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

August 14, 2018 09:42 AM

E-mini S&P 500 (September)

Yesterday’s close: Settled at 2825.50, down 11.25

Fundamentals: This morning brings a reprieve from turmoil; the Turkish Lira has bounced back as much as 8% before settling in. The story will continue to develop and an agreement to release the American pastor will certainly be favorable for the global risk appetite. While the damage to the world’s currency market has been done, we maintain that it is important to not get stuck in the forest so that you can see the trees; there can be a lot of noise in the headlines, especially during slower summer months. Major U.S. benchmarks battled yesterday and while banks, materials and energies were under pressure, tech was a bright spot. The Nasdaq is up almost 0.5% this morning and both it and the S&P 500 never traded down to yesterday’s settlement in the overnight hours; this can set a bullish tone through today. In last night’s FX Rundown, we pointed to economic data out of Europe today as an opportunity to shift gears away from the turmoil in Turkey. Stronger than expected GDP data from both Germany and the Eurozone has helped this cause and offset weak numbers out of China last night. Even more importantly, earnings are back in focus with a blowout announcement from Home Depot. The stock is up almost 2% and unofficially kicks off a stream of retail earnings this week. Import and Export Price Index data is due at 7:30 am CT. Retail Sales tomorrow morning is the headliner this week. 

TechnicalsDo not ever doubt how technically driven this market is. We have minor resistance and minor support surrounding our major three-star level at 2836-2837 and much of the range over the last 24 hours has stayed contained within here. Support at... Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and actionable bias and levels.

Crude oil (September)

Yesterday’s close: Settled at 67.20, down 0.43

Fundamentals: There are two characteristics about yesterday’s failure at resistance, 3% drop, rejection of a new swing low and reversal to retest unchanged. The first, it was about as technical as it gets (we will discuss in the ‘Technical’ section below). The second being very bullish. Price action fell out of bed once it broke key support at 67.04, a level in which we said, “will encourage further waves of selling.” Genscape released data yesterday pointing to a build at Cushing. Okla., last week. During the last several weeks we have emphasized the importance of draws at Cushing and the market did not digest this news very well; hence the exacerbated selling.

In OPEC’s Monthly Report yesterday, they said Saudi output dropped by 200,000 bpd in July; headlines this morning point to this drop as a main catalyst in the positive tape. Ultimately, that’s because there is no other narrative to help explain such a vicious recovery. Realistically though, Saudi Arabia’s drop in July’s output was known at 6:00 a.m. Central yesterday, yet the market still sold off. Emerging market fears along with Cushing led to selling below 67.04 and the buyers were not lining up during a summer session amid uncertainty. Yes, less output from Saudi Arabia (spare capacity issues) and ongoing concerns with Iran are both reasons at the end of the day why the buyers showed up; both are reasons why we have been bullish, remain bullish and believe this market is heading to $80. 

Technicals: Price action this morning is out above 67.70 but a failure to close above here today will be very disappointing and would likely lead to profit taking from the bulls. While 67.70 was not a major three-star level, it was a strong resistance. In fact, major three-star resistance sits at ... Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and actionable bias and levels.

Gold (December)

Yesterday’s close: Settled at 1198.9, down 20.1

Fundamentals: Gold failed to rally as a safe haven but has held ground this morning amid Treasury yields rising slightly and emerging market fears dissipating. The U.S Dollar has inadvertently been used as a weapon in the global landscape. Whether it be in trade talks or sanctions, the U.S dollar has been the safe-haven play as other currencies are rocked due to new waves of uncertainty. This has been extremely detrimental to gold which reached the lowest level since March of last year. The Chinese yuan nudged a new low against the Dollar overnight after Industrial Production and Fixed Asset Investment data missed. However, it has settled in and Gold did not take out yesterday’s low, yet. GDP data out of Europe was stronger than expected and this helped stopped the bleeding in the Euro. Import and Export Price Index is due at 7:30 a.m. Central. 

Technicals: Gold settled below $1,200 per oz. for the first time since January 30, 2017. Really, not all that long ago. It is testing into the March 2017 low of 1194.5 and yesterday’s washout was basically a necessary factor after Gold could not gain any traction in the 1220’s. For now, we once again must Neutralize our Bias in the near-term until a close back above major three-star resistance at ...Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and actionable 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.