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

E-mini S&P 500 (September)

Last week’s close: Settled at 2876.75, up 18.75 on Friday and up 24.50 on the week

Fundamentals: A strong close Friday confirmed that the Federal Reserve is still in the driver’s seat. The major takeaways from last week’s FOMC Minutes and Fed Chair Powell’s speech are that there are no signs inflation will run away, real rates have stayed suppressed and as long as uncertainties in international trade persist, the Fed will remain accommodative; this is a potent recipe for higher prices. Though there was no fresh substance from last week’s round of talks between the United States and China, there seems to be some light that the third wave, what we are calling the official start of a trade war, would not be imposed in a matter of weeks; that is all these talks needed to achieve. Instead, equity markets are getting a tailwind from a potential NAFTA deal between the United States and Mexico.

Furthermore, Confidence data from Germany beat expectations this morning and is seemingly turning a corner after the United States and EU agreed on a truce on tariffs while the two sides work on a trade deal. Equity markets around the globe are all higher this morning and additional support has come from the strengthening Chinese Yuan after the People’s Bank of China announced on Friday they will resume counter-cyclical factors in fixing the Yuan. China has been devaluing the Yuan since the spring, essentially exporting deflation around the globe. China is now strengthening the Yuan to battle rising inflation from both the cost of tariffs and as food supply has become tighter due to massive storms. Though dollar strength did not appear to pose a headwind to U.S equity markets, Dollar weakness could become a new tailwind. The economic calendar today only brings a read on Chicago Fed National Activity at 7:30 am CT. 

Technicals: Last week’s price action was as constructive as it gets, and the S&P 500 is trading out above its previous front-month all-time high. However, we do have major three-star resistance at 2885.25-2889 instead of the old 2878.50 record. Still, it is hard to imagine on a technical basis what would slow this market down and we must believe that upon a close today above 2889, the path is paved for... Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and proprietary bias and levels
 

Crude oil (October)

Last week’s close: Settled at 68.72, up 0.89 on Friday and up 3.51 on the week

FundamentalsCrude posted its best week since June and on a weekly basis, price action is as constructive as it gets. The market did finish about 50 cents from the high on Friday despite data from Baker Hughes showing the U.S. rig count fell by 9. The softness continued overnight, and the tape traded a dollar from Friday’s high before stabilizing this morning. Comments from the Kremlin had a strong hand in such as they said they are evaluating the newly imposed U.S. sanctions and will prepare a response in the nation’s best interests. Furthermore, they added that the U.S is building up military capabilities in the Middle East in order to strike Syria. Of course, these comments must be taken with a grain of salt, but these are a constant reminder of the geopolitical premium that must be maintained in this market. Genscape inventory expectations will trickle out today and have a hand in price swings. 

Technicals: Price action extended to a high of 69.31 on Friday before retreating. 
 

Gold (December)

Last week’s close: Settled at 1213.3, up 19.3 on Friday and up 29.1 on the week

Fundamentals: Gold turned a corner on Friday and we are outright Bullish in Bias. For now, the Chinese yuan did lose minor ground today but remains at the strongest level against the dollar since early August. 

Technicals: Price action closed above major three-star resistance at 1210.7-1212.5, now it must continue to do so. Unfortunately, we are not seeing the... Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and proprietary bias and levels.