Earnings & Reheated Trade War?

05/05/2020 9:08 am EST

Focus: MARKETS

Bill Baruch

President and Founder, Blue Line Futures

Here are major market support/resistance levels from Bill Baruch.

E-mini S&P (ESM)

Last week’s close: Settled at 2821.75, down 80.75 on Friday and down 7.75 on the week

Fundamentals: U.S benchmarks lost significant ground Friday and opened lower last night. We discussed here how earnings from Apple (AAPL) and Amazon (AMZN) Thursday evening coupled with the onset of a new chapter in the U.S-China trade war weighed heavily on the market. Over the weekend, Berkshire Hathaway (BRK.A) and Warren Buffett were the latest to signal caution amid mounting uncertainties, rising debt, lost revenue and slowing demand for the foreseeable future. The famed investor raised about $10 billion in cash, only by the end of Q1. Don’t fight the Fed is certainly a narrative after they nearly doubled their balance from $3.75 trillion to $6.65 trillion (77% to be exact) in half a year. The S&P gained as much as one third its value from the March lows, but that exuberance is seemingly exhausted after investors and traders alike used the Fed’s added liquidity as a backbone to front-run the easing of lockdowns. However, as Buffett and many others before him last week pointed out, they do not see the demand returning; the caution is real. If it does not resonate coming from some of the smartest minds in finance, then maybe it will amid new obstacles arising between the U.S and China.

President Trump and Secretary of State Pompeo are on the offensive. Each has accused China of greatly mishandling the Coronavirus outbreak while furthering the idea it originated in a Wuhan laboratory. President Trump has threatened to throw out the lauded ‘Phase 1’ trade deal if China cannot stick to its purchase commitments. We expect these narratives to stay in the forefront and develop as the week unfolds.

Bias: Neutral/Bearish
Resistance: 2821.75-2829.25***, 2845-2852***, 2868**, 2878-2879.75**, 2887**, 2902.50-2909.50***
Pivot: 2811.75
Support: 2771-2777**, 2732***, 2636.50-2662.75****

NQ (June)
Resistance: 8718-8719.75***, 8755-8781**, 8850-8880***, 8920**, 8988.50-9005.75***
Pivot: 8672-8688
Support: 8648.50-8654.50*, 8551**, 8431.75***, 8327.25-8342**** 

Crude Oil (CLN)

Last week’s close: Settled at $22.29, up 44¢ on Friday and up $1.07 on the week

Fundamentals: Crude has seen continued waves of relief on the hopes of demand returning to the market as governments have relaxed lockdown restrictions. A precipitous drop in active Oil Rigs has also been supportive. On Friday, Baker Hughes Rig Count reported a drop of 53 to 325 active rigs. This is a 47% drop from the early March peak ahead of Saudi Arabia’s announcement. Still, these waves of positivity are handcuffed as economic uncertainties mount and furthermore due to developing headwinds between the U.S and China. We remain cautious the sector, on the lookout for one more washout before a long-term buying opportunity.

Bias: Neutral
Resistance: 22.29**, 23.22-23.40***, 24.12***
Pivot: 21.60
Support: 20.86**, 19.12-19.65**, 17.12-17.29***, 9.75-10.57***

Gold (GCM)

Last week’s close: Settled at $1,700.9, up 6.7 on Friday and down 34.7 on the week

Fundamentals: Gold recovered well on Friday and the tailwind continued overnight to a high of 1726. Front and center is the question: was Friday the watershed moment where Gold can diverge from the S&P? Is Gold now looked at as the safe-haven or still wagged by the tail of risk-assets due to deflationary headwinds and tighter cash situations? Gold is up about 1% this morning and never traded below 1700 amid ping ponging volatility. The Treasury complex has given back all overnight gains and the Dollar is stronger; both will work to keep this recovery in Gold under wraps. Factory Orders for March plunged by 10.3%, slightly worse than the -9.7% expected. We remain unequivocally bullish Gold over the long-term, and after Friday’s groundwork believe we are now an accumulation phase before the next rally.

Bias: Bullish /Neutral
Resistance: 1725.1***, 1732**, 1737-1740***
Pivot 1706
Support: 1700.9***, 1687.5*, 1676**, 1660.5-1666.2***

Bill Baruch provides technical levels on all markets throughout the week at BlueLineFutures.comPlease sign up at Blue Line Futures to have our entire technical outlook, actionable bias and proprietary levels emailed to you each day. Email us at info@bluelinefutures.com to start the conversation and set up a phone call with our experts.

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