Price action got hammered ahead of settlement yesterday and this was another example where the market profile simply became exhausted. The fuel driving this week’s rally was the White House announcing the reimposition of sanctions beginning May 2 for importing Iranian oil. But sentiment has seemed to come in with hopes that Saudi Arabia and other members of OPEC will be quick to fill this gap or the U.S will give last minute waivers to some countries, in particular China.
Technicals: Major three-star resistance at $66.27 to 66.60 held perfectly this week and that is exactly why we never got more than slightly Bullish.
Gold (GCM)
Yesterday’s close: Settled at $1,279.7, up 0.3
Fundamentals: Gold is moving higher despite blowout U.S Q1 GDP results. In fact, gold is not the only asset defying odds this morning as U.S Treasuries are ripping higher in what anyone would expect to be a down-tape after the 3.2% read crushed the 2.0% expectations. We are not arguing with what these markets are telling us as we have been long-term constructive and upbeat on gold and U.S Treasuries because of our firm belief that rates around the world and the Eurozone will be negative again this year.
Technicals: Gold is firmly out above the $1,280.8 mark. This was a clear hurdle all week and the metal must close out above here today, or it faces a failure.
Bill Baruch provides technical levels on all markets throughout the week at BlueLineFutures.com
