Markets are still trying to unpack the impact of US-China tariff duals, reports Bill Baruch.
E-mini S&P (ESU)
Yesterday’s close: Settled at 2865.50, down 17.75
Fundamentals: U.S benchmarks reversed early gains yesterday and the S&P 500 finished more than 1% from what is now a psychological ceiling at 2900. We noted here in the first half of the week that nothing ultimately changed from Friday’s news of fresh tariffs escalating the trade war. Although President Trump soothed the market’s reaction with his comments early Monday morning, the snap back was also due to the surprise news of China levying tariffs on $75 billion actually sinking in; the market does not like surprises and that ultimately exacerbated the sell-off in the immediate-term. The 30-year Treasury bond this morning is exuding such uncertainties by hitting a fresh record low yield of 1.909, a move that signals continued volatility in equity markets. There is no major economic data from the U.S today but Richmond Fed President Barkin speaks at 11:20 CDT, there is a five-year Note auction at noon CDT and San Francisco President Daly speaks at 4:30 pm CDT.
Technicals: Blue Line Trade Alerts released a trade in the S&P this morning. Our pivot today in the S&P aligns our 2866.75 level with yesterday’s settlement. For the NQ, this is 7562.75-7575. Below these levels the bears are in the driver’s seat on the session.
Crude Oil (CLV)
Yesterday’s close: Settled at $54.93, up $1.29
Fundamentals: Crude oil is surging this morning after API reported a surprise draw of 11.1 million barrels after the bell yesterday. The private survey also reported a draw of 0.349 million barrels of gasoline and -2.5 million barrels in distillates. This was a large deviation from analysts expecting a draw of 2.112 million barrels from the EIA this morning accompanied by -0.388 of Gasoline and +0.918 mb Distillates. Last night’s data certainly sets a high bar for today’s official report and traders should also focus on API’s composite draw of 13.949 million barrels Something more bullish than the official expectations and merely in the ballpark of half those results could be enough to satisfy the bulls given that tensions between Iran and the U.S remain in the headlines.
Technicals: Crude Oil could not stay suppressed below major three-star support at 453.77 yesterday and this neutralized our near-term bias ahead of today’s inventory data. Price action has ripped through strong resistance.
Gold (GCZ)
Yesterday’s close: Settled at $1,551.8, down $14.60
Fundamentals: Gold notched a strong session yesterday despite stronger than expected Consumer Confidence and Richmond Fed Manufacturing. Silver has helped pave a path of least resistance for gold, invigorating this last leg along with elevated Treasury prices despite a very stable dollar since the Sunday night low. There is no major economic data today.
Technicals: Gold closed out above the previous high of $1,546.1 and this aligns with our momentum indicator.
Bill Baruch provides technical levels on all markets throughout the week at BlueLineFutures.com.
