S&Ps hold support early and rally on news of U.S.-China trade talks resuming.

E-mini S&P (ESU)

Yesterday’s close: Settled at 3008, up 19.00

Fundamentals: Yesterday was a constructive session, pullbacks held technical support before closing strongly on a tailwind from news that the U.S and China will soon resume talks. U.S benchmarks are battling to hold those gains ahead of a pivotal deluge of earnings and after reports the Department of Justice will open a broad review on tech behemoths. The NQ is down more than 0.5% with Facebook (FB), Amazon (AMZN) and Alphabet (GOOGL) all down about 1%. Facebook reports earnings after the bell today followed by Amazon and Alphabet tomorrow. Boeing Co. (BA) and AT&T (T) report before the bell today and I will be joining Mornings with Maria on Fox Business to discuss Boeing at 6:30 am CT.

Also pouring cold water over yesterday’s late rally is Flash PMI data from the Eurozone; German Manufacturing PMI hit a near seven year low. U.S reads are up at 8:45 am CT. Although yesterday’s Richmond Fed Manufacturing was the worst in six years, Philly and NY Fed Manufacturing reads surprised to the upside. There is now a 25% probability the Fed cuts 50 basis points at their meeting next week with at least 25 basis points fully priced-in.

Technicals: Both the S&P and NQ settled on the high yesterday on a tailwind from U.S and China trade news. However, there was no follow-through overnight as price action fell just shy of a thick wall of major three-star resistance.

Crude Oil (CLU)

Yesterday’s close: Settled at $56.77, up 0.55

Fundamentals: The price of crude oil whipsawed yesterday when API released their private inventory survey. All in all, the bullish headline draw of 10.961 mb was offset by large builds in the products and price action has been sideways into this morning. Flash PMI data is front and center early this morning and German Manufacturing PMI trekked to seven-year lows. The U.S reads are due at 8:45 am CT. These results factor into demand expectations and don’t forget one day ago, the IMF released stable global growth projections. An upbeat narrative on U.S and China trade with a fresh round of talks coming down the pipeline has worked to keep risk-sentiment on an uptick. Today’s EIA data is expected at -4.011 mb of Crude, -0.730 mb Gasoline and +0.499 mb Distillates. The API data showed a composite draw of 5.105 mb, this was largely in-line with EIA estimates for a composite draw of 4.242 mb. Traders showed not only keep an eye on headline Crude numbers, but this composite and how well production bounced back from Tropical Storm Barry.

Technicals: We have been neutral crude oil this week as we await prices to stabilize from last week’s fallout. There is no reason for us to change this bias ahead of today’s data, however, as we have noted the technical damage last week was immense and could easily lead to additional losses as there is a developing bear-flag pattern. We will turn bearish if price action remains contained below major three-star resistance.

Gold (GCQ)

Yesterday’s close: Settled at $1,421.7, down 5.2

Fundamentals: Gold continues to battle pullbacks despite the U.S. Dollar Index at front month highs for the year. Yesterday, the euro traded to a new front-month low on the year. Given the currency landscape and the fact gold is priced in dollars, this exudes the metals broad strength. Assisting in this broad strength is silver. Gold could not have been able to have such a resilient landscape without silver finally joining the party. Eurozone Flash PMIs were again bad, lifting global sovereign debt yields. Today’s U.S data will be crucial in encouraging the dollar to pare gains lifting suppressing Treasury yields; a perfect recipe for the metal.

Technicals: Price action is going through similar gyrations to when it was trading between $1,400 and $1,410 from July 11 through July 17. Gold is holding a close above $1,420.2 and testing major three-star support.

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

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