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

June 19, 2018 08:14 AM

E-mini S&P 500 (September)

Yesterday’s close (Monday, June 18): Settled at 2779.75, down 4.75

Fundamentals: Risk-off sentiment is sweeping through global markets after U.S. President Trump fired back at China last night. He instructed the U.S. trade representative to identify $200 billion worth of Chinese goods to impose a 10% tariff. In the “tit for tat” fashion that we said was not priced into the broad market with the Nasdaq only 0.5% from its all-time high in Sunday’s Tradable Events this Week, China retaliated right back. China’s Commerce Ministry said it will protect its interests and take “qualitative and quantitative” countermeasures if the U.S. publishes additional tariffs. Folks, if this becomes official and each side moves forward with these new threats, we then have a full-blown trade war and one not wholly priced into the market. The true question becomes, who can hold their breath the longest? The Shanghai Composite is down 3.8% today and 8.9% over the last month. The Hang Seng is down 2.8% today and 5.1% over the last month. The S&P 500 and NQ are both only 2% from their recent highs, for the NQ that was a record. Now, we do not want to compare China’s and Hong Kong’s benchmarks to that of the United States, they are apples and oranges; U.S, equity markets are the most promising asset class in the world. On Sunday and yesterday, we officially introduced a Bearish Bias for only the second time since late January; with uncertainty freshly in the air we remain very cautious as we await more news. 

In other news, the Dollar is higher this morning as trade uncertainty drags down the likes of many currencies across the globe. Comments from European Central Bank President Mario Draghi added pressure to the Euro, that they will remain patient before raising rates and will only do so gradually. St. Louis Fed President Bullard speaks at 6:00 a.m. Central and Building Permits and Housing Starts are due at 7:30 a.m. Central. Tomorrow morning, we look to a panel with Draghi and Fed Chair Powell.

Technicals: The S&P traded to an overnight low of 2735.75 before bouncing to 2751.50. Ultimately, the tape is trading around our major three-star resistance level 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 (August)

Yesterday’s close: Settled at 65.69, up 0.84

FundamentalsCrude oil recovered very well yesterday as speculation mounted that OPEC will only raise production 300,000 to 600,000 bpd. However, this morning, crude oil is a casualty of the risk-off, trade war fears. This pins the market back near Friday’s settlement at 64.85 as U.S inventories also come into the picture with estimates and API after the bell. The trade war is the major focus and will stay such through much of today, although OPEC will close out the week and we will surely continue to hear jawboning and gamesmanship for all sides. 

Technicals: Crude oil traded to a high of $65.82 per barrel and stalled squarely at key resistance at 65.64-65.80 before failing overnight. There are two levels close together that we are watching to the downside. 

Gold (August)

Yesterday’s close: Settled at 1280.1, up 1.6

Fundamentals: Gold is losing further ground this morning despite investors reaching for safe-haven assets such as Treasuries and the yen. The metal is at the lowest level since December and it appears that gold is less concerned about a trade war and more concerned with the rising dollar and four hikes this year. Additionally, the technical landscape has gone from very constructive to extremely poor. Building Permits and Housing Starts are due at 7:30 am CT. St. Louis Fed President Bullard speaks this morning at 7:00 am CT but the major focus will be the ECB panel tomorrow with Draghi and Powell. This morning, Draghi was dovish emphasizing patience before hiking rates and only doing so gradually.

Technicals: Price action is moving below major three-star support at 1277.5-1278.3 which held last week’s selling in check. A close below here keeps the bulls in the driver’s seat. While we see only a minor level at 1267, there is a probably the biggest level of support we have seen in Gold since it neared $1000 that comes in at... Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and proprietary 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.