E-mini S&P (June)
Yesterday’s close: Settled at 2894.50, up 13.50
Fundamentals: U.S benchmarks notched a fundamentally and technically constructive session yesterday. Although it felt price action shrugged off soft CPI data on Wednesday, we believe this to have overall kept bidders glued to a tiring rally. First and foremost, there is absolutely nothing wrong for a rally to consolidate after running 6.7% (S&P) from low to high in just about a week. At the same time, although U.S stocks are the best in the world and this certainly keeps the risk appetite hungry, there is no doubt that this is a Federal Reserve manufactured run as the odds for a rate cut by July 31st balloon to 88.6%. In fact, even the probability for a cut at their meeting next week has jumped to 34.2% as of this morning.
The risk-appetite soured shortly after midnight upon the one-two punch of the U.S officially blaming Iran for the attack on two takers in the Gulf of Oman and a deluge of China data whiffing on expectations. With bloating U.S Crude inventories 8% above the 5-year average for this time of year and a trade war worsening growth, even an escalating conflict in the Middle East has failed to firm Crude Oil. If this is so, what should it say about the broader parallels? Data from China last night echoed the ongoing trade war. Industrial Production missed expectations for the third straight month and grew at the slowest level since March 2002. Fixed Asset Investment, a number we like to watch very closely, has trended lower since peaking in 2010 and has not beaten expectations since October.
To make matters worse this morning, Broadcom is down 10% premarket after blaming the trade war on slowing chip demand. The chip sector is down nearly 3% this morning and weighing on the NQ which has kept losses in check by as much as 1% so far.
The economic calendar this morning could either boost or roil sentiment. We look to a pivotal read on May Retail Sales at 7:30 am CT and fresh June Michigan Consumer data at 9:00 am CT. As we first pointed to, equity markets have so far done absolutely nothing wrong, what happens going forward is now pivotal.
Technicals: The S&P settled yesterday right at our 2894 level and benchmarks did have a solid session considering that major three-star supports held and the close was upbeat. However, the S&P stalled again below major three-star resistance at ... Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and proprietary bias and levels.
Crude Oil (July)
Yesterday’s close: Settled at 52.28, up 1.14
Fundamentals: Overnight, the U.S officially blamed Iran for the attack on two tankers in the Gulf of Oman. Of course, this has been denied by Iran. Our takeaway though is that a failure for Crude to rally on such uncertainties and escalation of geopolitical tensions echoes how weak this market truly is amidst slowing growth around the world and a trade war that continues to hamper any hope of a recovery. This morning the IEA released their Monthly Report and was sure to cite the trade war when lowering their demand forecast for 2019. However, they pointed to stimulus measure that would help boost growth in 2020. It is tough to see an edge on either side of the trade in the near-term; given the weakness exuded by this market, however, also as uncertainties in the Middle East brew ahead of the weekend.
Technicals: Strong support below this market has held. Yesterday, we said that, “We see first key support at 52.40, major three-star support at ... Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and proprietary bias and levels.
Yesterday’s close: Settled at 1343.7, up 6.9
Fundamentals: Gold ripped higher overnight upon the same narrative we discussed in both the S&P and Crude sections; escalating tensions in the Middle East and deteriorating China data echoing a worsening trade war. U.S data today will either confirm or deny a potential bullish breakout in Gold. First up is Retail Sales at 7:30 am CT and then fresh June Michigan Consumer data at 9:00 am CT. With probabilities rising for a rate cut as early as next week, better data won’t change the broader landscape, but it will hold Gold back in the short-term. If this data falls upon the same path of what we saw from China early this morning, look for Gold to extend gains into the weekend.
Technicals: Gold has chewed through strong resistance at 1344.9-1349.8 to not only turn positive on the week but poke its head to the highest level in more than a year. Holding above first key support at 1335.7-1337.4 paved the way for technical strength and now ... Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and proprietary bias and levels.
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