E-mini S&P (September)
Yesterday’s close: Settled at 2705, down 23.50
Fundamentals: U.S Equity markets halted their declines overnight and S&P and NQ held yesterday’s late low. Trade tensions remain front and center, driving sentiment on an hour by hour basis. Yesterday afternoon, the S&P stalled at major three-star resistance and after a 40-point bounce from lows, buyers were exhausted. At that time White House Economic Advisor Kudlow pointed to China truly being in much worse economic shape than the U.S and implied that the U.S can outlast them in a trade war. Those comments coupled with hawkish ones from Boston Fed President Rosengren did not sit well with investors. In Monday’s CNBC interview, we pointed to this being a “big volatile week” and it has already lived up to the hype with two days to go. Traders must keep their ear to the ground on comments coming from the White House, this caused large two-sided swings yesterday. The final read on Q1 GDP is due at 7:30 am CT along with weekly Jobless Claims. St. Louis Fed President Bullard speaks at 9:45 am CT and Atlanta Fed President Bostic speaks at 11:00 am CT. There is a 7-year Note auction at noon. Lastly, traders must keep an eye on the Dollar; the Dollar Index is back to the highest level since July of last year and the Dollar/Yuan has extended gains today, a stronger Dollar weighs on multinationals who depend on overseas sales.
Technicals: Yesterday was a great example as to why we left major three-star resistance at 2745.50-2748.25 and did not increase the strength of our 2735.75-2737 key resistance level after a failing there on Tuesday. Furthermore, on Tuesday’s Morning Express we pointed to selling at 2735.75-2737 on the first test, yesterday’s early rip higher was the second test and one of such strength that you did not want to get in the way. Moving on, yesterday’s reversal of the reversal is very bearish and sets the table to see a move down to major four-star support that aligns with the 200-day moving average at 2670.25-2672.50. There are support levels below and we do believe 2695.75 will bring some headwind to the bears but once below there, the path is a bit of an air pocket. The overnight high was 2717.25 and we will align this with the 50-day moving average as key resistance on the session; a move back above here could easily get legs. The bears will remain in the immediate driver’s seat while below the 2708.50.
Bias: Bearish/Neutral
Resistance: 2717.25-2721**, 2735.75-2737**, 2745.50-2748.25***, 2759.50**, 2768.50-2773**
Pivot: 2708.50
Support: 2700.50**, 2695.75**, 2679.25**, 2670.25-2672.50****, 2660***
Crude Oil (August)
Yesterday’s close: Settled at 72.76, up 2.23
Fundamentals: Yesterday’s EIA report not only confirmed the bullish read on API but added strength to a bullishly developing landscape after OPEC’s meeting and due to the White House’s statement on Iranian imports. Yesterday’s Crude draw of 9.891 mb was the largest since September 2016 and price action traded to 73.06, the highest since November 27, 2014, when OPEC decided against cutting output. Furthermore, minor builds from the products of less than expected did not offset the headline read. Production did increase in the lower 48 states by 100,000 bpd but Alaska lost 38,000 bpd. Overall, we remain bullish in the intermediate and longer-term, however, in the near-term it is imperative that traders capitalized on this move if you have been riding our bullish call. Crude has ignored trade tensions with the U.S and China but the July 6th deadline looms and the spread between WTI and Brent has been cut in half, there is reason to tread more cautiously at these levels in the immediate-term. There are ways to maintain exposure with less risk, feel free to call our trade desk at 312-278-0500 to discuss.
Technicals: We have been Bullish in Bias on Crude and have hammered our belief on CNBC and Bloomberg this week. However, after a rally of nearly $10 in 10 days, it is time to exude caution and encourage profit taking; we have begun Neutralizing our Bias. We have attempted to signal this heading into yesterday’s session by having a rare major four-star resistance level overhead. Though the high was above here, price action did not close above here and for that reason it has yet to confirm a breakout. To the downside, we have minor support at 71.80 but pullbacks are easily susceptible to quick waves of additional selling down to 71.02. The recent uptrend remains intact all the way down to 69.37-69.44.
Bias: Neutral/Bullish
Resistance: 72.35-72.90****, 74.75-75.00**, 76.50***, 80.00****
Support: 71.80*, 71.02**, 70.39-70.78**, 69.37-69.44***
Gold (August)
Session close: Settled at 1256.1, down 3.8
Fundamentals: Gold has completely ignored turmoil in equity markets as the S&P sits 100 points from its recent swing high. Furthermore, the final read on Q1 GDP missed at 2.0% versus 2.2% this morning and weekly Jobless Claims came in higher than expected. At some point, Gold cannot ignore peaking U.S growth. Remember though, as we said yesterday, the Dollar Index will not give you a great idea of the global currency markets. The Dollar/Yuan has extended gains for the sixth day and this is driving the relationship with Gold and the Dollar. Tomorrow’s PCE read though will be crucial, if inflation slows, it will quickly spark speculation that the Fed won’t hike two more times this year.
Technicals: Gold is trading against and holding the psychological 1250 level into this morning. This aligns many major technical indicators to create our rare major four-star support level at 1238.3-1250 and we believe that Gold will respond from here. Still, it must close back above 1277.5-1281.7 to neutralize the immediate-term weakness.
Bias: Neutral/Bullish
Resistance: 1277.5-1281.7**, 1291.3-1293.7***, 1299.6**, 1305.5-1313***, 1321**, 1332.4***
Pivot: 1259.9-1262.4
Support: 1238.3-1250****
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