U.S. equity benchmarks sold of sharply on Friday. A rollercoaster week ended with mixed earnings and a big miss by Twitter weighed on an already damaged sentiment due to Facebook. Here, Friday morning, we called for a lack of value in the 2740’s and investors began to agree, derisking ahead of the weekend.
Crude oil prices are stuck between a rock and a range with seasonal weakness, as well as the promise of more oil production, which is alleviating fears of a tightening global marketplace. On Friday, the market was looking for a reason to rally or break. It got the reason to break on a report by The Wall Street Journal that Russia’s Energy Minister Alexander Novak, who said he “did not rule out… an increase in oil production in excess of 1 million barrels a day may be discussed.”
The week of July 30 presents breakout traders gold, Eurodollar and crude oil setups. All three are in narrow ranges on multiple time frames with inside-range pivots, compared to this week. Monthly pivots are also inside-range on the Eurodollar and crude oil, making this a time-pivots breakout as well. If one considers the last 10 days’ range as a time series, then half of its length could be rotated upwards/downwards in the price axis (use your finger’s distal phalanx for past 5-6 days and rotate 90-degrees up/down) to give a $71.00/barrel or $66.00/barrel target as a rough estimate that may seem today like a crazy place for price to be.
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.
Big oil is back, and we have earnings today but so is big LNG. OK, maybe the market for Liquefied Natural gas isn’t big yet but it is going to be. President Donald Trump boasted that “Europe will be a massive buyer of U.S. LNG as they will be able to diversify their energy supply.” Some dismissed the comments as not likely, but those who did are thinking small or not looking at the big picture. In coming generations, the United States will be the LNG supplier to the world.
Market sentiment received a solid boost after US President Donald Trump obtained concessions from the European Union to avert a transatlantic trade war. The United States and Europe have reached a deal to work towards “zero tariffs, barriers and subsidies on non-auto industrial goods” in a bid to defuse escalating trade tensions.
Yesterday was the definition of what we have been preaching all week. There are many themes playing out but none more important than earnings. The S&P 500 and Nasdaq began ripping higher into the close on news that President Trump agreed to suspend implementing tariffs on the EU, most importantly on autos, after meeting with European Commission President Juncker.