U.S benchmarks are firm this morning and just off record levels ahead of the first look at U.S Q1 GDP, reports Bill Baruch.
E-mini S&P (ESU)
Yesterday’s close: Settled at 3006.50, down 15.00
Fundamentals: U.S benchmarks are firm this morning and just off record levels ahead of the first look at U.S Q1 GDP at 7:30 am CT. The expectations are for +1.8%, the weakest growth since Q1 2017. The Federal Reserve meets next week, and a rate cut of at least 25 basis points is fully priced-in. It’s hard to imagine that even surprise blowout results today in the ballpark of doubling expectations would price-out the odds of next week’s cut. However, it would certainly set a tone for the Fed’s rhetoric, one that extrapolating out, the market may not like so much. For today though, our gut says the market will take today’s GDP data at face value. A much weaker number would pressure the tape where a strong number or something in-line would lift sentiment.
Let’s not forget, we are in the heart of earnings season. Beats from Google (GOOG) and Intel Corp. (INTC) after the bell yesterday who are now up 9% and 4.5% premarket have more than offset underwhelming results from Amazon (AMZN) which is down 1%. Strong numbers this morning from McDonalds (MCD) up 1.75% and Twitter (TWTR) up 5.75% premarket are also keeping a broad bid under sentiment ahead of today’s GDP.
Technicals: Price action did slip sharply from record levels yesterday but remained very stable. The NQ held our exact major three-star support level at 7917.25-7933 all afternoon and even the whipsaw upon earnings held the bottom end of our range perfectly. The S&P was buoyed by 3004.75-3005.50 despite a cup of coffee below. The table is set today with price action already facing our pivots of 3012.50-3015.50 and 8001.50-8012.50. We don’t see these as true resistance levels but instead as momentum indicators; above here the tape is bullish, and the path of least resistance is set for fresh record highs. To the downside, yesterday’s settlement prices bring first key supports and a buying opportunity. However, below yesterday’s low we could see a heavy wave of selling.
Bias: Bullish/Neutral
Resistance: 3023.75-3027.75**, 3044-3057.75***
Pivot: 3012.50-3015.50
Support: 3004.75-3006.50***, 2998-2998.50**, 2987.50-2991.75***, 2977-2978.50**, 2963-2969.25***
NQ (NQU)
Resistance: 8072.50-8076.50***, 8094.50-8100**, 8187.75***
Pivot: 8001.50-8012.50***
Support: 7981.75**, 7917.25-7933***, 7878.50-7887.25**, 7815.25-7842.75***
Crude Oil (CLU)
Yesterday’s close: Settled at $56.02, up 0.14
Fundamentals: Crude oil is at the higher end of the session’s range and stronger than expected U.S Q2 GDP results help offset disappointing manufacturing data this week. This is the quietest near-term landscape we have seen in the sector in sometime. There are headlines pointing to production in Russia recovering from a slower start to the month recovering to a pace of 11.099 million barrels-per-day from 10.79 mbpd mid-month; this would have been the slowest in at least a year. With not a lot of fresh news outside of ongoing tensions surrounding Iran, this could keep a ceiling on rallies given overhead technical resistance.
Technicals: In what has become a rangebound market, we must see a close outside of our major three-star resistance at $56.92 or major three-star support at $54.92 in order to encourage a directional move. Our momentum indicator comes in at $56.28 this morning, above here the bulls have a slight edge while below there the bears will attempt to take the reins.
Bias: Neutral
Resistance: 56.92-57.19***, 58.14-58.49***
Pivot: 56.28
Support: 55.74-55.88*, 54.92-55.10***
Gold (GCQ)
Yesterday’s close: Settled at $1,414.7, down 8.9
Fundamentals: Better than expected Durable Goods, Weekly Jobless Claims and Wholesales Inventories yesterday pressured gold to the lowest close since July 16. The metal is higher this morning despite a stronger U.S Q2 GDP than expected; 2.1% growth versus 1.8% and a surge of 4.3% in Real Consumer Spending. A soft read on Core PCE Prices at 1.8% for Q2 has kept the Dollar from gaining too much ground. This is an inflation indicator and although it recovered from a very soft Q1, it was below the 2% expected which aligns with the Fed’s target and supports their narrative for looser monetary policy. Today will be the last day using August as options expired yesterday, we will jump to December, which has more Open Interest on Monday.
Technicals: Gold held major three-star support through yesterday and this morning and this is all we can ask for in our overall bullish narrative. We remain unequivocally bullish in the longer-run but as we point out each day, the metal has failed to close out above major three-star resistance at $1432.9 on six attempts. Yesterday’s reversal brought a significant amount of damage, but gold has shaken this off and above $1,420.2, the bulls are in the near-term driver’s seat.
Bias: Neutral/Bullish
Resistance: 1432.9***, 1441-1442.9*, 1454.4*, 1484.5***
Pivot: 1420.2-1421.5
Support: 1410-1414.6***, 1400.5-1403.5***
Bill Baruch provides technical levels on all markets throughout the week at BlueLineFutures.com.
