Major stock indexes, crude oil and gold all moved higher, reports Bill Baruch.
E-mini S&P (ESU)
Yesterday’s close: Settled at 2889.75, up 24.25
Fundamentals: U.S benchmarks are surging higher. The tables turned through yesterday morning after major three-star support held a retest at 7:00 am CDT. A freshly upbeat rhetoric surrounding U.S.-China trade has added a tailwind to yesterday’s firm session. Headlines read ‘China Indicates It Won’t Retaliate Now on New U.S Tariffs’ from Bloomberg while Reuters points to comments from China’s Finance Ministry spokesperson calling for the United States to “create favorable conditions” for September talks. All are implying significant progress is about to be made and we again find ourselves at peak optimism in the trade-talks-jawboning cycle.
On the economic calendar we look to the first revision to U.S Q2 GDP (came down a tenth to 2.0% as expected). We also look to components such as Core PCE Prices, Corporate Profits, Real Consumer Spending which surged by 4.3% and Wholesale Inventories to accompany weekly Jobless Claims.
Technicals: Key resistance at 2888.50-2891.50 in the S&P and 7600.50-7618.25 in the NQ kept a ceiling on price action until 2:00 am CDT when the news cycle on trade hit the tape. We have now seen a surge through major three-star resistance at 2899.50-2904.25 in the S&P and out above the 100-day moving average at 2914.75; above here the path of least resistance again favors a direct test to a wall of resistance.
Crude Oil (CLV)
Yesterday’s close: Settled at $55.78, up 85¢
Fundamentals: Crude oil has held ground very well after yesterday’s official EIA data confirmed the bullish API survey and with headlines breathing life into risk-sentiment. The EIA said crude inventories fell by 10.027 million barrels, the largest drop in a month while storage of both products also slipped more than expected. Estimates of a fresh record in production poured cold water over the tape before positive news on the U.S.-China trade front provided a tailwind. With a long holiday weekend in focus coupled with ever-present Iran tensions, we won’t be surprised to see a bit of a seller’s strike. However, if price action remains technically contained as it has, this could quickly bring a sell opportunity coming out of the weekend.
Technicals: Crude oil has enjoyed a wave higher since battling to hold major three-star support at $53.77. Price action extended to test key resistance.
Gold (GCZ)
Yesterday’s close: Settled at $1,549.1, down $2.70
Fundamentals: Gold continues to battle higher despite U.S Dollar strength as the two-year/10-year Treasury yield inversion is proving a fresh tailwind. The other bright spot for the metal over the last week has been a technical breakout in silver. While fundamentally overdue, silver has been able to breathe fresh life into gold. Despite positive waves of risk-sentiment due to a more upbeat narrative surrounding U.S.-China trade, the odds for a Fed cut in September remain wholly priced-in.
Technicals: Gold not only held $1,546.1 on a closing basis yesterday but out above $1,549 as well.
Bill Baruch provides technical levels on all markets throughout the week at BlueLineFutures.com.
