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

July 27, 2018 08:46 AM

E-mini S&P 500 (September)

Yesterday’s close (Thursday, July, 26): Settled at 2842.50, up 1.25

Fundamentals: U.S benchmarks are eyeing a strong finish to the week after the S&P 500 closed at the highest level since Jan. 29, the session in which it set its all-time. Amazon beat earnings estimates yesterday after the bell and its gain of 4% premarket has helped the Nasdaq shrug off Facebook’s record loss as it trades more than 1% from yesterday’s low. With a path of least resistance seemingly higher, earnings, trade tensions and GDP promise to keep investors on their toes ahead of the weekend. Twitter missed this morning and has already plunged 16%, knocking the NQ back slightly from its overnight recovery. While it is no behemoth like Amazon or Facebook, the overall sentiment is something to watch closely. Exxon, Chevron, Phillips 66, Merck and more are also due this morning. Yesterday, ECB President Mario Draghi said it is too early to see where a truce on trade with the EU and U.S could go. Additionally, tensions between the United States and China are again heating up at a World Trade Organization meeting.

However, NAFTA has gained positive traction this week. As for the economic data front, the lauded first look at Q2 GDP is due at 7:30 a.m. Central. Expectations are set for 4.1%, this would be the highest since Q3 2014. While strong growth supports the Federal Reserve’s path of four rate hikes this year, Chair Powell has done a tremendous job in tempering inflation expectations. Strong trajectory growth during a time of uncertainty because of trade has supported the market instead of sparking a wave of fear that the Fed could move faster. In fact, we believe nearly the most hawkish path of rate hikes possible is priced in. The Federal Reserve is back in the spotlight with a two-day meeting next week concluding with a policy decision on Wednesday, they are not expected to hike.

Technicals: Our Bullish Bias this week has paid off as dips have proven to be buying opportunities. However, resistance 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 69.61, up 0.31

Fundamentals: While we believe the technical landscape is the main headwind holding crude back from further gains (discussed below), the currency landscape is surely not favorable. The dollar has essentially strengthened against all major currencies ahead of this morning’s GDP read that is expected to be the strongest since Q3 2014. The Yuan is trekking to new lows and the Euro is seeing weakness after yesterday’s ECB Meeting. On the trade front, tensions with U.S. and China remain heightened and there is uncertainty surrounding repercussions of such; will global growth or China’s demand of U.S. crude oil be damaged? Working to offset these fears are geopolitical tensions in the Middle East. Traders must keep an ear to the ground on any further developments on U.S. and Iran relations while Saudi Arabia has halted shipments through a passage in the Red Sea due to threats from Iran. Earnings from Big Oil are due this morning and will keep the market busy. Baker Hughes rig count data at noon Central will also be key as the lower 48 states continue to add production. 

Technicals: We remain intermediate and long-term bullish crude oil, however, strong headwind at major three-star 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 (December)

Yesterday’s close: Settled at 1235.3, down 5.7

FundamentalsU.S dollar strength is putting pressure on gold. However, the dollar strength is more of a byproduct of foreign weakness. The euro sold off sharply on ECB President Mario Draghi’s post-policy meeting presser and the Chinese yuan is sinking to fresh swing lows. While the Treasuries have remained calm over the last 24 hours, weakness there has also dragged on gold this week. The first look at U.S Q2 GDP was inline with expectations at 4.1%, the highest since Q3 2014. The interesting thing here is that gold jumped $4 after the release and it would elude to selling ahead of the number in case it came in much hotter than expected. The final look at July Michigan Consumer Sentiment is due at 9:00 am CT.

Technicals: Though price action did cling to our 1235.6 level upon settlement yesterday and that is encouraging, today’s weakness is surely not favorable. Today’s low has held minor support and a close back 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.