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Morning Express: August 13, 2019

By:

President of Blue Line Futures

E-mini S&P (September)

Yesterday’s close: Settled at 2880.25, down 39.50

Fundamentals: U.S. benchmarks are doing their best to stave off waves of selling as mounting recession fears and geopolitical concerns rattle risk-sentiment around the globe. Germany’s closely watched ZEW Sentiment this morning was worse than expected and at the lowest level since December 2011. Hong Kong’s international airport is again closed; the ongoing protest and violence are showing no signs of dissipating. Today, Hong Kong’s leader Lam warned the city is “wounded” and the protests are pushing the city “into an abyss”. Argentina is also sending shockwaves with a near record setting rout on a number of financial instruments after President Macri lost the primary election over the weekend. The U.S. Treasury complex is acting as a barometer to these broad uncertainties; the 30-year Bond yield is a hair from its record low of 2.089% in July 2016 while the 2 and 10-year Note spread is only 5 basis points from inverting. Expectations for three more Fed cuts this year linger at a 50% probability. U.S CPI is due at 7:30 am CT. We watch the Core read most closely and this crucial inflation indicator has been stable with last month showing the largest MoM increase since January 2018. The YoY numbers are off last July’s peak, but not by much; stronger than expected inflation would begin tying the Fed’s hands.

Technicals: Equity markets finished sharply lower yesterday, here, we said, “First key support in the S&P comes in at 2899-2901.75 and sustained price action below here will pave a path of least resistance down to 2870.50-2877.75.” After hitting a low of 2872.50, the S&P settled at 2880.25. The NQ tested and held its parallel support into the close at … Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and actionable bias and levels. 

Crude Oil (September)

Yesterday’s close: Settled 54.93, up 0.43

Fundamentals: Crude Oil poked its head up near a strong wave of technical resistance yesterday on hopes Saudi Arabia will rescue the market from broader weakness. With weaker demand growth squarely in focus due to deteriorating conditions further dragged by the ongoing trade war, Saudi Arabia is seen as having further vested interest in stabilizing prices with the reinvigorated Saudi Aramco IPO. Traders must keep a pulse on risk-sentiment ahead of inventory data. Analysts expectations will trickle out through today and early estimates point to a draw of 2.5 mb of Crude. API is due after the bell at 3:30 pm CT.

Technicals: Price action could not quite get to major three-star resistance at 55.65-55.97. Today’s pivot aligns previous resistance with our momentum indicator at … Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and actionable bias and levels. 

Gold (December)

Yesterday’s close: Settled at 1517.2, up 8.7

Fundamentals: Gold hit a fresh six-year high trading to 1546.1 early this morning. A near record low on the 30-year Bond yield and near inversion of the 2 and 10-year Notes coupled with heightened geopolitical concerns and mounting recession fears around the globe have fueled the latest leg in this bull market rally. Stronger than expected U.S. inflation data this morning is pouring cold water over the latest spike. Core CPI was +0.3% MoM and +2.2% YoY, both above expectations and slimming the odds of a 50-basis point cut in September. Global data remains in the forefront with a deluge from China later tonight followed by German Q2 GDP early tomorrow morning. Technicals: As bulls, we got everything we could ask from Gold in the last 24 hours. First a direct test to 1500 coming out of the weekend that held. Next, a firm settlement that carried into the overnight before a decisive move out above our previous upside target at … Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and actionable bias and levels.

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