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

E-mini S&P 500 (September)

Tuesday’s close: Settled at 2713.25, down 14.00

Fundamentals: After a losing ground into the close on Tuesday, major U.S benchmarks are all higher coming out of the July 4 Independence Day holiday. Investors and traders alike await a deluge of data and news over these next two days including Friday’s tariff deadline and jobs report. This morning brings an early look at jobs data with ADP Payrolls at 7:15 am Central. Weekly Jobless Claims are due at 7:30 am and Markit Composite and Services PMIs are released at 8:45 am. The closely watched ISM Non-Manufacturing read is due at 9:00 am Central. At 1:00 pm Central today, the FOMC releases the Minutes from their June meeting, here they hiked as anticipated but also raised expectations for two more hikes this year. These Minutes will give a closer look at how aggressive their rhetoric was in hawkishly raising those expectations.

Since selling off sharply on June 25, the S&P 500 has ricocheted between strong support at the 2700 area and major three-star resistance at 2745-2748 in anticipation of Friday’s deadline where the White House will impose $34 billion in tariffs on Chinese goods. While the deadline has been the bullseye on the calendar, it could only mark the beginning of the tit for tat tariffs in which headlines have been pointing to for weeks. Once the White House makes an official announcement, China is expected to retaliate with $34 billion in tariffs of their own. While this is widely expected, the market is due to react upon implementation. You do not have to look further than the volatility of a 2% range on May 29 when the White House announced the ‘widely expected’ steel and aluminum tariffs on the EU, Mexico and Canada; the difference here is a much larger and broader scale.

However, all is not bad news at the moment, the S&P and NQ have pared much of their late Tuesday losses after what seems to be an olive branch on trade from the White House to the EU. Europe is leading the way higher and the DAX is up 1.5% after it was reported that President Trump offered German automakers a deal to suspend tariffs if the EU lifted duties on U.S. cars imported. This has ultimately allowed the market to see a light at the end of the tunnel on President Trump’s “fair and free” trade goals.

Technicals: Price action has remained contained within a 2% range and whether your bias is bullish or bearish you must come to terms with the fact that ranges are meant to be broken. While our Bias has been Bearish into this week, the market has failed to push through key support levels and we must exude the importance of staying nimble by being outright Neutral; this can be traded from both sides. The tape is pushing through 2731.50 and while above here, the bulls will try to gain an edge. Still, first key resistance comes in at.. 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)

Tuesday’s close: Settled at 74.14, up 0.20

Fundamentals: Crude oil has battled higher this week despite President Donald Trump tweeting that Saudi Arabia should increase production by two million barrels per day. The important thing to remember here is that Saudi Arabia has already said they will increase production by 1.8 mbpd in July. While President Trump uses Twitter to voice his opinion, Iran is not happy about it and has asked him to stop tweeting because they believe he is driving up prices. Geopolitical tensions are surely running high and his tweets may be a constant reminder.

However, Iran’s Revolutionary National Guard said they will disrupt oil shipments within the region in response for the White House’s statement that buyers of Iranian crude must stop by November or face U.S sanctions. For us, it comes down to spare capacity, a number running lower as more production comes online, coupled with rising demand. Remember, analysts believe demand could increase by almost 1 mbpd by the middle of next year. EIA inventory data is due today and the expectations are for -5.2 mb of crude, -0.817 mb of Gasoline and -0.545 mb of Distillates. API on Tuesday showed -4.5 mb of crude. Depending on estimated production, something in line with the headline expectations should ultimately support price action.

Technicals: The technical landscape has remained pretty cut and dry this week, there have been two sharp pullbacks to previous rare major four-star resistance which is now major three-star support. Both have held, and Crude has built a base, the market remains in a strong uptrend until it closes below here and even then a viable buy opportunity comes in 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)

Tuesday’s close: Settled at 1253.5, up 11.8

Fundamentals: Gold’s strong technical reversal against rare major four-star support on Tuesday came as the Chinese yuan gained strongly against the U.S Dollar. We maintain that this currency relationship is one of the biggest drivers for Gold right here right now. Even today, the Dollar Index is down 0.5% on Euro strength, but Gold is merely holding gains as the dollar/yuan has settled within its range on the week. The other major driver for Gold is the Fed and it is no coincidence that in the middle of June they hiked interest rates and raised expectations to two more hikes this year. The Minutes from that meeting are due at 1:00 pm CT today. ADP Payrolls missed expectations slightly this morning and tomorrow’s Nonfarm read will be crucial. Weekly Jobless Claims are due at 7:30 am CT. At 8:45 am CT Markit Composite and Services PMIs are released. The closely watched ISM Non-Manufacturing number is due at 9:00 am CT. 

Technicals: Gold tested into the bottom part of our rare major four-star support and reversed sharply; this aligns many major technical indicators as well as a trend line from the 2015 low. Additionally, as of last Friday’s Commitment of Traders, Managed Money in gold went net-short 24 contracts. For these two reasons, we are now outright Bullish Gold for the first time in months, however, buyers must manage risk properly given the volatility, risk upon breaking 1238 and the data and news due to come. There are many ways to manage this risk, please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and proprietary bias and levels.