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E-mini S&P (September)

Yesterday’s close: Settled at 3227.50, down 38.00

NQ, yesterday’s close: Settled at 10,548.25, down 256

Fundamentals: U.S. benchmarks are pointing lower again but battling at crucial levels of technical support (discussed in our Technical section below). We introduced a cautiously Bearish Bias yesterday and Tech led the way; Microsoft, Apple, Amazon, Alphabet and Facebook all lost at least 3%. Microsoft’s results were seen as unenthusiastic Wednesday evening and analysts are sounding alarms on Apple ahead of their report next Thursday. Overall, volatility surrounding the behemoth’s earnings is nothing unusual. Bill Baruch joined CNBC’s Trading Nation yesterday to discuss tech with a focus on software. The chipmakers also finished poorly. Intel slipped by 1% yesterday but is down 13% premarket following their report after the bell. NVIDIA fell 3% yesterday and is down another 2.5% overnight. AMD is a bright spot though shaking away from its peers and gaining 7% on news after the bell of its new desktop processor.

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Reports from Verizon, Schlumberger, Honeywell and American Express this morning were broadly mixed and the stocks are all up or down less than 1% premarket.

Weakness is not just due to tech, but U.S.-China relations which have been boiling for weeks. Markets have been broadly less concerned assuming President Trump will not ramp-up pressures ahead of the election and of course given the unprecedented stimulus measures. Last night, U.S. Secretary of State Pompeo delivered an address scolding the communist nation and asking other world power to unite in what could amount to a Cold War. In another signal tensions are rising, President Trump made comments disregarding the lauded trade deal due to China’s role in spreading Covid-19. In retaliation, China ordered the U.S. to close its consulate in Chengdu. This comes after the U.S. closed China’s Houston consulate Wednesday and reports that China is hiding a fugitive at its San Francisco location.

On the economic calendar, July Flash PMIs in the Eurozone expanded better than expected. For Manufacturing, this was the first expansion since February 2019; it only took achieving rock bottom and a dead-cat bounce to do such. U.S. July Flash PMIs are due at 8:45 am CT.

Technicals: Our roadmap here yesterday morning accompanying our cautiously Bearish Bias played out as perfectly as it could have. Price action in the S&P took out first key support at 3262.50-3265.50 and the NQ major three-star support at 10,790; this set the stage for additional waves of selling. Such was able to chew through major three-star support in the S&P at 3226.25-3233.25, a level that we described a decisive break and close below as opening the door to our downside target of 3169.50-3183.50. The decisive break was achieved with a low yesterday of 3214.25 but not so much the decisive close. Still, a bounce back attempt has stayed contained by the 3226.25-3233.25 pocket which we have broken apart today. The overnight high at 3239 aligns closely with our momentum indicator at 3237 and rally attempts must stay contained below here through the morning in order to lay groundwork for additional selling ahead of the weekend; a move above here will neutralize the tape. Key support in the S&P at 3213.50-3214 held yesterday and it will be a crucial one to watch intraday this morning; price action below will encourage added selling. As for the NQ which is leading the way, it held major three-star support at 10,511-10,548 yesterday although closing on the lows and at this level. The overnight weakness has taken out this critical technical level that aligns multiple indicators as well as a trend line from the March lows. This trend line now aligns with major three-star resistance at 10,610-10,646 which also encompasses our momentum indicator this morning. Rally attempts could retest here, but only a move and close back above will neutralize yesterday’s weakness. So far, our next major three-star support at 10,296-10,308 has held with first key support at 10,358 in front doing some heavy lifting. We remain cautiously Bearish in Bias until the aforementioned construction takes place.

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Bias: Neutral/Bearish

Resistance: 3237-3239**, 3254.50-3258.50**, 3271-3273.25**, 3284.50**, 3312**, 3339.50****

Pivot: 3226.50-3227.50

Support: 3213.50-3214**, 3204**, 3190.25-3194.50**, 3169.50-3183.50****

NQ (September)

Resistance: 10,610-10,646.25***, 10,761-10,790**, 10,837.25-10,863.75**, 10,900-10,934**, 11,002-11058***

Pivot: 10,511-10,548***

Support: 10,358**, 10,296-10,308****, 10,000-10,012***

Crude Oil (September)

Yesterday’s close: Settled at 41.07, down 0.83

Fundamentals: Crude Oil is holding up strong despite rising U.S. inventories, bloated Chinese inventories, a rise in U.S production, the impending rise in OPEC+ production and of course U.S.-China tensions. All things considered; this week has so far been a win for the bulls. Can it stick? Flash PMIs in Europe this morning expanded better than expected and this is supportive as economies snap back from zero demand. July U.S. Flash PMIs are due at 8:45 am CT and will help bellwether risk-sentiment. Overall, if equity markets continue to slip, we do imagine the energy sector will follow. We maintain that we want to be buyers from lower levels. Baker Hughes rig data is due at noon CT.

Technicals: Price action is holding up well against major three-star resistance at 41.28-41.74 and especially so after failing at the gap from March 6th earlier in the week. First key support comes in at 40.43-40.72 and if price action holds this today, it could set the stage for a positive start to next week. There are a few pockets of support from here down to $39 and ultimately that exemplifies the construction Crude Oil has had in consolidating at higher levels.

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Bias: Neutral

Resistance: 41.28-41.74***, 42.64****

Support: 40.43-40.72**, 39.79-39.87**, 39.31-39.39**, 38.77**, 37.07-37.32***, 34.20***

Gold (August)

Yesterday’s close: Settled at 1890, up 24.9

Fundamentals: Gold has ripped higher again this morning, now achieving $1900 for the first time since September 2011. Continued weakness in the U.S. Dollar, a wave of risk-off and U.S.-China tensions all lay groundwork for continued strength in Gold. The metal has ignore stronger than expected Eurozone Flash PMIs this morning and now looks to the U.S. reads at 8:45 am CT. Price action still faces the 1911.6 record and we imagine this is something that is achieved today or by Sunday night. Again, we do not suggest chasing price action, but instead be prepared to use pullbacks as a buying opportunity.

Bill Baruch joined CNBC’s Trading Nation yesterday to discuss not Gold, but Silver and where we expect it to go from here.

Technicals: We have rare major four-star resistance at the obvious pocket of 1900-1925. This week’s surge has extended, and we would not be surprised to see a pullback after achieving a fresh record. Our momentum indicator is rising and aligns with previous resistance and yesterday’s settlement to create first key support at 1886-1890; the bulls are clearly in the driver’s seat above here and the path of least resistance is higher across all time frames.

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Bias: Neutral/Bullish

Resistance: 1900-1925****

Support: 1886-1890**, 1880.5**, 1865-1868.5**, 1849.1-1850.9***

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Bill Baruch