Major markets are consolidating around support levels after last week’s sell-offs, notes Bill Baruch, President of BlueLineFutures.com
E-mini S&P (ESM)
Last week’s close: Settled at 2831.75, up 12.25 on Friday and down 30.25 on the week
Fundamentals: U.S benchmarks are holding ground near unchanged after the holiday weekend. Friday was a firm session and buyers steadfastly defended technical support despite a deteriorated trade narrative ahead of the long weekend. After recent Purchasing Manager Index reads were some of the worst on record, the U.S 10-year Treasury note is trading at the highest level since November 2017 and the 30-year Treasury bond at the highest level since January 2018. In other words, Treasury yields are roughly at 18-month lows. There is a 77.2% probability, based in Fed Fund futures prices, the Fed cuts rates this year, the highest yet. The news cycle has been quieter than we have become accustomed to and today we look at data to potentially stir or boost sentiment. The Case Shiller House Price Index is due at 8:00 am CT and a crucial read on May Consumer Confidence is due at 9:00 am CT. Today, the Treasury releases a deluge of supply with six-month Bills and two-year Notes due at 10:30 am CT and 3-month and 5-year Notes due at noon CT ($81 Billion between the 2 and 5-years).
Technicals: Friday’s session was overall range bound. Major three-star resistance in the S&P 500 at 2839.25-2842 has kept a lid on rally attempts while key resistance in the NQ at 7356 has also proved to steady. The bulls must achieve a close above 2839.25-2842 in order to technically neutralize the most recent wave of weakness in the back-half of last week. However, it is not that easy. Trend line resistance from the record high comes in at 2850 today and price action broke below a wedge pattern that developed from this resistance and the May 14 low. The S&P now needs to close back above the trend line and furthermore above 2857.50-2860.25 to turn near-term bullish.
For the NQ, there is a strong wave of resistance at 7391.75 and then with major three-star at 7410-7434.75; a close above here is needed to neutralize its breakdown that incurred a lower low Thursday and a bearish tail Friday. However, only a close above 7501-7511.50 is bullish in the near-term. Today the downside, the S&P would confirm continued weakness by closing below 2818.50-2822 or trading below 2805.85-2807 intraday. Our major three-star support in the NQ which we called to be tested last week has been strong, however, the NQ must take this out if it will continue to lead the way lower.
** We believe the above will provide a playbook through tomorrow’s session. The Morning Express will not go out tomorrow morning. Updated levels will be sent out after today’s close**
Bias: Neutral
Resistance: 2839.50-2842***, 2850**, 2857.50-2860.25***, 2870.75-2872.50***
Pivot: 2831.75
Support: 2818.50-2822***, 2805.75-2807***, 2799.75**, 2789***
Nasdaq 100 (NQM)
Resistance: 7356**, 7391.75**, 7410-7434.75***, 7468.25-7475**, 7501-7511.50***
Pivot: 7326
Support: 7308-7315**, 7241-7276***, 7093***
Crude Oil (CLN)
Last week’s close: Settled at $58.63, up 0.72 on Friday and down $4.29 on the week
Fundamentals: Crude oil is consolidating higher after its worst weekly loss since Dec. 17. The geopolitical news cycle from U.S-China trade to OPEC and the Middle East has been overall quiet. Last week’s bloodbath was driven by deteriorating trade talks between the U.S and China but potentially even more so by bloating inventories in the U.S during what is typically a season to see these reduced. Furthermore, that seasonally bullish time of year has arguably just peaked. The straw that broke the camel’s back was the dismal PMI data as crude plunged during those results. Inventory data will play a crucial role this week but so will the broader economic data if it echoes a trade war and we look to Manufacturing PMI out of China on Thursday night.
Technicals: On Friday, we discussed that the exacerbated drop was due for a dead cat bounce. This is technically what we are seeing. There is a high probability given the amount of technical damage that a low is not yet in. We plan to lean on major three-star resistance at $59.86 to $60.04 as a sell opportunity. However, a close above here will neutralize the overall weakness and a close above the 200-day moving averages at $60.37 will reinvigorate the uptrend.
Bias: Neutral/Bearish
Resistance: 59.86-60.04***, 60.37-60.61***
Pivot: 58.60-58.75
Support: 57.34-57.94***, 55.80**, 54.42-54.52***
Gold (GCM)
Last week’s close: Settled at $1,283.6, down 1.8 on Friday and up 7.9 on the week
Fundamentals: Gold’s recovery through the end of last week on the heels of very poor PMIs is playing out to be nothing more than simply that; a recovery ahead of the long holiday weekend. This morning, the dollar is a tad stronger against each the Chinese yuan and euro. However, Treasury prices and the probability of a Fed rate cut this year have trekked to new highs which the metal has ignored. The data is up next; Case Shiller at 8:00 am CT and a crucial read on May Consumer Confidence at 9:00 am CT. Today is also option expiration for the very popular June contract. There is decent call open interest which kept a lid on rallies, however, the put Open Interest begins to pick up at the 1275 strike. Look for 1275 to be a floor today unless Consumer Confidence is a blowout number.
Technicals: Gold struggled to extend gains out above major three-star resistance at $1,282.4 despite consecutive closes notching such. First key support comes in at $1,275.9 and we will reiterate what we said last week; gold must hold this to remain constructive off its recent low. However, a close below here will encourage additional waves of selling. Still, we view strong support at 1255.8-1258.9 as a great buying opportunity.
Bias: Neutral
Resistance: 1282.4***, 1290.7-1292.4**, 1301.5-1304.2***
Support: 1275.9-1278**, 1264-1267.9***, 1255.8-1258.9***
Bill Baruch provides technical levels on all markets throughout the week at BlueLineFutures.com.
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