A busy week of economic reports and the FOMC meeting will drive markets this week, says Bill Baruch, President of BlueLineFutures.com.
E-mini S&P (ESM)
Last week’s close: Settled at 2941.50, up 15.25 on Friday and up 31.50 on the week
Fundamentals: U.S benchmarks are stable this morning after a strong finish Friday, pulling off support midsession. In this jam-packed week, things got started off with the PCE Index, the Fed’s preferred inflation indicator. The read for March came in below expectations at 1.6% versus 1.7%, however, Personal Spending surged by 0.9%, the largest jump since 2009. Alphabet (GOOGL), Google’s parent company, reports earnings after the bell and tonight we look to Chinese Manufacturing PMI at 8:00 and 8:45 pm CT (state and private reads). The Federal Reserve concludes a two-day policy meeting Wednesday, a fresh round of high-level trade talks kicks off in Beijing Wednesday and the April jobs numbers is due Friday. All of this comes on the heels of Friday’s blowout headline GDP number. A read that has certainly been questioned due to bloated inventories.
Technicals: Price action finished Friday on session highs. For the S&P, that was a new swing high out above resistance at 2935-2939.75. As we discussed, the midweek pullback and construction laid the groundwork for yet another bull-flag-like pattern and a move to new swing highs is a bullish breakout. However, in this case, the all-time highs sit just overhead. On Friday, we said “Ultimately, the bull-flag-like pattern should bring such a strong technical tailwind upon securing a breakout that one does not have to pick the perfect entry and could even wait for a clear breakout to jump aboard.” Today’s pivot is 2935-2939.75 and a sustained tape above here will look to fuel such a breakout. The NQ finished on session highs Friday, but it was the first day that it did not set a record high. Key resistance comes in at 7840.75-7847 and this level is working to keep rallies in check. In fact, we look to this level with more strength than the all-time high of 7879.50 with the path of least resistance truly pointing to 7910-7925. The uptrend remains strong though and Friday’s pullback held major three-star support which aligned the previous record high and a pocket that the NQ tested before breaking out the prior week. Friday’s low will now align with this for a line in the sand to define the immediacy of the uptrend. Above here, a constructive tape will hold supports on pullbacks today.
Bias: Neutral/Bullish
Resistance: 2944.75-2947***, 3025***
Pivot: 2935-2939.75
Support: 2926.25**, 2912.50-2917.25***, 2899-2901**, 2889.50-2891.75***
NQ (June)
Resistance: 7840.75-7847**, 7879.50*, 7910-7925***, 8179***
Support: 7820*, 7806.50-7807.50**, 7795.25-7796.50**, 7728.75-7755.50***, 7703.75**, 7647.75-7664.75***
Crude Oil (CLM)
Last week’s close: Settled at $63.30, down $1.91 on Friday and down 0.77 on the week
Fundamentals: Crude reversed sharply on Friday, giving up all the week’s gains after stalling at major three-star resistance. There were also rumors swirling early Friday that China could potentially see waivers or an extended wind-down time for importing Iranian oil. China imports nearly half of the Iranian oil. Furthermore, President Trump reiterated multiple times throughout the day that he is pressuring OPEC and Saudi Arabia to lower gas prices.
Technicals: Crude did not settle below trend line support from December, which aligns with multiple other technical indicators to create major three-star support at $63.00 to $63.15. We have been upbeat on crude since February and because of this settlement, we will remain neutral/bullish. However, traders must manage risk properly, understanding that there was severe damage done on Friday and on the weekly chart. Only a close back above $63.93 will neutralize that damage.
Bias: Neutral/Bullish
Resistance: 63.93***, 64.44*, 64.72-64.95**, 65.67-65.74**, 66.27-66.60***, 67.95-68.36***
Support: 63.00-63.15***, 61.92-62.28***, 60.79-61.05**
Gold (GCM)
Last week’s close: Settled at $1,288.8, up 9.1 on Friday and up 12.8 on the week
Fundamentals: Gold defied the GDP headline beat on Friday and finished the week on a very strong note. Gold and Treasuries both surged and the dollar lost ground on the session and this was attributed to the fact that the strong growth numbers were due to bloated inventories. Stockpiles in inventories typically weigh on growth in the following quarter. The metal has started this week on soft footing, losing the ground it made up Friday after Consumer Spending surged in March by the most since 2009. Still, the Fed’s preferred inflation indicator, the PCE Index came in softer than expectations at 1.6% vs. 1.7%. This morning, the CME’s FedWatch Tool shows a 64.3% chance the Federal Reserve cuts rates this year and a 35.7% chance they leave rates unchanged. The Fed concludes a two-day policy meeting Wednesday.
Technicals: Price action closed strongly on Friday and out above the $1,280.8 pivot, however, it did fail at major three-star resistance at $1,291.3 and the sellers have stepped in to start the week. The $1,280.8 pivot is back in the mix and will be crucial on today’s close, below here it will keep the bears in the driver’s seat; until this is confirmed we will keep a slight bullish bias carried from Friday’s action. First key support comes in at $1,273 and move below there today is a failure.
Bias: Neutral/Bullish
Resistance: 1285.7**, 1291.3-1291.7***, 1301.5***
Pivot: 1280.8
Support: 1273-1276.7**, 1267.9*, 1255.8-1258.5***
Bill Baruch provides technical levels on all markets throughout the week at BlueLineFutures.com
