Markets remain quiet despite impeachment, which has not roiled markets because there is little change of conviction in Senate.
E-mini S&P (ESH)
Yesterday’s close: Settled at 3199.25, up 3.75
Fundamentals: Volatility is slipping out of markets more broadly. Although this is certainly not a bad thing for investors, it makes our job as traders a bit more difficult no matter your strategy. The S&P 500 has hovered just below major three-star resistance all week while the Nasdaq 100 has hovered just above its key marker. Bullish tailwinds celebrating the cancelled Dec. 15 tariffs linger despite a lack of details surrounding the U.S.-China trade truce. President Trump was impeached by the House of Representatives on both articles last evening in what was an expected outcome. This partisan movement is not expected to make it through the Senate and thus markets have largely ignored the news. Central banks are in the headlines this morning, although the Bank of Japan and the Bank of England left policy unchanged, Sweden raised its key rate back to zero. The bank noted firm inflation was behind the policy move.
On the U.S economic calendar, Initial Jobless Claims remained elevated at 234k. This follows last week’s 252k. Both are the highest since the first quarter. Philly Fed Manufacturing was not any better, avoiding its first contraction since February and second since 2016 by 0.3. NY Empire State Manufacturing on Monday along with Flash PMIs have all underwhelmed. Existing Home Sales are due at 9:00 am CST.
Yearend liquidity remains in the spotlight and today the Fed will auction $35 billion in 14-day financing. Demand for the Fed’s money market operations this week have been more modest than expected, only $30 billion was subscribed for on Tuesday. However, their balance sheet is now at $4.1 trillion, expanding from $3.8 in September. China is also making headlines, Bloomberg reported the PBoC as injecting the most liquidity since January.
Technicals: With little volatility the S&P 500 sits just below major three-star resistance at 3200-3204.25. The consolidation here has allowed our momentum indicator to rise to 3198.50 and align with yesterday’s settlement of 3199.25 to create our pivot. Amid consecutive sessions of little volatility, our levels tend to tighten up.
Crude Oil (CLG)
Yesterday’s close: Settled at $60.85, flat
Fundamentals: The path of least resistance has been higher and today it is gasoline firming the complex. January gasoline is currently a shade under what has been a ceiling at $1.70. Yesterday’s inventory data was not one-sided on the surface, however, as we discussed here the bearish API read Tuesday night set a fairly high bar for EIA to actually become bearish; this allowed the complex to rally post-data. Furthermore, some of the report’s internals regionally have been supportive. The bid began last week on the U.S and China trade truce, found a tailwind from China Industrial Production and now additional support on news of the PBoC adding liquidity.
Technicals: Price action is elevating towards our major three-star resistance at $61.20, this is the trend line on the continuous contract from April.
Gold (GCG)
Yesterday’s close: Settled at $1,478.7, down 0.7
Fundamentals: Gold continues to do a terrific job in the face of rising yields while equity markets linger at record highs. The economic data today was starkly different than Tuesday’s reads; Initial Jobless Claims, Philly Fed and Existing Home Sales all missed. The 10-year yield pinged Friday’s high of 1.95% overnight and this 2% ceiling is something to keep a close pulse on; a rejection or rise in Treasury prices will be very supportive to Gold at the onset of a seasonally bullish time of year.
Technicals: Gold is doing that aforementioned terrific job in holding ground, but it also cannot chew through major three-star resistance.
Bill Baruch provides technical levels on all markets throughout the week at BlueLineFutures.com. Sign up for a complimentary two-week trial of 1 or all 4 of our daily Blue Line Express commodity reports!
