E-mini S&P 500 (September)
Yesterday’s close (Tuesday, July 17): Settled at 2811.25, up 14.75
Fundamentals: Yesterday, we said the market found itself in another Goldilocks situation; this could not have played out more perfectly. Big tech led the way with Amazon, Google and Facebook all gaining more than 1% and the Nasdaq set a new all-time high. Netflix more than halved its overnight losses to finish -5.24%. The banking sector held ground after its Monster Monday; the XLF finished +0.11%. Johnson & Johnson was the leader we were hoping to see gaining nearly 5% before settling +3.54%. Most importantly, Fed Chair Powell has become a "master serenader." The S&P 500 began lifting from our buy zone before his Senate Banking Committee hearing started but his certain and steady tone, one which is very upbeat on the economy and the job being done by the Federal Reserve, again kept a path of least resistance north for equity markets.
Today, Federal Reserve Chairman Jerome Powell sits before the House Financial Services Committee at 9:00 a, CT and though his approach may see a diminished effect from yesterday, earnings and technicals could lead a breakout. Morgan Stanley is up 3% this morning after reporting earnings. This could not be anymore timely after the big banks held ground yesterday on the heels of Monster Monday and the XLF is still 10% from its January high; in other words, there is room to run. Something that we must mention is the Deutsche Bank effect and this German bank has been an eyesore for the entire sector, upbeat preliminary Q2 results released Monday brought a breath of fresh air. Building Permits and Housing Starts are due at 7:30 am CT. After the bell, IBM, American Express, Alcoa and others release earnings; as a whole these will be closely watched for their global heartbeat. With all of this said, two factors that must agree today are of course the technicals (discussed below) and the dollar. Dollar also benefited from Powell yesterday, it is higher this morning against all major currencies; the British Pound is at the lowest level in more than a year and the Euro is approaching recent lows. A strong Dollar weighs on multinationals and thus market sentiment.
Technicals: While we did bull up yesterday, we must Neutralize our Bias a bit in order to trust our rare major four-star resistance level which has been adjusted slightly to 2811.25-2814.25. Intraday dips can still be bought but must be traded. A close out above this level is certainly bullish on a technical basis and will confirm yesterday’s bullish engulfing candle. Still, we must note that... Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and proprietary bias and levels.
Yesterday’s close: Settled at 67.16, up 0.09
Fundamentals: After early weakness on comments from Treasury Secretary Mnuchin reemphasizing that the White House would consider relief from U.S sanctions for countries importing Iranian Oil, the market was able to fight back above a key technical level (discussed below) before settlement. A fresh force majeure declared in Libya supported price action along with last week’s massive draw (the largest since September 2016) still fresh in the minds’ of traders. This was dented after API reported a build of 629,000 barrels when analysts were expected a draw in the ballpark of 2.5 to 3 mb. However, Crude losing as much as 1% overnight but stabilizing this sets a bearish bar for today’s EIA report. Expectations are for -3.622 mb Crude, -44,000 barrels of Gasoline and +837,000 barrels of Distillates. By a bearish bar, we mean that something merely in line with today’s expectations should be supportive to price action. Another factor to watch is production; we have failed to see an increase in production over recent weeks, if this continues it is likely to begin to act as support.
Technicals: We remain unequivocally long-term upbeat on Crude Oil and believe the downside is limited in time and in price. Most importantly today is major three-star support.
Yesterday’s close: Settled at 1227.3, down 12.4
Fundamentals: Gold is officially at the lowest level in a year. Since rallying last February, there have been three attempts into this area, each was met with steady buying by the resilient bulls and none had such aggressive shorts already positioned. Positioning this time is not the only difference though, the Chinese Yuan is a major catalyst in Gold’s movement and this brings an unpredictable factor. Yesterday, the Dollar increased against all major currencies as Fed Chair Powell remained upbeat on the U.S economy signaling the potential of two more hikes this year. This means that the difference going forward must be made either from a strengthening Yuan or the market waking up to the fact that the Fed’s rate-hike cycle is nearing its peak over the next 12 months and real rates have failed to advance in more than a month. Neither of these provide a dependable timeframe as markets can remain irrational for extending periods. Still, we remain long-term bullish gold, but traders must tread with caution or use protection, feel free to contact our trade desk at 312-278-0500 to discuss in more detail.
Technicals: We must begin to Neutralize our Bias after price action traded and closed below our rare major four-star support. This does not change our long-term bullishness and there are key levels below to watch. The first is at... Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and proprietary bias and levels.