Daily markets morning round-up: E-mini S&P, gold, crude & Treasuries

E-mini S&P 500 (September)

Last week’s close (Wednesday, June 27): Settled at 2759.50, up 7.00 on Friday and down 25.00 on the week.

Fundamentals: The most important factor in global markets right now is trade. Tensions heated up to start the week after a tweet from President Trump called for, “all countries that have placed artificial Trade Barriers and Tariffs on goods going into their country, remove those Barriers & Tariffs or be met with more than Reciprocity by the U.S.A”. Benchmarks finished Friday on soft footing and this tweet added fresh pressure to start the week. While the July 6th deadline to impose tariffs sits starkly in investors’ minds, we have been pointing to the White House announcing restrictions on Chinese investment in the U.S on or by June 30th as a tremendous hurdle since Friday.

The Wall Street Journal ran a story on this last night and equity markets responded lower. In a move directed blatantly at China’s “Made in China 2025” initiative, this would block firms with at least 25% Chinese ownership from buying companies with what the White House describes as “industrially significant technology” among other restrictions that include technology exports to China. The last week of the second quarter is jam-packed but the landscape will revolve around trade tensions and we ask you to read our Tradable Events this Week to dive deeper into what we are watching for. German Ifo Business Climate missed expectations but the Euro is holding well against first key resistance at 1.1743 on Dollar weakness due to trade. New Home Sales are due at 9:00 am CT.

Technicals: Price action traded to an early low of 2739.25 and remember, it has not traded below major three-star support at 2745.50-2746.75 intraday while a close below here signals lower. This will be key to watch for upon the 8:30 am CT cash open. However, we do expect price action to attempt to close some of the gap from Friday’s settlement at 2759.50. There are now three layers of resistance that line up closely, each with their own significance. Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and proprietary bias and levels.

Crude oil (August)

Last week’s close: Settled at 68.58, up 3.04 on Friday and 3.73 on the week

Fundamentals: Even we were surprised by the ferocity of crude’s rally on Friday. Heading into OPEC last week, we maintained our belief that there was tremendous value in crude at the $65 per barrel area. While we did exude caution in the near term given the questionable fundamentals of trade and OPEC, we said on Friday we are even more upbeat on Crude in the intermediate and longer-term. Friday’s gain of 4.6% was Crude’s best since 2016 and it signals how tight supply is even with OPEC adding a nominal 1 mbpd or realistically 500,000 – 600,000 bpd. This signals more than anything how bulls feared additional supply being added and were quick to reposition once it was in line with expectations. We have ongoingly discussed our concern for trade tensions in the S&P 500 section, but they also must not go unheard here. We believe that the only true headwind for Crude this week is if China uses it as a retaliatory measure in trade talks. 

Technicals: Crude oil closed above all major and key levels on Friday. We are watching the pivot at 68.42-68.52 and the bulls will remain in clear control if price action holds above this level. A close below here though could encourage a consolidation as deep as major three-star support at ...  Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and proprietary bias and levels.

Gold (August)

Last week’s close: Settled at 1270.7, up 0.2 on Friday and down 7.8 on the week

Fundamentals: Gold is trying to go through its bottoming process but once again it is disappointing to see equity markets firmly in the red and the Dollar even slightly lower without Gold responding. While the Commitment of Traders showed that bulls had again gotten excited about the metal for the three weeks before last, they have now trimmed positions to the lowest since going net-short at the end of 2015. While disappointed in Gold’s response to the aforementioned fundamental factors which all revolve around trade tensions, the CoT data does make Gold finally attractive once again. As we discussed above, the week will revolve around trade, however, there is a slew of economic data to watch closely. Fresh June data could begin to show slowing growth due to trade and this gold must not ignore. New Home Sales is due at 9:00 am CT today. Tomorrow brings a closely watched June read on Consumer Confidence. 

Technicals: The CoT points to supply/demand technicals signaling that if everyone has already sold, who is left to sell. First key resistance at...  Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and proprietary bias and levels.