Recent stocks strength will hinge on numerous economic reports over next two days, reports Bill Baruch.
E-mini S&P (ESH)
Yesterday’s close: Settled at 3380.50, up 23.00
Fundamentals: U.S benchmarks finished at new records yesterday on what was a steady grind higher the entire session. Apple (AAPL) led the way gaining 2.38% but the rally was broad with Facebook (FB) up 1.72% and Comcast (CMCSA) 2.75%. Healthcare plan providers like UnitedHealth (UNH) and Anthem Inc. (ANTM) surged by more than four and five percent, however, drug manufacturers, devices and biotech were all lower. The Semiconductor sector gained 1.5% and even Energy participated by 1.3%.
Despite the strong finish, those gyrations we referenced here yesterday kicked in at 5:30 pm CST, just after the reopen. China’s Hubei province, one of the two epicenters for the Coronavirus breakout, revised the counting method for confirmed cases. Stocks were reacting to the slowest pace of new infections since early January, but Chinese officials were not classifying a positive test unless symptoms were present. Reclassifying it properly added about 15,000 cases, a gain of nearly one third. The death toll has now also topped 1,600. Global stocks are under a bit of healthy pressure this morning on the news.
Macro economists have been waiting all week for the back-half. U.S CPI data is due at 7:30 am CST and Retail Sales is out tomorrow morning. However, the inflation read is downplayed by Fed officials reemphasizing this week that policy is in an appropriate place. Tomorrow’s Retail Sales may be a much more important report at this time and place given how crucial the U.S consumer is to not only the domestic economy but that from around the world. NY Fed President Williams speaks at 4:30 pm CST. Tomorrow, we also have reads on Industrial Production and fresh February Michigan Consumer data.
Technicals: We have had been cautiously bullish all week and given last night’s news poured cold water over yesterday’s exuberance we want to take a step back into neutral to watch a few rounds. More importantly, the S&P 500 and Nasdaq 100 are trading below our momentum indicators this morning.
Crude Oil (CLH)
Yesterday’s close: Settled at $51.17, up $1.23
Fundamentals: The risk-environment was broadly healthy yesterday and queued off a slowing pace of virus outbreaks. Despite a massive build in headline crude inventories of 7.459 million barrels, a small draw in gasoline buoyed the tape and lifted gasoline for a gain of 4.4%. The news of revised outbreak numbers has weighed on the energy sector through the evening and into morning but only to a minor degree. If outbreak numbers continue to climb at such a pace, it is very easy to imagine crude oil back to recent swing lows very quickly. Especially so after the IEA’s monthly report. The International Energy Agency said fuel consumption is now expected to contract by 435,000 barrels per day in the first quarter. Furthermore, they laid expectations that the annual demand growth will be the lowest since 2011.
Technicals: Yesterday’s recovery traded higher into today’s session and achieved a high of $51.96, nudging minor resistance at $51.84 and just shy of key resistance at $52.44.
Gold (GCJ)
Yesterday’s close: Settled at $1,571.6, up $1.50
Fundamentals: Despite only meager gains, given the move in Treasuries and the U.S. dollar yesterday, Gold notched a magnificent session. The metal found itself in a good place to respond to the revised virus outbreak numbers from Hubei at 5:30 pm CST last night. Still, it finds itself at elevated levels and against technical resistance with a slate of crucial data right around the corner. Today’s U.S CPI is important but certainly not as much as we’ve seen in recent months. However, tomorrow with Retail Sales, Industrial Production and fresh Michigan Consumer data will be of the utmost importance and ultimately define the week for Gold.
Technicals: We’ve held neutral this week, explaining that gold must close above $1,579.5 in order to invite bullish waves in the near term once again. However, we have not wavered from our unequivocally long-term bullish bias, investors must own some gold in their portfolio.
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!Please sign up at Blue Line Futures to have our research emailed to you each morning.
