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E-mini S&P (September)
Yesterdays close:Settled at 2932, up 51.75.
Fundamentals:Yesterday morning, President Trump announced he will delay additional tariffs on China until December and the risk-appetite responded. U.S benchmarks rallied sharply with the S&P gaining 1.8%. For now, Chinese negotiators plan on visiting Washington in about two weeks, early September, for face to face meetings. The volatility that ensued after this announcement, favorable or not, must further raise investors awareness to how emotional and susceptible this market is to such headlines because it can go both ways. Although everyone has witnessed impacts causing a selloff, many investors fail to remember. In and of itself, such a move could keep investors from taking on additional risks at higher levels without additional certainties on trade. Hahaha! Who are we kidding, FOMO (the Fear Of Missing Out) will take over in such a scenario.
A deluge of data from China last night poured cold water over yesterdays rally. Our favorite trio of Industrial Production, Fixed Asset Investment and Retail Sales all missed expected with Industrial Production given the mounting global slowdown had the largest impact on sentiment. This morning, German Q2 GDP QoQ confirmed a contraction of 0.1%. The largest headline driver may be what was the inevitable achievement recessionary indicating yield curve inversion of the 2-year and 10-year Treasury yield followed by a record low yield in the 30-year Bond. This has certainly seemed to awaken the algos today.
Technicals:The tape is giving back yesterdays rally and such a failure becomes extremely concerning technically and fundamentally. First, lets not forget that major three-star support, an extremely crucial level we were pointing to since last week at 2870.50-2877.75 in the S&P held on a closing basis Monday and was buoyed the action ahead of the bell yesterday. This level has been adjusted and broken out first key support at 2877.75-2880 and then major three-star support below there 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)
Yesterdays close:Settled at 57.10, up 2.17
Fundamentals:Crude Oil roared higher yesterday after President Trump delayed tariffs on China and the two sides announced a plan to meet in two to three weeks. API data after the bell that showed a surprise build of 3.7 mb of Crude compared to an expected draw of 2.761 mb began the rejection of yesterdays rally. This was followed by dismal Chinese data, most importantly a big miss on Industrial Production, the worst read since March 2002. The broader risk-environment has also taken a swift kick to the gut after 2-year and 10-year Note achieved the inevitable inversion. Heading into the EIA data at 9:30 am CT, API has certainly lowered the bar. The official expectations are for -2.775 mb Crude, +0.025 mb Gasoline and +0.985 mb Distillates. Estimated production, only 100,000 bpd below its record, also must be watched closely.
Technicals:With only a slight Bullish Bias yesterday, our next major three-star resistance level at 57.25 was achieved. First, this Neutralizes our Bias. Now, we have a failure on our hands fundamentally and technically as well as within the energy sector and potentially more broadly. This would invigorate a Bearish Bias, however, we do not want to get in front of todays inventory report. However, below ...Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and actionable bias and levels.
Yesterdays close:Settled at 1514.1, down 3.1
Fundamentals:Gold was fundamentally and technically constructive yesterday in the face of news that could have chopped its stability off at the legs. First, CPI data was stronger than expected and then President Trump delayed the trade war. Gold fell from 1546.1 to a low of 1488.9 and the technical recovery from this level was absolutely tremendous. There is no major U.S economic data today but the big news is the 2-year and 10-year Note yield inversion. Going back to last autumn, we have consistently written that a yield curve inversion provides a tailwind to Gold; this is what we are seeing today.
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