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

July 25, 2018 08:39 AM

E-mini S&P 500 (September)

Yesterday’s close (Tuesday, July 25): Settled at 2821, up 9.00

Fundamentals: Yesterday was a mixed yet disappointing session with all major indices finishing well from their highs. Though the S&P 500 and Dow held green, the Nasdaq settled down 14.25 points and 1% from a new record high while the Russell 2000 lost 1.2% on the session. We are seeing much of the same globally this morning with Europe in the red. German Business Climate actually beat expectations but was the worst since November 2012. Asia is extending yesterday’s gains with the Hang Seng +0.9% and the Nikkei +0.46%. A President Trump tweet that tariffs are great, earnings misses and jitters and a number of technical roadblocks all played a role in halting yesterday’s early positivity and sent many sectors in the red.

On the tariff front, the much-awaited meeting between President Trump and European Commission President Jean-Claude Juncker is expected today. Expectations are mixed for the meeting and Trump, a day after tweeting tariffs are great, is calling for all tariffs between the two sides to be dropped. The U.S. has already imposed steel and aluminum tariffs but around the July 4 holiday, there was a light at the end of the tunnel as the two showed a desire to make a deal on autos. If there is no headway, the European Union has promised to impose tariffs on $20 billion of U.S. goods. Even upon no agreement, the undertone of this meeting will be critical. Earnings remain front and center in this pivotal week; Boeing, GM, Coca-Cola, UPS, Anthem, Northrop Grumman and many others report ahead of the bell. Facebook headlines the post-bell lineup and is accompanied by Visa, AMD, Ford, Qualcomm and more. New Home Sales data is due at 9:00 a.m. Central.

Technicals: The S&P 500 simply failed to get above our major three-star resistance at 2829.75-2833.25 and consolidated back down to major three-star support. However, the Nasdaq and Russell displayed sharp reversals and concern here is warranted; for this reason, we must Neutralize or Bias a bit while still remaining upbeat on the market in general. Focusing on the S&P, it has done absolutely nothing wrong andmajor three-star support at... Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and actionable bias and levels.

Crude oil (September)

Yesterday’s close: Settled at 68.52, up 0.63

Fundamentals: Given recent inventory volatility, the market finds itself in a consolidation ping-ponging between key technical levels ahead of today’s official EIA data. While crude in yesterday’s API report was largely in line with expectations at -3.16 mb (exp -3.0 mb), Gasoline was a large drawdown showing -4.87 mb. Distillates also came in at -1.32 mb. Overall, this was a bullish report, but we saw only a minor reaction as traders await the official data 9:30 am CT. Expectations are for -2.331 mb Crude, -0.713 mb Gasoline and +0.207 mb Distillates. After Monday’s reversal despite escalating tensions between the U.S and Iran, price action has stayed contained and signals an emphasis on today’s report. Remember, Monday’s reversal was partly due to fear of bottlenecking at Cushing. While it may not show entirely in today’s data, the read for this hub must be watched closely (API reports -0.808 mb). Additionally, estimated production data remains key.

Technicals: Price action has stayed contained within first key resistance at...  Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and actionable bias and levels.

Gold (August)

Yesterday’s close: Settled at 1225.5, down 0.1

Fundamentals: The U.S dollar is lower against all major currencies this morning including the Yuan. In fact, the Yuan has strengthened back above Friday’s close and this has been a key catalyst in supporting Gold this morning. Treasury yields have risen this week on reports that the Bank of Japan might tighten up its timeframe in reducing stimulus or dance around with policy. The strengthening Yen against the Dollar has helped offset the effect that rising yields can have on Gold. We are upbeat on Gold and maintain that when sellers get excited, that is the time to be long. New Home Sales are due at 9:00 am CT and tomorrow the ECB holds a policy decision. 

Technicals: Price action is testing first key resistance for the second time in three sessions. Gold must close above...  Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and actionable bias and levels.

About the Author

Bill Baruch is President and founder of Blue Line Futures, a leading futures and commodities brokerage firm. Bill has more than a decade of trading experience and focuses on developing trading strategies for both long and short-term trading approaches. Prior to Blue Line, Bill was the Chief Market Strategist at iiTRADER.  Bill is a featured expert on CNBC, Bloomberg and the Wall Street Journal as well as other top tier publications.