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Today's Playbook - Blue Line Morning Express

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E-mini S&P (June)

Yesterdays close:Settled at 2857.50, down 8.50

Fundamentals:U.S benchmarks are flirting with losses in the 1% ballpark after Minutes from the latest Fed meeting and Flash PMI data. Yesterday afternoon, those Minutes exuded the Fed is less likely to cut rates than what markets have seemingly priced in. Additionally, Fed Chair Powells comments on slow inflation being transitory is an opinion more widely held among members. If inflation does pick up in the back-half of the year, it could price-out a rate cut altogether. This morning, the CMEs FedWatch Tool shows a 70.2% probability the Fed cuts rates this year. One reason interest rate futures are signaling such an outsized probability of a rate cut versus the Feds more patient rhetoric is simply that economic growth globally is worsening amidst a backdrop of already low rates. Our belief dating back to 2017 was that rates are ultimately trending lower for longer. Overnight, Manufacturing data in Japan contracted. This morning, German and Eurozone PMIs and German Business Climate data all worsened and came in below expectations (Manufacturing PMI contracted). Data to this degree not only lights a fire under Treasury prices but it echoes the ongoing effects of the U.S-China trade war. This is where stocks find themselves this morning, under immense pressure once again now that fundamentally we can see deteriorating conditions due to trade. U.S Flash PMIs are due at 8:45 am CT and if these come in below expectations, we are likely to see continued selling in equities. However, a better than expected read should help turn sentiment. New Home Sales are due at 9:00 am CT. At 1:00 pm CT we have a slew of Fed speakers Barkin, Bostic, Daly and Kaplan.

Technicals:Yesterday, the S&P failed again to get out above trend line resistance that could be drawn back to the all-time highs on May 1st. We noted this here yesterday and had major three-star resistance at 2870.75-2872.50. This technical failure has opened the door for continued waves of selling and ultimately what has been a bleed-out since last night. The resistance trendline was not the only one forming, we also have support ....Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and proprietary bias and levels.

Crude Oil (July)

Yesterdays close:Settled at 61.42, down 1.71

Fundamentals:This is a failure in Crude Oil in the final leg of a seasonally bullish push. Yesterdays inventory data was bearish with builds across the board much larger than anticipated while estimated production bounced back 100,000 bpd. But the selling really picked this morning after Flash PMIs in Europe echoed the ongoing deterioration in global conditions caused by the U.S-China trade war. Adding pressure on commodities broadly is a strengthening Dollar. These effects have outweighed geopolitical tensions in the Middle East ahead of the long weekend.

Technicals:Crude Oil is below the 200-day moving averages at 60.46-60.67 and the psychological $60 mark. The tape is bearish and ...Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and proprietary bias and levels.

Gold (June)

Yesterdays close:Settled at 1274.2, up 1.0

Fundamentals:Gold is responding to global weakness and negative rates after another weak read on European PMIs. The German 10-year Bund has been in negative territory since decisively cutting through zero on May 7th and after a two-day reprieve rates are again heading lower. U.S Treasuries are also surging with the 30-year hitting a two-month high. All the while the Dollar Index is attempting to breakout. Yes, Dollar strength is holding back Gold from further gains but at a bare minimum it is nice seeing the metal respond to global weakness. U.S Flash PMIs are due at 8:45 am CT and this will be key for the currency trade, a miss here will bring some relief to the Euro and allow Gold to truly capitalize on the global weakness. However, a better read on U.S PMIs could quickly force Gold to pare todays early gains. New Home Sales are due at 9:00 am CT. At 1:00 pm CT we have a slew of Fed speakers Barkin, Bostic, Daly and Kaplan.Bill Baruch joined Kitcos Daniela Cambone to discuss where we could find a floor in Gold and Silver.

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Bill Baruch is President and founder of Blue Line Futures a leading futures and commodities brokerage firm located at the Chicago Board of Trade. Blue Line’s mission is to put the customer first and bring YOU the best customer service, consistent and reliable research and state of the art technology. Bill has more than a decade of trading experience. Working with clients he focuses on developing trading strategies that present a clear objective for both long and short-term trading approaches. He believes that in order to properly execute a trading strategy, there must be a well-balanced approach to risk and reward.

Prior to Blue Line, Bill was the Chief Market Strategist at iiTRADER which followed running a trade desk at Lind Waldock and MF Global.

Bill is a featured expert on CNBC, Bloomberg and the Wall Street Journal as well as other top tier publications.

Contributing author since 10/6/17 

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