E-mini S&P 500 (September)
Last week’s close: Settled at 2839.50, up 11.00 on Friday and up 22.00 on the week
Fundamentals: After minor overnight volatility, U.S, European, Japanese and Hong Kong benchmarks are near unchanged but those from China are deeply in the red. The German DAX took a sweeping hit after a big miss on Factory Orders this morning but has regained positive; Euro weakness is supportive. In an editorial in its state-run newspaper to start the week, China directed sharp comments at President Trump, doubling up on calling him a bully and saying that it is in their best interest to sacrifice the short-term term economics for the larger and longer-term picture. This comes just days after Trump pointed to weakness in the Chinese economy as giving the U.S an upper hand in trade talks. In Sunday’s Tradable Events this Week, we discussed China’s moves on Friday, the Yuan and data this week. Overnight, the yuan traded as much as 1.4% from Friday’slow, however, this has now been cut in half. Advertently, we are seeing U.S Dollar strength and pressure on commodities. There is headline risk with a number of domestic and geopolitical irons in the fire. Of course, U.S. and China trade talks are atop the list. However, positive developments are not far-fetched, especially those on the NAFTA front. Regardless, equity markets held strong on Friday despite these risks heading into the weekend and we view this as a positive sign. This again exemplified that the Federal Reserve is the biggest elephant in the room. With no major increases in wage growth on last Friday’s Nonfarm Payroll and the aforementioned headline risks, the Fed has no reason to move faster than already priced in and this rhetoric is supportive to the market. In fact, June’s MoM Average Hourly Earnings growth was revised down to 0.1% from 0.2%. For this reason, Friday’s CPI read will be very closely watched.
Technicals: We again turned Bullish in Bias to finish out the week and price action finished strongly, not only securing a close above our major three-star level 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)
Last week’s close: Settled at 68.49, down 0.47 on Friday and down 0.20 on the week
Fundamentals: Crude Oil battled to hold ground on Friday but ultimately remained range bound and still has. Price action is moving back north on news that Saudi production in July actually declined. This is coupled with news on the geopolitical front with sanctions coming down the pipeline on Iran in the next 24 hours on U.S Dollar purchases, metals and other dealings Additionally, Saudi Arabia has seized diplomatic relations with Canada due to the jailing of women’s rights activists and this could be a story to watch closely. The Chinese Yuan has weakened and the U.S. dollar has strengthened against all major currencies, likely holding back further gains.
Technicals: Friday’s price action failed at first key resistance 69.08 and fell back to major three-star support as noted here. However, this hold against major three-star support at... Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and actionable bias and levels.
Last week’s close: Settled at 1223.2, up 3.1 on Friday and down 9.1 on the week
Fundamentals: Friday’s Yuan strength due to China adjusting their reserve requirement on forex forward certainly boosted Gold and the metals complex. However, the editorial in China’s state-run newspaper pointing to not backing down in this trade conflict has again weakened the Yuan and thus Gold and the metals complex. The U.S Dollar is also stronger on a big whiff from German Factory Orders. Friday’s Nonfarm Payroll was otherwise supportive but has been quickly forgotten. There is no major economic data from the U.S. today.
Technicals: Price action in gold is lower again this morning with the fundamentals of the Yuan driving it south. The CoT report on Friday showed that Managed Money expanded their record short position in gold and there is reason to believe that more have piled in through this morning. Gold struggled Friday and again today against first key resistance at... Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and actionable bias and levels.