E-mini S&P 500 (June)
Yesterday’s close: Settled at 2575, down 68
Fundamentals: U.S. equity markets are holding their ground this morning while Europe plays catch up after being closed yesterday; the DAX is working to pare 1.5% in losses. Yesterday’s bludgeoning was much more than tech, only 13 of the S&P 500 companies finished in the green. There are a few things we tend to focus most on at the moment. The S&P 500 took out the 200-day moving average yesterday and the world did not fall apart. So, first and foremost, we have said this before and we will say this again, each plunge for the last three weeks has been fairly orderly considering the overall 9% drop since the March 13th high. This is because the market is used to volatility; we are not coming out of a long period of low volatility that blows out adverse positions and exacerbates a move, this has already happened. Second, as these market beatings mount, so does the list of bearish pundits. If you google search “stocks” all you will find is a list of the fresh "bearish" and "correction coming" arguments.
Next, earnings are right around the corner and these have consistently been a positive for the market. Yes, trade war fears are real and pose a risk, however, there are two ways to look at it. Either this is a hardliner negotiating tactic by the White House and things won’t be as bad as the market is pricing in or growth does slow, and the Federal Reserve also slows the path of tightening (will they comment on trade headlines this week?); both of which are bullish for the market. While there are many more arguments to look at here, this feels more like a violent whiplash as the market is trying to find new leadership rather than the beginning of something more. Lastly, we have not been advocating to sit here and buy each day. In fact, if you have spoken with our trade desk, there are days we have gone short. What we are saying though is this washout will present a tremendous buy opportunity and maybe it already has.
Technicals: Last Thursday we were bullish, yesterday we were more neutral. Our point, in these market conditions it is important to stay nimble; while being long-term Bullish, there are swing trade opportunities to go short. With the S&P below the 200-day moving average and more than 1% from yesterday’s low, we have no choice but to be outright Neutral today. Major three-star resistance comes in today 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 (May)
Yesterday’s close: Settled at 63.01, down 1.93
Fundamentals: Risk-off swept through markets yesterday and crude oil was a significant casualty. While we have been Bullish, there is still a significant net-long position of 463,000 contracts according to the CFTC and as major three-star support was taken out, those longs tapped out. Despite holding ground Sunday night in a low volume trade due to the holiday in Europe, when equity markets rolled over so did Crude Oil. At the same time, the U.S Dollar began paring overnight losses and news that Russian production ticked up from 10.95 to 10.97 in February hit the tape. While the S&P has traded more than 1% from yesterday’s low, Crude has struggled to achieve the same feat. Inventories will come into the picture today; analysts’ expectations will hit the airwaves and API is due at 3:30 pm CT.
Technicals: We have no choice to be more Neutral now that price action close below major three-star support.
Yesterday’s close: Settled at 1346.9, up 19.6
Fundamentals: Yesterday was exactly what Gold bulls needed to start this crucial week off. Though the dollar pared much of its Sunday night losses, gold continued to grind higher on the session in the wake of a reinvigorated trade war with the United States and China and equity market weakness; the safe haven bid was alive and well. The economic calendar is light today but Minneapolis Fed President and dove, Kashkari speaks today at 8:30 a.m. Central. Fed Governor and voting member Brainard speaks at 3:30 p.m. Central and will garner a bit more attention. Gold is holding ground as the intraday session gets underway and as equity markets continue to rebound; this is a good sign.
Technicals: Yesterday’s high was 1349.2 and the settlement held 1344-1345 level. It has not been uncommon to see a little profit taking as price action nears the dreaded 1360-1370 area.
Natural gas (May)
Yesterday’s close: Settled at 2.683, down 0.05
Fundamentals: Despite colder temperatures and snow to start April, storage expectations have remained steady. Given this, price action made its way lower yesterday and likely saw additional pressure as the energy sector took a hit in the risk-off environment. This market continues to consolidate.
Technicals: We remain neutral.
10-year T-Notes (June)
Yesterday’s close: Settled at 121’085, up 0’04
Fundamentals: The S&P took out the 200-day moving average yesterday and the world did not fall apart. The S&P 500 is rebounding and back to this level this morning. The 10-year did see a bid amidst the selling yesterday, but it did not accelerate from what has already been a grind higher. The recent rally in the 10-year remains orderly and this should be signaling a longer-term bottoming and failure for the yield to take out 3%. Geopolitical tensions remain in the forefront in this busy week of Fed speak and jobs data. The economic calendar is light today but Minneapolis Fed President and dove, Kashkari speaks today at 8:30 am CT. Fed Governor and voting member Brainard speaks at 3:30 pm CT and will garner a bit more attention.
Technicals: Yesterday did trade to a new swing high of 121’12, however, it remained contained below major three-star resistance at ... Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and proprietary bias and levels.