E-mini S&P 500 (June)
Yesterday’s close: Settled at 2772.75, down 16.25
Fundamentals: Yesterday was a tough session for market bulls, and we took our licks. CPI data was in line with expectations and this did pave the road higher for equity markets; the S&P traded to a new swing high of 2807.25 and the Nasdaq extended to a new record. Not so fast though, the White House took another dramatic turn with the release of Secretary of State Rex Tillerson. The reaction was not immediate, it seemed as if the market was trying to turn a corner from the ‘sell first, ask questions later’ environment. But as investors digested the uncertainty this brings to foreign policy, it was not long before price action began cascading lower. The true pressures arrived on news that President Trump is targeting $60 billion in Chinese goods with a strong focus on information technology, consumer electronics and telecommunications. This news especially weighed on the more tech-focused Nasdaq as the FANG leaders lost significant ground.
Onto today, strong Industrial Production and Fixed Asset Investment data out of China last night helped price action form a bottom. Dovish comments from European Central Bank President Mario Draghi lifted the tape further. We remain upbeat on this market and today could be a solid recovery session. PPI and Retail Sales data is due at 7:30 a.m. Central. Though the PPI inflation read takes a back seat to CPI, it must be closely watched. Retail Sales will garner more attention today, especially coming off an abysmal January read. The post-holiday hangover contraction will be easily forgiven on a stronger than expected today and we believe good news here is good news for stocks. Business Inventories data is due at 9:00 a.m. Central.
Technicals: Price action yesterday took out major three-star support on the second test and traded down to our third level of support into the close and overnight. The 2762.25-2764.25 level has held into this morning with a swing low of 2762.25. Our next major three-star support level does not come in until... Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and proprietary bias and levels.
Crude oil (April)
Yesterday’s close: Settled at 60.71, down .65
Fundamentals: Crude oil turned south sharply yesterday after failing to regain the $62 per barrel mark. We see the main driver as crude being a casualty to the risk-off environment along with traders paring back long bets ahead of inventory data. The dollar was not stronger on the session. Price action stabilized above the psychological $60 barrier and less of a build than expected from API +1.156 mb crude versus +1.5 mb invited some of the buyers back to the party. Strong Industrial Production and Fixed Asset Investment data out of China last night has also been supportive. Additionally, according to Bloomberg, China’s oil demand rose 13.3% from January through February versus the same time last year. OPEC’s monthly report is out at 7:50 a.m. Central today. The EIA inventory report is due at 9:30 a.m. Central and the expectations are for +2.023 mb crude, -1.176 mb gasoline and -1.519 mb Distillates. Production will be critical as always.
Technicals: With a weaker U.S. dollar and crude testing major three-star support, we are slightly bullish on crude but are cautious ahead of today’s EIA data. Price action hugging the pivot level this morning as traders await the OPEC Monthly Report.
Yesterday’s close: Settled at 1327.1, up 6.3
Fundamentals: Despite a quick stop-run, gold liked the in-line CPI read yesterday. Ultimately, this pins much more of an emphasis on the non-existent wage growth as we head into next week’s Fed hike meeting. However, gold also enjoyed a safe-haven bid on the news that Secretary of State Rex Tillerson was dismissed by the White House. Equity market came under pressure on this news as well as tariff fears; President Trump is looking to impose $60 billion in tariffs on China with a strong focus on tech and telecommunications. The dollar did not like this news either and found itself trading lower before ECB President Mario Draghi jawboned the Euro back early this morning. Gold finds itself consolidating ahead of PPI and Retail Sales data. While PPI will garner a little more attention due to the in-line CPI, Retail Sales is a big read coming off last month’s post-holiday contraction. Both will go a long way in dictating the gold trade today. Business Inventories are due at 9:00 a.m. Central.
Technicals: Yesterday’s constructive price action paves the way for a higher tape, but the hurdle remains first key resistance at... Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and proprietary bias and levels.
Natural gas (April)
Yesterday’s close: Settled at 2.786, up .008
Fundamentals: Natural gas is down heavily this morning on a technical failure to at our major three-star resistance. Although Nor’easter is making its way through the East Coast and temperatures remain frigid through the Midwest, the technicals simply failed. Although storage draws going two and three weeks out have picked up, the technicals simply failed. The risk is still to the upside if this weather persists, but for now the bears hang their hat on knowing warmer weather is just weeks away.
Technicals: The failure yesterday budded throughout the session as it failed to hold above the 2.80 mark and failed 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.
10-year Treasuries (June)
Yesterday’s close: Settled at 120’105, up 0’04 ticks
Fundamentals: Price action spiked on the in-line CPI read but ultimately settled back in where it was to prior within an hour. Although there was not an immediate reaction in equities to the Tillerson news, the combination of such with the White House announcing it wants to impose $60 billion in tariffs on Chinese technology products and telecommunications eventually brought the strong waves of selling in equity markets. This kept a bid under the 10-year as the session unfolded. Still, price action remains very technical and in a consolidation ahead of next week’s FOMC Meeting. We have been discussing here that though Neutral the 10-year, we are expecting the yield curve to continue to flatten. The disappointing but not awful data has been very supportive to this; we expect more of the same over the coming months. Retail Sales and PPI are due at 7:30 a.m. Central and Business Inventories are at 9:00.
Technicals: First resistance has kept the tape in check ahead of this morning's data. A very well-defined... Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and proprietary bias and levels.