Daily markets morning round-up: E-mini S&P, gold, crude & Treasuries

April 19, 2018 08:52 AM

E-mini S&P (June)

Yesterday’s close (Wednesday, April 18): Settled at 2709.75, up 3.25

Fundamentals: Yesterday, the S&P covered the March 22 gap perfectly before covering the closing gap from Tuesday and bouncing to a series of lower highs on the session. The technicals are extremely relevant and cannot be ignored. That is why the lack of volume on this rally is becoming more and more concerning. Equity markets are as fickle as ever and right now the geopolitical coast is clear, however, the lack of volume in the face of great earnings signals that not everyone is buying into the ‘all is calm’ narrative. Ahead of the bell, we look to earnings from Procter & Gamble, Phillip Morris, PPG, Novartis Bank of New York Mellon and more. There are no major movers after the bell. On the economic calendar, today is weekly Jobless Claims and Philly Fed at 7:30 am CT. Fed Governor Brainard speaks at 7:00 am CT, Quarles speaks at 8:30 am CT and Cleveland Fed President Mester at 5:45 pm CT.

Technicals: Yesterday’s early morning and gap covering high of 2718.50 was never taken out. To us, this breakout above 2680 feels weaker than we would have liked and for that reason we are now completely Neutral. We remain long-term upbeat this market but look to trade from both sides and, more particularly, sell rallies until a move and or close out above first key resistance.

Crude Oil (June)

Yesterday’s close: Settled at 68.47, up 1.96

FundamentalsCrude oil exploded higher late in yesterday’s session ahead of tomorrow’s OPEC meeting. Additionally, the EIA inventory report was not bearish and while the dollar has not weakened against currency pairs in recent days, it has surely buoyed commodities. Tomorrow, OPEC and Non-OPEC ministers meet to discuss production caps and the current state of balance. Yesterday’s EIA headline Crude read was -1.071. This did not deviate much from the -0.500 expected nor did it from the API read Tuesday night. However, the products showed a combined draw of more than 6 mb and a steady rise of production in the lower 48 states (25k bpd) was offset by a drop in Alaska (10k bpd). Lastly, traders must keep an eye out for real Dollar weakness as a catalyst to $70

Technicals: We have been Bullish in Bias crude oil for some time now minus looking for an overextension and cooling of geopolitics to bring prices in earlier this week. Yesterday, we reintroduced a minor Bullish Bias here ahead of the EIA report and became more Bullish after an EIA report that was not bearish. The path of least resistance remains strongly higher, so much so that we reduced major three-star resistance. 

Gold (June)

Yesterday’s close: Settled at 1353.4, up 4.0

Fundamentals: Commodity prices are on fire and this week we have pointed to the inability of the Dollar Index to rally despite dismal data in the Eurozone and what one could consider as flattering data here in the U.S. If something cannot rise on the arguably bullish news, this is a sign of weakness. In conclusion, though you are not seeing the dollar weaken directly, it is weakening against commodity prices and in particular gold. The metals sector including Nickel and Aluminum has seen tremendous gains this week and month due to sanctions and tariffs. This strength is coupling with safe-haven demand and a weaker Dollar to invigorate the forgotten metal, Silver. Gold and Silver are most bullish when working together and this could be the start of something big. Today there is weekly Jobless Claims and Philly Fed at 7:30 am CT. Fed Governor Brainard speaks at 7:00 am CT, Quarles speaks at 8:30 am CT and Cleveland Fed President Mester at 5:45 pm CT.

Technicals: Though we are extremely Bullish Gold, we have kept a dash of Neutral in our Bias to exude caution in the face of strong technical headwinds.

Natural Gas (May)

Yesterday’s close: Settled at 2.739, up 0.001

Fundamentals: We will continue to focus on the May contract through the end of the week. Price action remains contained after attempting a rally but failing at major three-star resistance. Bears cling to the hope that the worst winter in 100 years comes to an end soon. Today’s storage draw expectations range from, yes draw in the middle of April, -23 bcf to -26 bcf. Additionally, next week is expected to draw too.

Technicals: While there is a lack of value freshly shorting here 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 (June)

Yesterday’s close: Settled at 120’045, down, 0’135

Fundamentals: Treasury markets sold off hard yesterday and the yield curve steepened. While some point to investors’ belief that the Fed could hike four times this year as the cause, we look to cooling geopolitical headlines and Russia reducing holding in the wake of further sanctions. There is a stew of reasoning, but we do not believe the Fed will raise rates four times this year. Today there is weekly Jobless Claims and Philly Fed at 7:30 am CT. Fed Governor Brainard speaks at 7:00 am CT, Quarles speaks at 8:30 am CT and Cleveland Fed President Mester at 5:45 pm CT.

Technicals: Price action is heavy into this morning and we look to support coming in.

About the Author

Bill Baruch is President and founder of Blue Line Futures, a leading futures and commodities brokerage firm. Bill has more than a decade of trading experience and focuses on developing trading strategies for both long and short-term trading approaches. Prior to Blue Line, Bill was the Chief Market Strategist at iiTRADER.  Bill is a featured expert on CNBC, Bloomberg and the Wall Street Journal as well as other top tier publications.