Major markets have mostly held their own this week despite impeachment talk, reports Bill Baruch.
E-mini S&P (ESZ)
Yesterday’s close: Settled at 2980.50, down 5.75
Fundamentals: U.S benchmarks have ultimately been working higher since the opening bell swoon yesterday and arguably since price action Wednesday morning held the overnight low; the range has been about 1% and gyrating higher with 3000 broadly acting as a psychological ceiling. We have written extensively this week on U.S-China trade, impeachment and Fed headlines and will keep things shorter today in order to avoid sounding redundant. One of the sharper moves intraday yesterday was higher and upon KC Fed Manufacturing data blowing expectations out of the water; 11 versus -4. This was the first positive read since April. Remember, we noted that Tuesday’s price action slipped precipitously on a slew of headlines, but Consumer Confidence and Richmond Fed Manufacturing both whiffed on expectations at that time. Our narrative continues to be one that this market not only wants to but needs to make a transition from Fed easing dependence to stronger data dependence. This could easily be seen through some of the market gyrations this week and with the tape higher this morning although odds of an October Fed cut are back down to 45%.
Today’s economic calendar brings Durable Goods and the Fed’s preferred inflation indicator the Core PCE Price Index at 7:30 am CDT. Here, we also get Personal Spending and Income data. As long as inflation remains tame, the Fed has additional flexibility. The final read on September Michigan Consumer data is due at 10:00 am CDT. Fed Governor Quarles speaks at 7:30 am CDT and Philadelphia Fed President Harker speaks at noon CDT.
Technicals: It was our minor support levels in the S&P 500 and Nasdaq 100 that championed yesterday’s low. From there, price action worked higher to settle above our first key support levels. While the S&P 500 has gone on to stick its nose out above yesterday’s pivot, the NQ has been contained.
Crude Oil (CLX)
Yesterday’s close: Settled at $56.41, down 8¢
Fundamentals: Crude oil is again lower this morning as it struggled to hold higher prices as the geopolitical risk premium continues to dissipate. Although we have held the view that fading rallies since the strike on Saudi Arabia is the way to play this, we still do not trust the price action ahead of the weekend. Deteriorating global growth seen this week from China to Germany has further encouraged the IEA to consider lowering its demand outlook for 2019 and 2020. All in all, we are entering a seasonally weaker time of year for the energy complex.
Technicals: Yesterday’s low of $55.41 ultimately held first key support and price action is testing it for the third time this morning.
Gold (GCZ)
Yesterday’s close: Settled at $1,515.2, up $2.90
Fundamentals: Gold is sharply lower by 1% this morning with waves of selling coming in the early hours of the morning. Ultimately, the yield story is a stable one and the odds of a 50-basis point cut next month have dissipated to 45%. Considering a stronger U.S Dollar on the week, this has all pressured gold back to the psychological $1,500 mark. Today’s economic calendar brings a raft of important reports (see S&P section above).
Technicals: Gold failed at major three-star resistance yesterday at $1,521.1 and the inability to settle above the $1,517.7 pivot opened the door for a break below first key support, a level that held the first test.
Bill Baruch provides technical levels on all markets throughout the week at BlueLineFutures.com.
