Global Markets Firm, Eyes on Saudi. Bullish Crude. Gold Risk vs. USD
Bill Baruch, president and founder of Blue Line Futures, previews E-mini S&P, Gold, Crude, Forex and Treasury markets and today’s economic report calendar. Follow his reports Monday-Friday on MoneyShow.com and short Midday Markets video.
Bill Baruch’s Midday Market Minute short video for Oct. 24 here.
Stocks soften up again, is there a bigger move coming?
Bill Baruch’s FX Rundown for Oct. 23-24 here.
Euro steady. Yen gives up. Aussie holds low. CAD higher.
E-mini S&P (December)
Tuesday’s close: Settled at 2746.25, down 10.25.
Fundamentals: U.S. benchmarks battled back Tuesday in magnificent fashion. The S&P (SPX) was down 2.3% at its lowest level since June and shaved losses to 0.37% by the bell. The NQ (NDX) lost 3% before turning green for a moment and finishing down 0.2%. Our biggest takeaway Tuesday is that amidst the fear, panic and a dragging news cycle, the technicals continue to lay a terrific roadmap. From that, the NQ was the most technically constructive by not taking out the October 11 low and closing above the 200-day moving average but most importantly, both the S&P and NQ held our major three-star support levels before reversing sharply.
Global markets are firm this morning. Europe opened higher given the strong U.S. close but saw waves of profit taking back near unchanged after Flash PMI data disappointed. U.S. benchmarks followed but the picture has turned rosier as U.S. hours approach and the German DAX is up 1%. Asia is stable but not gathering the risk-on bounce back seen in the west.
Adding to the overnight loose footing were comments from President Trump on the death of Saudi journalist Jamal Khashoggi, saying that he will leave it up to Congress to respond to “one of the worst cover ups.” Ultimately, President Trump was seen as a likely olive branch given his pro-business approach. If he gives Saudi Arabia a cold shoulder, the market clearly believes relations could sour more quickly.
On the earnings front, Boeing (BAC), UPS (UPS), Northrop Grumman (NOC), Freeport-McMoran (FCX) and others are due this morning.
After the bell, AMD (AMD), Microsoft (MSFT), Visa (V), Tesla (TSLA) and AT&T (T) will bring fireworks. Ford (F) will also be watched closely.
Technicals: Our major three-star support in both the S&P and NQ held beautifully Tuesday and if you spoke to our trade desk, you know we got bulled up upon such. First key resistance at ...
Today’s economic calendar
House Price Index is out, Flash PMIs and New Home Sales.
This afternoon, St. Louis Fed President Bullard speaks at 11:30 am EDT, Atlanta Fed President Bostic at 1 pm and Cleveland Fed President Mester at 1:10 pm.
Crude Oil (December)
Tuesday’s close: Settled at 66.43, down 2.93.
Fundamentals: Crude Oil is paring a small chunk of Tuesday’s near $3 loss ahead of the official EIA invetory data. Last night, API reported a massive surprise build of 9.88 mb.
You might be asking yourself, why the heck is Crude up more than 0.5% this morning after a number like that?
First, Crude simply overshot to the downside. We have been talking about exacerbating bear legs for the better part of the year given the overcrowded long trade. Those who are going to play this bullish trend (yes, please do not forget that Crude Oil is in a strong bull trend) must understand positioning dynamics and because of this must plan accordingly; a main catalyst in our more Neutral approach over the last two to three weeks.
Second, last week EIA reported an official build of 6.49 mb when API reported a draw of 2.1 mb. This means that API is now catching up to EIA. Last night after the number, we told clients that we believe Crude Oil will trade higher into the EIA report on the expectations of seeing a build of only 1 to 2 mb.
One must understand that this is now partially priced in and if EIA confirms anything above the expected 3.694 mb, Crude is likely to head lower. Analysts also expect -1.878 mb Gasoline and -1.927 mb Distillates.
Lastly, President Trump said he will leave it up to Congress to respond to the death of Saudi journalist Jamal Khashoggi. Saudi Energy Minister Khalid al-Falih said Tuesday that Saudi Arabia will raise production. This was viewed as an angle to appease President Trump with lower prices in order to soften penalties due to the death of the journalist.
Without the response in the hands of President Trump, traders are likely to begin questioning this additional production.
Technicals: Crude Oil overshot to the downside, plain and simple. We explained this dynamic above. For this reason, Tuesday afternoon, we went from more Neutral in Bias Crude Oil due to near-term concerns to more Bullish in Bias. On a positive note, Crude did ...
Gold (December)
Tuesday’s close: Gold settled at 1236.8, up 12.2.
Fundamentals: Gold is consolidating after Tuesday’s safe-haven rip higher. Holding back the metal more than anything this morning is a stronger U.S. dollar (USD) due to weak euro (EUR) fundamentals; poor Flash PMIs and the Italian budget impasse.
Furthermore, equity markets across the globe have stabilized and all safe-haven assets have dissipated.
Technicals: We remain Bullish in Gold with a longer-term focus, however, Tuesday we blatantly said longs must manage risk as Gold approached our major three-star resistance level at ...
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View a short video: Bill Baruch: Trading Futures. Gold, USD, yuan.
Recorded: TradersExpo Chicago July 24, 2018.
Duration: 4:34.
