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

August 31, 2018 08:59 AM

E-mini S&P 500 (September)

Yesterday’s close (Thursday, Aug. 31): Settled at 2902, down 12.75

Fundamentals: We could not have been more Bullish on this rally. Furthermore, our upside target of 2924.50 may not have been perfectly achieved for those who are greedy but hitting within 7 points is a win in our book. Yesterday’s PCE data showed that inflation stabilized back at 2.0% for the month of July. This kicks the focus back onto trade and there are questions looming with a long weekend and two deadlines in the crosshairs. First, representatives from the United States and Canada will meet ahead of today’s deadline to rework what was NAFTA. The U.S and Mexico have a deal in place and the White House has given Canada until Friday to jump aboard. In a tweet yesterday, President Trump pointed to more good things to come, was he insinuating a new trade deal with our number two and three trade partners? The real worry stems from trade talks between the United States and China. Wednesday, Sept. 5, is the date set for President Trump to officially address the third wave of tariffs and what we are calling the official start of a trade war; $200 billion in tariffs on Chinese goods. While we have said here many times that we do not believe this will be officially implemented, is it really worth being leveraged long within 1% of the record high ahead of the holiday weekend? To add further uncertainty to the table are trade talks between the U.S and Europe. Though these have been progressive, the White House has seemingly expected more from Europe. EU Commission President Juncker said this morning that if the U.S. reneges on a promise to refrain from imposing tariffs on autos, Europe will do the same. Though Germany represents the fourth largest trade partner to the United States and you must go down to number eight to find France; autos are of massive importance to this market. Overall, the market exuberance has been dampened and we must be patient to find the next entry point; discussed in further detail in the "Technical" section below. 

Technicals: While we do remain long-term Bullish in Bias, our near-term outlook is where we want to exude patience. Aggressive buyers should wait for an opportunity upon the first test to... Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and proprietary bias and levels. 

Crude oil (October)

Yesterday’s close: Settled at 70.25, up 0.74

Fundamentals: Mission accomplished! While we did exude patience and risk-management at many points, we did just call a more than $5 move in Crude oil; our target of $70.40 per barrel was achieved yesterday. Our bigger and longer-term narrative is one looking for $80 before the end of the year. Still, it is important to remember that nothing moves in a straight line. With a long holiday weekend ahead, we expect crude oil to remain elevated. To play devil’s advocate, what could hold crude oil back? Escalating emerging market fears are a serious headwind and furthermore, a fallout in the United States and China trade talks upon the implementation of the third wave of tariffs, $200 billion on Chinese goods, is going to cause a global growth scare. Our near-term target has been achieved, for those staying long, it will be important to manage your downside risk ahead of the Sept. 5 announcement on those tariffs. 

Technicals: Despite the fundamental headwinds mentioned above, who are we to Neutralize our Bullish Bias ahead of a long week. Technically speaking, this market is the most constructive commodity our there and we remain Bullish. However, traders must realize that price action is testing into major three-star resistance at 70.40-70.92. The immediate-term uptrend remains intact as long as price action stays above a certain level.

Gold (December)

Yesterday’s close: Settled at $1,205 per oz., down 6.5

Fundamentals: The Dollar did not begin another safe-haven melt-up upon yesterday’s emerging market scare and Gold has held ground very well into this morning. The Chinese Yuan has strengthened into this morning and this is a supportive factor for the metal. However, economic data from Europe, German Retail Sales and Eurozone CPI, came in below expectations and this is keeping the Dollar Index bid. The final read on August Michigan Consumer data is due at 9:00 a.m. Central. All and all, Treasuries are trading higher upon an uptick on trade fears with the United States and each China and Europe and the dollar is not running away; this is a good sign for the metal, a shift back to normality for now.

Technicals: Price action is battling but we must see a settlement back above... Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and proprietary bias and levels. 

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.