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

August 15, 2018 09:12 AM

E-mini S&P 500 (September)

Yesterday’s close (Tuesday, Aug. 14): Settled at 2841.50, up 15.50

Fundamentals: U.S benchmarks are lower this morning with the S&P 500 and Nasdaq both down more than 0.5% on emerging market fears and the escalation of the conflict with Turkey. China is leading the way lower on a delayed reaction to Monday night’s trio of dismal reads; Industrial Production, Fixed Asset Investment and Retail Sales. The Shanghai Composite is down 2% and the Hang Seng is down 1.5%. The Unite States was holding ground much better until it was reported that a Turkish court will not allow the release of the American pastor Brunson from home arrest. Additionally, Turkey doubled tariffs on some U.S. goods. Major benchmarks in Europe are all down nearly 1%. Domestically, retail is in focus with earnings from Macy’s due this morning and Retail Sales data at 7:30 a.m. Central. NY Empire State Manufacturing and Unit Labor Costs are also due then. We will look to Industrial Production at 8:15 a.m. Central and Business Inventories at 9:00 am. The longer-term and broader picture is still a positive one, however, given the uncertain geopolitical landscape and ascent of the Dollar, precautions must be taken. We certainly do not believe the market is rolling over, however, our biggest concern in the near-term resonates with the cloud of risk-off that approached late last week and into Monday. Once the first cloud passes, a reinvigoration of fears shortly after can usually create a near-term washout. 

Technicals: Price action stalled at minor resistance yesterday at 2842.25 but finished at the highs of the session. Today’s dip below our critical pivot of 2836-2837 for the third time in four sessions is very concerning and pins extreme importance on support below 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 (October)

Yesterday’s close: Settled at 66.33, down 0.24

FundamentalsCrude oil failed once again to hold higher prices in the near-term. After whipsawing on Monday, price action traded to the highest level in a week to just fail. Concerns of an inventory build were confirmed by the private API survey after the bell yesterday with Crude building 3.66 mb. Furthermore, Cushing has been a major catalyst in weakness this week, the API survey said 1.64 mb was added there. Today’s official EIA expectations are for -2.499 mb Crude, -0.583 mb Gasoline and +0.964 mb Distillates. The important thing to understand heading into this number is that the bearish bar has been set by API. Furthermore, API was much more bullish last week with -6 mb Crude versus official EIA data that showed -1.351 mb; this could be average out. All in all, the door is wide open for a neutral number (near unchanged inventories) to bounce this market back. Still, Cushing is a major concern but if production continues to slow, it should help offset this. The broader wildcard today will be the stronger Dollar and emerging market fears which will encourage selling upon dampened demand prospects. 

Technicals: Yesterday was a disappointing session for the bulls after price action failed at major three-star resistance in both the September and October contract. The tape slipped significantly but all is not lost, the bigger, broader, longer-term picture is still a very positive one; we discussed this in Sunday’s Tradable Events this Week. We begin using the October contract today and this roll will pin a key level upon the weekly close. There is a well-defined trend line going back to February of this year and since the October contract is lower than the September, there is ground to make up for when it officially falls off; we must not see a weekly close below 65.71-65.92 in order for this to hold. In the near-term; a close back above 66.22-66.27 and new highs on the session will neutralize yesterday’s weakness. To the downside, major three-star support comes in 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 1200.7, down 1.8

Fundamentals: A new day, same old story; gold cannot attract a safe-haven bid due to the dollar stealing the show. As we discussed yesterday, the Dollar has inadvertently been used as a weapon in the global landscape; it has essentially become the safe-haven. For gold traders, looking for those safe-haven attributes, we have said this before and will say it again; our trade desk has been doing more and more with the Treasury market, call our desk at 312-278-0500 or email us at info@bluelinefutures.com. The Chinese yuan is trekking to new lows against the Dollar and Retail Sales and NY Empire State Manufacturing beat expectations this morning. There is no reason to believe Gold will just reverse course today, however, washouts of this magnitude (this week’s action) usually lead to greener pastures. 

Technicals: Price action could not manage a close above 1204 yesterday and this opened the door to further waves of selling overnight. First key support at 1194.5 has been breached with a low of 1190.5; a close below here today will keep the door open for a further washout to major three-star support 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.