E-mini S&P (June)
Yesterday’s close: Settled at 2843, up 83.75
Fundamentals: U.S benchmarks are settling in after yesterday’s melt-up. One that came on the heels of a 12% surge last week. Amazon led the way, setting a fresh record. In fact, yesterday it gapped out above the mark previously set on February 11th and never looked back to gain 5.28%. The IMF released its first World Economic Outlook since the Covid-19 outbreak crippled the global economy. They estimate global growth in 2020 to contract by 3% with many leading nations getting hit harder. They expect the U.S economy to shrink by 5.9%. Furthermore, more than 2200 died in the U.S alone yesterday, a record. The data throws cold water over hopes of reopening the economy sooner than later. Still, the largest question is how.
Economic data and earnings are in focus this morning. Fresh April NY Fed Manufacturing is expected at -35, a depth only reached in April 2009. March Retail Sales are also in focus. Remember, March data though will only help us gauge the early impacts of the shutdowns. The headline read is expected at -8.0%, a level far surpassing anything we see over the last 30 years. The Core read excluding autos is expected at -4.8%. In January 2009, the worst of the Great Financial Crisis, it came in at -3.1%. A trio of top banks reported this morning. Bank of America, Goldman Sachs and Citigroup are all down after underwhelming markets. UnitedHealth Group is positive though. The healthcare sector has been a leader as of late. (Bill Baruch joined CNBC to discuss the sector yesterday, but the video is not yet available).
The U.S government announced a $25 billion bailout package for the airlines. We are seeing gains across the sector this morning. Bill Baruch spoke with CNBC’s Trading Nation yesterday to discuss his top picks.
Lastly, President Trump pulled funding from the World Health Organization. He essentially accused them of being aligned with China, taking them for “face value”. This is something we have been adamant about; the WHO dropped the ball and exuded calm through their press conferences in mid-January. While on China, data early this morning on Foreign Direct Investment for March shows a drop of 10.8%, on the heels of -8.6% in February. We don’t doubt it to be weighing on risk-assets this morning.
Technicals: Price action is under slight pressure. In a bull market, we would call this a healthy pullback. However, we have leaned on this being a sharp bear market rally. Our only doubt on that thesis is simply, ‘don’t fight the Fed’. First key support in the S&P comes in at 2778.50-2779.50, this level aligns the 50% retracement back to Monday’s 2711 low and last Thursday’s settlement. Below here, major three-star support comes in at ... Please sign up at Blue Line Futures to have our entire technical outlook, actionable bias and proprietary levels emailed to you each morning. Crude Oil
Yesterday’s close: May settled at 20.11, down 2.30. June settled at 27.40, down 1.86
Fundamentals: Crude Oil is again under pressure, however, today the back months are closing the historically large spread. May options expired yesterday which means we are in the thick of the contract roll. May is down about 0.50 this morning while September is down about $1.00. The IEA’s negative Monthly Report is sending shockwaves through the energy sector. They estimate global oil demand in April to be 29 mbpd lower than a year ago and for the second quarter 23.1 mbpd lower. Furthermore, they pointed to a slower recovery than expected. The negativity is not constrained to the sector, risk-assets are broadly lower following the IMF’s downbeat World Economic Outlook which calls for the world economy to shrink by 3% in 2020. Historically low NY Empire State Manufacturing and Retail Sales data added to this narrative.
Weekly EIA inventory data is due at 9:30 am CT. Last night’s private API survey report certainly set a bar, +13.143 mb Crude, +2.226 mb Gasoline and +5.64 mb Distillates. This is a composite build of 21 mb. Storage levels are under the microscope with Cushing being the headline. API reported a build of 5.361 mb. Analyst estimates for the official EIA report are slightly tamer for the headline Crude read, but overall, in line; +11.676 mb Crude, +6.386 mb Gasoline and +1.437 mb Distillates.
Technicals: Price action across the complex is weak and the door is open for continued selling but we must see May Crude stay suppressed below 20.31-20.60. We are watching June Crude more closely given it is essentially the front-month. Our momentum indicator is lagging, and we expect it to close in on yesterday’s settlement of 27.40. Overall, with continued price action in the red through the session we find the door open for a test to ... Please sign up at Blue Line Futures to have our entire technical outlook, actionable bias and proprietary levels emailed to you each morning. Gold (June)
Yesterday’s close: Settled at 1768.9, up 7.5
Fundamentals: Gold is trading about 3% from yesterday’s spike highs and again the two to two and a half day rips have proven to be selling opportunities allowing traders to recalibrate longs upon pullbacks. Bill Baruch joined CNBC yesterday to follow up on his bullish call on Gold. He certainly reminded viewers of his narrative; you don’t want to be chasing Gold when everyone is screaming for it, that is when you want to capitalize on Gold you already own. The economic data and comments from the IMF are beginning to shed light on the impact of the Covid-19 outbreaks and government shutdowns. They expect the global economy to shrink by 3% in 2020 and the U.S by 5.9%. NY Empire State Manufacturing for April plunged to a historic -78.2. Headline Retail Sales for March which only begin to show the impact was -8.7%. Industrial Production for March also plunged below expectations. These are reasons why Gold is a buy upon pullbacks, but there is no reason to chase the action as markets rarely if ever move in a straight line.
Technicals: Gold is below our momentum indicator this morning which aligns with the 1752.8-1755 level, this is our Pivot. While below here, the door is open to first key support at 1722-1725. We view a retest to what is now rare major four-star support at ... Please sign up at Blue Line Futures to have our entire technical outlook, actionable bias and proprietary levels emailed to you each morning.
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