E-mini S&P 500 Index (ES) Futures Technical Analysis – Remains Weak Under 2999.00, Could Strengthen Over 3002.75

December E-mini S&P 500 Index futures are trading flat to lower on Wednesday, pressured by several factors including concerns over Brexit as U.K. and EU negotiators try to hammer out an acceptable alternative to a hard exit, renewed worries over U.S.-China trade relations and weaker than expected U.S. economic data. The potentially bearish events are helping to dampen yesterday’s earnings driven performance.

At 15:02 GMT, December E-mini S&P 500 Index futures are trading 2996.50, down 1.25 or -0.05%.

As far as U.S.-China trade relations are concerned, early Wednesday, China threatened countermeasures if the U.S. continues to “meddle” in its affairs over Hong Kong. President Trump has been noticeably silent on the matter, perhaps fearing he’ll offend the Chinese, causing the trade deal to fall apart.

Additionally, the Wall Street Journal questioned how much more in U.S. agricultural products China will actually buy and for how long.

Finally, keeping a lid on prices was a U.S. retail sales report that came in lower than expected, increasing the chances of an October 30 Federal Reserve rate cut.

E-mini S&P 500 Index
Daily December E-mini S&P 500 Index

Daily Technical Analysis

The main trend is up according to the daily swing chart. A trade through 3003.25 will signal a resumption of the uptrend.

On the downside, support comes in at 2960.50 to 2940.25.

Daily Technical Forecast

Based on the early price action, the direction of the December E-mini S&P 500 Index the rest of the session on Wednesday is likely to be determined by trader reaction to a Gann angle cluster at 2999.00 to 3002.75.

Bearish Scenario

A sustained move under 2999.00 will indicate the presence of sellers. If this move creates enough downside momentum then look for the selling to possibly extend into the downtrending Gann angle at 2979.75. This is a potential trigger point for an acceleration into the Fibonacci level at 2960.50.

Bullish Scenario

Overtaking and sustaining a rally over 3002.75 will signal the presence of buyers. Taking out yesterday’s high could trigger an acceleration to the upside with the main top at 3025.75 the next potential upside target.

Side Notes

I think the low volume is being caused by the lack of clarity for investors. Brexit, U.S.-China trade relations, U.S. economic data, and Fed rate cut decision may be too much for investors at this time, leading professional investors to head to the sidelines.

EUR/USD Mid-Session Update for October 16, 2019

The Euro is trading higher against the U.S. Dollar on Wednesday after U.S. retail sales fell for the first time in seven months in September, increasing the chances of a Fed rate cut at its policy meeting on October 29-30.

According to the Commerce Department, retail sales dropped 0.3% last month as households slashed spending on building materials, online purchases and especially automobiles. The decline was the first since February.

Data for August was revised up to show retail sales gaining 0.6% instead of 0.4% as previously reported. Economists polled by Reuters had forecast retail sales would climb 0.3% in September. Compared to September last year, retail sales increased by 4.1%.

After the release of the disappointing report, the chances of a Fed rate cut jumped from 78.4% to 88.2%, according to the CME FedWatch Tool.

Lower rates tend to make the U.S. Dollar a less-attractive investment.

At 14:20 GMT, the EUR/USD is trading 1.1048, up 0.0015 or +0.14%.

EURUSD
Daily EUR/USD

Daily Technical Analysis

The main trend is down according to the daily swing chart, however, momentum is trending higher. The main trend will change to up on a trade through 1.1110. A move through 1.0879 will signal a resumption of the downtrend.

The minor trend is up. This move confirms the upside momentum. A trade through the minor top at 1.1063 will indicate the buying is getting stronger. The minor trend changes to down on a move through 1.0991.

The main range is 1.1164 to 1.0879. Its retracement zone at 1.1021 to 1.1055 is currently being tested. Trader reaction to this zone will determine the near-term direction of the EUR/USD.

The short-term range is 1.0879 to 1.1063. Its retracement zone at 1.0971 to 1.0949 is support.

Daily Technical Forecast

Based on the early price action, the direction of the EUR/USD the rest of the session on Wednesday is likely to be determined by trader reaction to the downtrending Gann angle at 1.1053 and the Fibonacci level at 1.1055.

Bullish Scenario

A sustained move over 1.1055 will indicate the presence of buyers. If this generates enough upside momentum then look for a move into the minor top at 1.1063, followed by the downtrending Gann angle at 1.1072. Overtaking this angle could drive the EUR/USD into the uptrending Gann angle at 1.1099.

Bearish Scenario

A sustained move under 1.1053 will signal the presence of sellers. This could trigger a retest of the 50% level at 1.1021. This is a potential trigger point for an acceleration to the downside with the next target angle coming in at 1.0989.

Price of Gold Fundamental Daily Forecast – Poor U.S. Retail Sales Providing Support Along with Brexit, Trade Concerns

Gold futures are trading higher on Wednesday shortly after the cash market opening. The market has regained some of its upside momentum after rebounding from early session weakness. The catalysts behind the strength are lingering concerns over Brexit, pessimism over U.S.-China trade relations and weaker-than-expected U.S. economic data, which could mean an end of the month rate cut by the Fed.

At 12:57 GMT, December Comex gold is trading $1494.60, up $11.10 or +0.77%.

Renewed Brexit Worries

Gold is being underpinned this morning by renewed worries over Brexit after Tuesday’s optimistic outlook drove gold prices sharply lower.

On Tuesday, optimistic comments on Brexit from European negotiator Michel Barnier were backed up by reports that a draft legal text over the divorce was being drawn up.

“Our team(s) are working hard, and work has just started now today, this work has been intense over the weekend and yesterday, because even if the agreement will be difficult, more and more difficult, to be frank, it is still possible this week,” Barnier told reporters in Luxembourg on Tuesday morning.

He added that “any agreement must work for everyone,” saying it is “high time to turn good intentions into a legal text.”

By mid-afternoon (Tuesday), one report suggested that a draft deal was in the works according to two separate sources familiar with negotiations.

On Wednesday, traders aren’t so optimistic about a deal and are seeking protection in gold. This comes after “constructive” talks between the U.K. and the E.U. to get a Brexit deal, went on past midnight. Investors are still unclear if both parties can avoid postponing the U.K.’s departure from the EU on October 31.

U.S.-China Trade Relations Sour

There’s a little more tension between the United States and China on Wednesday, which is raising concerns over whether the two parties will reach even a partial trade agreement over the near-term.

This is stemming from reports that China is threatening “countermeasures” in response to the U.S. House of Representatives passing four pieces of legislation taking a hard line on Beijing for its violent response to protesters in Hong Kong.

U.S. Retail Sales Underperform

U.S. retail sales fell for the first time in seven months in September, raising fears that a slowdown in the American manufacturing sector could be starting to bleed into the consumer side of the economy. Furthermore, the disappointing report could help alter the split in the Federal Open Market Committee (FOMC) with more policymakers leaning toward a rate cut.

Daily Forecast

I’m looking for prices to remain underpinned unless an actual deal between the U.K. and the EU over Brexit is actually announced.  The U.S. and China seem far apart in their efforts to finish phase one of their partial trade agreement and the retail sales report is helping to support an end of October rate cut by the Fed.

Natural Gas Price Fundamental Daily Forecast – Traders Hunting for Stops Over $2.568 Amid Calls for Chilly Temps

Natural gas futures are edging higher for a fourth session on Wednesday, putting the market in a position to take out the two-week high and change the short-term trend to up.

Once again, the catalysts underpinning the market and driving out the weak short-sellers are stronger spot market prices amid forecasts pointing to chilly temperatures in store for the Great Lakes and Northeast late in the month.

At 12:50 GMT, December Natural Gas is trading $2.548, up $0.016 or +0.63%.

On Tuesday, the Global Forecast System (GFS) showed a “much colder pattern” compared to its European counterpart, and the midday GFS run trended even colder for late October, according to NatGasWeather.

“There remain three major periods of interest, starting with a cold shot currently sweeping across the northern U.S. for a bump in national demand,” the forecaster said. “This will be followed by national demand dropping below normal this weekend through early next week…but where the data is cold enough and bullish in most weather models is October 24-30 as a series of stronger cold shots advance deep into the U.S. with widespread lows of teens to 30s.”

Short-Term Weather Outlook

According to NatGasWeather for October 16-22, “A weather system with showers and cooling will sweep across the Midwest and Northeast the next few days with lows of 30s to 40s. Texas and the southern US will be mostly comfortable with highs of upper 60s to lower 80s, although locally hotter over the Southwest, South Texas, & Florida. High pressure and above normal temperatures will gain across the eastern half of the country this weekend with near perfect highs of 60s to 80s, while slightly cool over much of the West. Overall, decent demand the next few days, then lighter this weekend.”

Daily Forecast

The trend will change to up on a trade through $2.568, making this today’s upside target. Should a move through this level generate enough upside momentum, then with help from the “chilly” forecast, we could see an eventual surge into a 50% retracement level target at $2.636.

A failure to reach or blow through $2.568 will indicate traders are becoming concerned over Thursday’s government storage report that could show another triple digit build. However, since this is stale data and traders are more focused on the future weather, any correction is likely to be short-lived.

Oil Price Fundamental Daily Forecast – Underpinned by Upbeat Brexit News, but Gains Capped by Trade War Concerns

U.S. West Texas Intermediate and international-benchmark crude oil futures are trading nearly flat to slightly better on Wednesday, underpinned by optimism over Brexit and new signs that OPEC and its allies are willing to make further supply cuts, but pressured by renewed concerns over U.S.-China trade relations and potentially bearish weekly inventories reports.

At 11:54 GMT, December WTI crude oil is trading $53.04, up $0.16 or +0.30% and December Brent crude oil is at $58.71, down $0.03 or -0.05%.

Traders Hoping for Favorable Brexit Deal

Traders are optimistic that the European Union and the United Kingdom will strike a deal that avoids a “hard” or no-deal Brexit. This should boost economic growth and consequently oil growth and prices.

Early Tuesday optimistic comments on Brexit from European negotiator Michel Barnier were backed up by reports that a draft legal text over the divorce was being drawn up.

“Our team(s) are working hard, and work has just started now today, this work has been intense over the weekend and yesterday, because even if the agreement will be difficult, more and more difficult, to be frank, it is still possible this week,” Barnier told reporters in Luxembourg on Tuesday morning.

He added that “any agreement must work for everyone,” saying it is “high time to turn good intentions into a legal text.”

By mid-afternoon (Tuesday), one report suggested that a draft deal was in the works according to two separate sources familiar with negotiations.

Further Supply Curbs Possible

OPEC Secretary-General Mohammad Barkindo said OPEC “will do whatever (is) in its power” along with its allied producers to sustain oil market stability beyond 2020.

Daily Forecast

The markets are at a stalemate on Wednesday because of fading hopes of a trade deal between the United States and China after the latter threatened countermeasures against the U.S. for showing support for the Hong Kong protesters.

Traders are also looking for further developments over Brexit. A deal to allow the U.K. without hard ramifications should underpin prices.

Late in the session, the price action will be driven by the weekly inventories report from the American Petroleum Institute at 20:30 GMT. It is expected to show U.S. crude stocks probably grew for the fifth straight week, according to a Reuters survey.

The report has been delayed one day because of Monday’s U.S. bank holiday. The Energy Information Administration will report on Thursday.

USD/JPY Fundamental Daily Forecast – Pressured by Renewed Safe-Haven Buying

The Dollar/Yen is trading lower on Wednesday after failing to follow-through to the upside following yesterday’s strong performance. On Tuesday, the Forex pair was boosted by strong demand for risky assets and higher Treasury yields. The rise in share prices was fueled by better-than-expected U.S. earnings reports. The move in yields was driven by optimistic news over Brexit.

At 09:28 GMT, the USD/JPY is trading 108.685, down 0.178 or -0.16%.

Today’s early weakness is likely being fueled by some light hedging pressure triggered by China’s threat of countermeasures in response to a U.S. bill supporting Hong Kong protesters.

China Vows ‘Strong Countermeasures’

Three bills were approved in the House of Representatives Wednesday evening, one supporting the right of individuals to protest, another allowing for the U.S. to check on Beijing’s influence over the territory and a third aimed at preventing U.S. weapons from being used by police against protesters.

“If the relevant act were to become law, it wouldn’t only harm China’s interests and China-U.S. relations, but would also seriously damage U.S. interests,” said Geng Shuang, China’s Foreign Ministry spokesperson, in a statement on the body’s website. “China will definitely take strong countermeasures in response to the wrong decisions by the U.S. side to defend its sovereignty, security and development interests.”

Geng said while China was working to restore law and order in Hong Kong, U.S. lawmakers were “disregarding and distorting facts,” by turning criminal acts and violence against police into issues of “human rights or democracy.”

“That is a stark double standard. It fully exposes the shocking hypocrisy of some in the U.S. on human rights and democracy and their malicious intention to undermine Hong Kong’s prosperity and stability to contain China’s development,” said Geng, who urged the U.S. to “stop meddling.”

Brexit Traders Eye Imminent Draft Deal

Perhaps helping to limit losses on Wednesday are optimistic comments on Brexit from European negotiator Michel Barnier were backed up by reports that a draft legal text over the divorce was being drawn up.

IMF Warning

Another factor that could be pressuring the Dollar/Yen is a bearish report from the International Monetary Fund.  The U.S.-China trade war will cut 2019 global growth to its slowest pace since the 2008-2009 financial crisis, the International Monetary Fund (IMF) warned on Tuesday, adding that the outlook could darken considerably if trade tensions remain unsolved.

Daily Forecast

The markets are relatively calm overnight despite the threat of countermeasures by China to the U.S. legislation supporting the Hong Kong protesters. However, investors have taken precautionary steps by buying the Japanese Yen, gold and Treasury bonds for protection.

Keep an eye on this story to see if President Trump responds to the threat. He could trigger a huge break in the Dollar/Yen if he says anything negative about China that would put a trade deal in jeopardy.

Later today, traders will get the opportunity to respond to the U.S. retail sales report for September and the Fed Beige book. Both reports could influence the Fed’s decision on interest rates later in the month.

Bearish numbers will increase the chances of a Fed rate cut, further weakening the Dollar/Yen.

Wrong Response by Trump to China’s Countermeasures Threat Could Blow Up Trade Deal

There’s a breaking story out of Asia early Wednesday that could blow up into something major later in the day if U.S. President Trump decides to exacerbate the issue. The current price action in the financial markets indicates a sense of caution may be developing in the financial markets with safe-haven assets – Treasury bonds, Japanese Yen and gold turning higher, while demand for risky assets is edging lower.

According to reports, China is threatening to take countermeasures against the U.S. in response to a bill that favors the Hong Kong protesters, the Chinese Foreign Ministry said Wednesday.

That is a pretty bold threat to make while the United States and China are trying to finalize the first phase of a partial trade deal agreed upon on Friday. It’s also closely similar to the threat China made against the National Basketball Association (NBA) before it caved to pressure from the Chinese government last week after an NBA team official made comments supporting the Hong Kong protesters.

The Background

Three bills were approved in the House of Representatives Wednesday evening, one supporting the right of individuals to protest, another allowing for the U.S. to check on Beijing’s influence over the territory and a third aimed at preventing U.S. weapons from being used by police against protesters.

China’s Response

“If the relevant act were to become law, it wouldn’t only harm China’s interests and China-U.S. relations, but would also seriously damage U.S. interests,” said Geng Shuang, China’s Foreign Ministry spokesperson, in a statement on the body’s website. “China will definitely take strong countermeasures in response to the wrong decisions by the U.S. side to defend its sovereignty, security and development interests.”

Geng said while China was working to restore law and order in Hong Kong, U.S. lawmakers were “disregarding and distorting facts,” by turning criminal acts and violence against police into issues of “human rights or democracy.”

“That is a stark double standard. It fully exposes the shocking hypocrisy of some in the U.S. on human rights and democracy and their malicious intention to undermine Hong Kong’s prosperity and stability to contain China’s development,” said Geng, who urged the U.S. to “stop meddling.”

Trump’s Problem

Last week, CNN reported, Trump, in a call with Chinese President Xi Jinping, promised that the U.S. would stay quiet on the Hong Kong protests while the two countries continued to negotiate a possible end to the ongoing trade war.

Early Wednesday, traders are taking precautionary positions in response to the comments from China’s Foreign Ministry Spokesperson. Bonds, gold and Japanese Yen are being bought and stocks in the U.S. and Europe are being sold.

What traders could be waiting for is Trump’s response. Will he defy his promise to Chinese President Xi Jinping, or will he remain silent?  It’s highly unusual for Trump to remain silent for too long especially when a foreign country threatens the U.S. with “strong countermeasures.”

Traders should keep an eye on this story because it could develop into something major during the trading session. Somewhere, somehow, somebody in the press may try to push Trump’s button’s to get a response, and if they push the wrong one, Trump could say something to shake up the financial markets.

Trump certainly knows how to pick his battles. He’s usually quick to respond to comments from CEO’s, coaches, athletes, politicians and celebrities. However, if he doesn’t speak up, he’ll show the world that he just gave in to pressure from China, the country he keeps saying is weaker than the United States.

AUD/USD Forex Technical Analysis – Weakens Under .6721, Strengthens Over .6751

The Australian Dollar is trading lower on Wednesday, pressured by fresh tensions between the United States and China after Beijing threatened to retaliate over the passage of measures in Washington aimed at supporting Hong Kong Protesters.

“If the relevant act were to become law, it wouldn’t only harm China’s interests and China-U.S. relations, but would also seriously damage U.S. interests,” said Geng Shuang, China’s Foreign Ministry spokesperson, in a statement on the body’s website.

“China will definitely take strong countermeasures in response to the wrong decisions by the U.S. side to defend its sovereignty, security and development interests.”

At 08:00 GMT, the AUD/USD is trading .6733, down 0.0025 or -0.37%.

AUDUSD
Daily AUD/USD

Daily Technical Analysis

The main trend is up according to the daily swing chart. However, three days of selling pressure have put the Forex pair in a position to change the main trend to down.

A trade through .6710 changes the main trend to down. A move through .6811 will signal a resumption of the uptrend.

The short-term range is .6671 to .6811. Its retracement zone at .6741 to .6724 is currently being tested. Trader reaction to this zone could determine the next near-term move since buyers will likely try to form another secondary higher bottom.

The main range is .6895 to .6671. Its retracement zone at .6783 to .6809 is resistance. This zone stopped the rally on October 11 at .6811.

Daily Technical Forecast

Based on the early price action and the current price at .6733, the direction of the AUD/USD the rest of the session on Wednesday is likely to be determined by trader reaction to the short-term Fibonacci level at .6724.

Bearish Scenario

A sustained move under .6724 will indicate the selling pressure is increasing. This is followed closely by an uptrending Gann angle at .6721. If this angle fails as support then look for the selling to possibly extend into the main bottom at .6710.

Taking out .6710 will change the main trend to down. This could lead to a possible extension of the selling into the next uptrending Gann angle at .6696. This is the last potentially bullish angle before the .6671 main bottom.

Bullish Scenario

A sustained move over .6425 will signal the return of buyers. Since the main trend is up, buyers may step in on the test of the retracement zone at .6741 to .6724. Furthermore, they may try to defend the trend by protecting the main bottom at .6710.

The first upside target is the 50% level at .6741. This is followed by a downtrending Gann angle at .6781. Sellers came in earlier in the day on a test of this angle. Taking it out could trigger an acceleration into a pair of downtrending Gann angles at .6775 and .6781.

Asian Shares Rise as Upbeat Brexit News Offsets IMF’s Prediction of Lower Global Growth

The major Asia Pacific stock indexes are trading mostly higher on Wednesday, boosted by upbeat news regarding Brexit from the previous day. Brexit hopes were boosted by news that the European Union and United Kingdom were close to a deal. However, gains may have been limited by a warning from the International Monetary Fund (IMF) on Tuesday that the U.S.-China trade war will cut 2019 global growth to its slowest pace since the 2008-2009 financial crisis.

At 07:09 GMT, Japan’s Nikkei 225 Index is trading 22472.92, up 265.71 or +1.20%. Hong Kong’s Hang Seng Index is at 26644.67, up 140.74 or +0.53% and South Korea’s KOSPI Index is trading 2082.83, up 14.66 or +0.71%.

In Australia, the S&P/ASX 200 Index is trading 6736.50, up 84.50 or +1.27% and in China, the Shanghai Index is at 2976.77, down 14.28 or -0.48%.

Brexit Traders Eye Imminent Draft Deal

Asian shares were supported on Wednesday after optimistic comments on Brexit from European negotiator Michel Barnier were backed up by reports that a draft legal text over the divorce was being drawn up.

“Our team(s) are working hard, and work has just started now today, this work has been intense over the weekend and yesterday, because even if the agreement will be difficult, more and more difficult, to be frank, it is still possible this week,” Barnier told reporters in Luxembourg on Tuesday morning.

He added that “any agreement must work for everyone,” saying it is “high time to turn good intentions into a legal text.”

By mid-afternoon (Tuesday), one report suggested that a draft deal was in the works according to two separate sources familiar with negotiations.

IMF Says Trade War Will Cut Global Growth

The U.S.-China trade war will cut 2019 global growth to its slowest pace since the 2008-2009 financial crisis, the International Monetary Fund (IMF) warned on Tuesday, adding that the outlook could darken considerably if trade tensions remain unsolved.

The IMF said its latest World Economic Outlook projections show 2019 GDP growth at 3.0%, down from 3.2% in a July forecast, largely due to increasing fallout from global trade friction.

The World Economic Outlook report spells out in sharp detail the economic difficulties caused by the U.S.-China tariffs, including direct costs, market turmoil, reduced investment and lower productivity due to supply chain disruptions.

Other News

South Korea’s central bank cut its interest rate for the second time in three months on Wednesday, as expected, following its first cut in July.

In Australia, the listing of lender Latitude Financial, what was to be the biggest Australian IPO of the year, has been canceled, according to Reuters. The IPO was canceled because a large proportion of demand for shares was coming from hedge funds rather than desired long-term investors.

In New Zealand, the Reserve Bank signaled more rate cuts, or even unconventional stimulus measures, may be needed to counter global headwinds, as figures on Wednesday showed the country’s annual inflation rate slowed in the third quarter.

Inflation fell to 1.5% in the year to end-September from 1.7% previously, Statistics New Zealand said, moving further away from the central bank’s target, but slightly ahead of a 1.4% rise predicted in a Reuters poll of economists.

Two-Weeks Before Fed Meeting, Policymakers Remain Divided Over Rate Cut

It’s not too early to start thinking about the U.S. Federal Reserve’s next move on interest rates. With two weeks to go until their next monetary policy meeting on October 29-30, U.S. central bank policymakers appear unconvinced phase one of a partial U.S.-China trade deal is enough to dismiss the policy uncertainty that has weighed on U.S. economic growth for months.

At the same time, Federal Reserve decision-makers remain far from united behind additional rate cuts beyond the two cuts they made in July and September with unemployment at a 50-year low and consumer spending strong.

On Tuesday, it was San Francisco Fed President Mary Daly and St. Louis Federal Reserve President James Bullard’s turn to voice their opinions about the direction of interest rates.

Off-Setting Views

On Tuesday, Daly told reporters after a speech at the Lost Angeles World Affairs Council & Town Hall, “Right now, I see the economy in a good place, and policy accommodation in a good place.”

However, businesses retain an overarching sense of uncertainty, Daly said, even though “the gusting (of headwinds) seems to have gone down a little bit on the news of some progress on Brexit, some progress on trade negotiations between the U.S. and China.”

Current weak inflation levels, and a three-year inflation outlook among U.S. consumers falling to its lowest level on record, has caught her eye.

On Tuesday, a report showed the inflation outlook among U.S. consumers remained muted in September, rising slightly over the near-term but falling to the lowest level on record over a three-year time frame since the New York Federal Reserve began its monthly survey of consumer expectations in 2013.

Although Daly expressed some concerns over low inflation, she still expects it to rise back to the Fed’s 2% target, and believes the Fed’s two rate cuts so far this year, in July and September, will help sustain the longest U.S. expansion in history.

“In terms of what to do going forward, I would like to see additional data, because the economy is in a really good place right now,” Daly said.

Speaking in London, Bullard painted a gloomier picture. Like Daly, he sees what he called continued “trade regime uncertainty” as a key risk to the U.S. economy. However, he also put more emphasis on continued weak inflation and slowing global growth.

Unlike Daly, who sees Fed policy as currently “slightly accommodative”, Bullard said on Tuesday in his view policy may be “too restrictive”.

As a result, the Fed “may choose to provide additional accommodation going forward, but decisions will be made on a meeting-by-meeting basis,” Bullard said.

Fed Still Divided

Two weeks before the Fed’s interest rate decision, and policymakers still haven’t budged from their September meeting positions.

One group like Fed Chair Jerome Powell believes the outlook is generally positive. Another believes the U.S. economy needs even easier policy to avoid sinking into a recession. Still a third group believes the Fed has gone far enough or even a little too far in trying to revitalize the economy. Their biggest fear is a too-easy policy could lead to financial instability if investors take on too much risk and asset values get stretched.

As of Tuesday’s close, investors expect Fed policymakers to reduce rates when they meet October 29-30. According to the CME FedWatch Tool, the latest probability of a 25-basis point Federal Open Market Committee (FOMC) rate cut is 75.4%.

The focus ahead of the next Fed meeting will be on U.S. economic data. This week, the key report is Retail Sales. Next week, it’s Durable Goods. On October 29, the Conference Board releases its Consumer Confidence report. On October 30 while the Fed is meeting, a report on Advance GDP will be released.

Unfortunately, Fed members won’t have the chance at this meeting to react to data on Personal Spending and the Core PCE Price Index.

Additionally, ISM Manufacturing, which last month posted its second consecutive contraction, will be released on November 1 along with the October Non-Farm Payrolls report.

This could be a problem for Fed members because some may favor another rate cut in anticipation of a weak ISM Manufacturing report, and some may pass on a rate cut due to expectations of a solid jobs report.

Impressive Earnings Reports Provide Clarity for Investors

What a relief! Finally a day when we didn’t have to watch the box all day scanning for meaningless U.S.-China trade talk headlines Yes, earnings season began with a flurry of activity on Tuesday, allowing us to focus on the reports and only the reports. It certainly made trading easier because the numbers were cut and dry. There was very little to read into, very little was left to interpretation. The reports were either bullish or bearish.

In the cash market on Tuesday, the benchmark S&P 500 Index settled at 2995.68, up 29.53 or +1.01. The blue chip Dow Jones Industrial Average finished at 27024.80, up 237.44 or +0.91% and the technology-driven NASDAQ Composite Index closed at 8148.71, up 100.06 or +1.27%.

The big takeaway this week for traders is the impact of clarity. We learned on Monday that a lack of clarity usually has a negative impact on investor decisions, encouraging them to shed risky assets. Tuesday taught us that clarity over earnings brings them right back then.

Since it’s “the market”, I don’t expect bullish earnings reports to line up like they did on Tuesday. We’re likely to see days featuring mixed reports. Furthermore, we’re likely to see both bearish and bullish headlines on the progress of the trade talks. For that matter, you can throw in headlines about Brexit. Since we’re coming down to the deadline set for October 30, this phenomena has been capturing its share of headlines lately. It was reported on Tuesday that upbeat news over Brexit contributed to the rally.

Investors Bullied by Headlines

As I wrote earlier, this week’s price action in the stock market has been all about the impact of clarity on an investor’s decision process. I’m sure you heard the old adage, “when in doubt, stay out” for investors looking to enter a new position, and “when in doubt, get out” when holding a position.

In my opinion, trying to keep up with the headlines is primarily behind trader indecision. Furthermore, traders have even built algorithms to generate buy and sell signals on key words. This could be the source of stock market volatility also. Additionally, even the headline writers at Bloomberg, Reuters and CNBC aren’t telling you anything useful. Most of the time the headline is late and the story is stale by the time traders act upon it.

I think you’ll have more success if you react to numbers in a report and the price action than a headline unless the headline is stating a fact. Any headline implying hope, fear or greed is dangerous.

Last week, CNBC’s Jim Cramer warned against trading stocks on the roller coaster of U.S.-China headlines. Markets are “hostage to events that are not only totally out of our hands, but totally out of the president’s hands,” Cramer said on “Squawk on the Street.”

“I am describing an unfathomable market,” declared, “where if you have conviction, you are out of your mind,” meaning fundamental cases for buying or selling are useless.

Just the Fact Ma’am

If you’re going to trade the headlines then look for something that states a fact. On Tuesday, Reuters said, “JPMorgan Hits Record High, Lifts Bank Stocks, UnitedHealth Eyes Best Day in Eight Years, and JNJ (Johnson & Johnson) Set for Biggest One-Day Percentage Gain Since January. Those are facts.

“Brexit Deal Hopes Brighten Sentiment” – “Hope and Sentiment” – the kiss of death for traders. Clarity breathes life into a market.

U.S. Dollar Index Futures (DX) Technical Analysis – Brexit Optimism, Strong Sterling Weighing on Dollar Index

The U.S. Dollar is trading slightly lower against a basket of major currencies after posting a wicked two-sided trade early Tuesday. The early session rally was fueled by increasing demand for risky assets as U.S. Treasury yields rose and equity markets soared on the back of upbeat comments over Brexit and better-than-expected U.S. earnings reports.

At 16:11 GMT, December U.S. Dollar Index futures are trading 98.015, down 0.155 or -0.16%.

The upbeat comments over Brexit, however, were a double-sided sword, however, with a surge in the British Pound helping to drive the index lower. The Euro also inched higher against the dollar. However, losses may have been limited by a drop in demand for the safe-haven Japanese Yen and Swiss Franc. The dollar also lost ground to the commodity-linked Canadian Dollar.

Dollar index traders are primarily focused on the British Pound after optimistic comments on Brexit from European negotiator Michel Barnier were backed up by reports that a draft legal text over the United Kingdom’s divorce from the European Union was being drawn up.

U.S. Dollar Index
Daily December U.S. Dollar Index

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum has been trending lower since the formation of the closing price reversal top at 99.305 on October 1.

The main trend will change to down on a trade through 97.560. A move through 99.305 will negate the closing price reversal top and signal a resumption of the uptrend.

The minor trend is down. This move confirms the shift in momentum to the downside. A trade through 98.955 will change the minor trend to up.

The short-term range is 96.960 to 99.305. Its retracement zone at 98.135 to 97.855 is currently being tested. This zone provided support on Friday when the selling stopped at 97.885. Trader reaction to this retracement zone will likely determine the near-term direction of the index.

On the upside, 50% resistance levels come in at 98.435 to 58.595. On the downside, the major 50% support level is 97.140.

Daily Swing Chart Technical Forecast

Based on the early price action and the current price at 98.015, the direction of the December U.S. Dollar Index the rest of the session on Tuesday is likely to be determined by trader reaction to the 50% level at 98.135.

Bearish Scenario

A sustained move under 98.135 will indicate the presence of sellers. This could trigger a further break into Friday’s low at 97.885, followed by the Fibonacci level at 97.855. This is a potential trigger point for an acceleration to the downside with 97.560 the next likely downside target.

Bullish Scenario

Overcoming the 50% level at 98.135 and sustaining the move will signal the presence of buyers. If this creates enough upside momentum then look for an extension of the rally into the 50% level at 98.435.

USD/JPY Fundamental Daily Forecast – Investors Shedding Safe-Haven Yen Amid Upbeat Brexit Comments

The Dollar/Yen is trading higher and in a position to take out last week’s high at 108.626 after a string of better-than-expected earnings reports offset concerns over U.S.-China trade relations. A reversal to the upside in U.S. Treasury yields and increased demand for risky assets are also driving investors away from the lower-yielding Japanese Yen.

At 15:33 GMT, the USD/JPY is trading 108.801, up 0.402 or +0.36%.

Upbeat Brexit Outlook

Positive news over Brexit is also reducing demand for the safe-haven Japanese Yen. This move is being fueled by the latest comments on Brexit from European negotiator Michel Barnier sounded an optimistic tone.

“Our team(s) are working hard, and work has just started now today, this work has been intense over the weekend and yesterday, because even if the agreement will be difficult, more and more difficult, to be frank, it is still possible this week,” Barnier told reporters in Luxembourg on Tuesday morning.

Treasury Yields Rise

U.S. Treasury yields are on the rise on Tuesday after opening lower, making the U.S. Dollar a more attractive asset. Traders are saying the move is being fueled as investors dump safe-haven assets like the Japanese Yen amid increasing hopes for a Brexit deal.

U.S. Equities Strengthen

The Japanese Yen is being further pressured by a sharp rise in U.S. equities as corporate earnings season go off to a strong start. The early rally was ignited by strong performances in the banking and health care sectors.

Shares of J.P. Morgan Chase jumped 3.8% after its third-quarter numbers topped analyst expectations. The company’s revenue also hit a record, boosted by home and auto loans along with credit cards.

UnitedHealth posted a quarterly profit that topped analyst expectations by 13 cents per share. The company’s results got a boost from growing pharmacy benefits. UnitedHealth also hiked its full-year earnings guidance. UnitedHealth shares climbed 8%.

Increasing demand for risk is good for the U.S. Dollar because of the carry trade, whereby investors sell borrowed Yen from Japanese banks to buy U.S. equities.

Kuroda Speaks

Earlier today, the Bank of Japan (BOJ) raised its assessment for one of the country’s nine regions and stuck to its sanguine view on the rest, though frail factory production and exports suggested pressure for more stimulus is unlikely to ease anytime soon.

BOJ Governor Haruhiko Kuroda said on Tuesday the central bank would not hesitate to take additional easing steps if risks to the economy grow and threaten momentum toward its 2% inflation target.

“We need to pay closer attention to the possibility that momentum toward achieving our price target will be lost,” Kuroda said in a speech at a quarterly meeting of the central bank’s regional branch managers.

E-mini NASDAQ-100 Index (NQ) Futures Technical Analysis – Upside Momentum Targets 7956.50, Followed by 7973.75

December E-mini NASDAQ-100 Index futures are trading sharply higher after the cash market opening on Tuesday after a string of stronger-than-expected earnings reports in the banking and healthcare sectors spilled over to the technology sector.

Investors are also showing little concern over U.S.-China trade relations despite dampened hopes of a permanent trade deal. This likely means that investors feel optimistic that an agreement will eventually be reached, but that it will be a complicated process.

Furthermore, as long as the two-sides are still talking, it’s hard to be bearish. But a collapse in talks will be bearish.

At 14:19 GMT, December E-mini NASDAQ-100 Index futures are trading 7915.00, up 57.50 or +0.73%.

E-mini NASDAQ-100 Index
Daily December E-mini NASDAQ-100 Index

Daily Technical Analysis

The main trend is up according to the daily swing chart. A trade through 7918.50 will signal a resumption of the uptrend. The main trend changes to down on a move through 7583.25.

The short-term range is 7973.75 to 7474.25. Its retracement zone at 7783.00 to 7724.00 is support. Trading above this zone will continue to generate a strong upside bias.

Daily Technical Forecast

Based on the early price action and the current price at 7915.00, the direction of the December E-mini NASDAQ-100 Index futures contract the rest of the session on Tuesday is likely to be determined by trader reaction to the downtrending Gann angle at 7910.50.

Bullish Scenario

A sustained move over 7910.50 will indicate the presence of buyers. Taking out last week’s high at 7918.50 will indicate the buying is getting stronger. This could trigger a surge into a downtrending Gann angle at 7956.50.

The angle at 7956.50 is the last potential resistance angle before the main tops at 7973.75 and 8002.50.

Bearish Scenario

A sustained move under 7910.50 will signal the presence of sellers. If this move is able to generate enough downside momentum then look for a potential acceleration to the downside with the next target a downtrending Gann angle at 7818.50, followed by the short-term Fibonacci level at 7783.00.

E-mini Dow Jones Industrial Average (YM) Futures Technical Analysis – Bullish as Long as 26727 Holds as Support

December E-mini Dow Jones Industrial Average futures surged on Tuesday in conjunction with a jump in the cash market on the opening. Stronger-than-expected corporate earnings reports earlier in the session were the catalysts behind the early strength.

J.P. Morgan Chase kicked off things with third-quarter numbers that topped analyst expectations. The company’s revenue also hit a record, boosted by home and auto loans along with credit cards. The news helped drive shares up more than 2%.

At 13:36 GMT, December E-mini Dow Jones Industrial Average futures are trading 26855, up 109 or +0.41%.

Shares of Johnson & Johnson were also up more than 2% after its third quarter numbers were lifted by higher sales of cancer and other prescription drugs. Shares of UnitedHealth, another Dow member, rose 2.9% after the company posted a quarterly profit that topped analyst expectations by 13 cents per share.

E-mini Dow Jones Industrial Average
Daily December E-mini Dow Jones Industrial Average

Daily Technical Analysis

The main trend is up according to the daily swing chart. A trade through 26975 will signal a resumption of the uptrend. The main trend will change to down on a move through 25983.

The Dow is posting an inside move for a second straight day. This suggests investor indecision and impending volatility. Bullish traders are hoping better-than-expected earnings news will offset worries over U.S.-China trade relations.

The short-term range is 27312 to 25703. Its retracement zone at 26697 to 26508 is support. The market is currently trading on the strong side of this zone, giving the market an early upside bias.

Daily Technical Forecast

Based on the early price action and the current price at 26855, the direction of the December E-mini Dow Jones Industrial Average futures contract the rest of the session on Tuesday is likely to be determined by trader reaction to the uptrending Gann angle at 26727.

Bullish Scenario

A sustained move over 26727 will indicate the presence of buyers. If this move can generate enough upside momentum then look for the rally to extend into the downtrending Gann angle at 26960, followed by last week’s high at 26975. Additional upside targets are minor tops at 27040 and 27112, followed by a downtrending Gann angle at 27136.

Bearish Scenario

A failure to hold and a sustained move under 26727 will signal the return of sellers. The first downside target is 26697. Look for a technical bounce on the first test of this level.

If 26697 fails as support then look for a potential acceleration to the downside with the next target the main 50% level at 26508.

E-mini S&P 500 Index (ES) Futures Technical Analysis – Strengthens Over 2983.00, Weakens Under 2981.75

December E-mini S&P 500 Index futures are pointed higher shortly ahead of the cash market opening with traders reducing some of their concerns on U.S.-China trade relations, while shifting their focus to earnings season. Stocks are also being supported after a number of major companies posted better-than-expected results.

Posting stronger-than-expected results were J.P. Morgan Chase, Johnson & Johnson, UnitedHealth and BlackRock. Goldman Sachs, however, missed the Street’s estimate.

At 13:16 GMT, December E-mini S&P 500 Index futures are trading 2976.75, up 11.25 or +0.37%.

E-mini S&P 500 Index
Daily December E-mini S&P 500 Index

Daily Technical Analysis

The main trend is up according to the daily swing chart. Today’s second consecutive inside move suggests investor indecision and impending volatility.

A trade through 2994.00 will signal a resumption of the uptrend. The main trend will change to down on a move through 2881.75.

The main range is 3024.75 to 2855.00. Its retracement zone at 2960.50 to 2940.25 is support. Holding above this zone is helping to generate an upside bias.

The major support zone remains 2901.25 to 2872.00.

Daily Technical Forecast

Based on the early price action and the current price at 2976.75, the direction of the December E-mini S&P 500 Index the rest of the session on Tuesday is likely to be determined by trader reaction to the resistance cluster at 2981.75 to 2983.00.

Bullish Scenario

Taking out and sustaining a rally over 2983.00 will signal the presence of buyers. If this move creates enough upside momentum then look for a surge into last week’s high at 2994.00, followed by a minor top at 2995.00 and a downtrending Gann angle at 3003.75. This is the last potential resistance angle before the 3025.75 and 3032.25 main tops.

Bearish Scenario

A sustained move under 2981.75 will signal the presence of sellers. The first downside target is the main Fibonacci level at 2960.50. This is a potential trigger point for an acceleration into the main 50% level at 2940.25.

Price of Gold Fundamental Daily Forecast – Just Enough Concern Over Trade Deal to Underpin Prices

Gold futures are edging higher on Tuesday amid concerns over U.S.-China trade relations. Lower U.S. Treasury yields are helping to underpin prices, while gains are being capped by increased demand for risky assets and a firmer U.S. Dollar. Traders are also attributing the early strength to dampened hopes of a prolonged trade deal between the United States and China, and ahead of a summit that will determine how Britain leaves the European Union.

At 12:21, December Comex gold is trading $1497.90, up 0.30 or +0.035.

The lukewarm response to phase one of the trade deal continues to encourage gold bulls to hang on to their long positions. However, this isn’t really bullish news either. It seems to be just enough to prevent the market from collapsing like it did last week.

At the same time, the fact that the two sides keep talking is helping to keep a lid on prices with some saying the threat of a more permanent deal being signed at any time over the next few weeks is enough to keep even the strongest bulls from adding to their long positions.

The Brexit narrative is also playing with investor sentiment ahead of the make-or-break summit between Britain and the European Union on Thursday and Friday that will determine whether Britain is headed for a deal to leave the bloc on October 31, a disorderly no-deal exit or a delay.

Daily Forecast

There are no major economic releases in the United States on Tuesday, but it is the start of earnings season on Wall Street. Although most analysts are forecasting a weak earnings season, today’s session started with a bang with a number of major companies posting big earnings beats.

Stronger-than-expected reports could help boost stock prices, which could put some pressure on demand for gold.

Traders are also monitoring the situation in the Middle East after the U.S. decided to stop trade negotiations with Turkey and raised steel prices to 50%. Gold could find support if the situation escalates in the area.

Oil Price Fundamental Daily Forecast – Choppy Trade Expected as US-China Hammer Out Details of Trade Deal

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading lower on Tuesday, after clawing back most of its early session losses. The catalyst behind the second day of weakness is worry over U.S.-China trade relations that is raising concerns over the weakening global economy and declining demand growth.

At 11:55 GMT, December WTI crude oil is at $53.29, down $0.36 or -0.68% and December Brent crude oil is at $59.04, down $0.31 or -0.56%.

Weak data from China is also pressuring prices. Earlier on Tuesday, the National Bureau of Statistics (NBS) reported that China’s factory gate prices declined at the fastest pace in more than three years in September. That follows customs data on Monday that showed Chinese imports had contracted for a fifth straight month.

On Friday, the announcement of a partial trade deal between the United States and China helped boost prices, but these gains were erased on Monday when China said it wanted to continue discussions before agreeing to the first phase of the deal. This news rekindled concerns over demand ground.

However, the market did get a slight boost on Tuesday after OPEC Secretary-General Mohammad Barkindo said OPEC and its allies “will do whatever (is) in its power” to sustain oil market stability beyond 2020.

Rising tensions in the Middle East are also providing some support on concerns over a possible support disruption after President Trump imposed sanctions on Turkey and demanded the NATO ally stop a military incursion in northeast Syria that is rapidly reshaping the battlefield of the world’s deadliest ongoing war.

According to CNBC, the move highlights increasing instability in the Middle East amid months of attacks on tankers and oil sites in and around the oil-exporting Gulf region.

Daily Forecast

It seems U.S.-China trade relations will be the main focus for traders for several weeks or until the two economic powerhouses sign the “Phase One” trade agreement. So expect a volatile two-sided trade.

Short-term investors will be watching U.S. inventories. Prices could get a boost this week as investors are expecting a drawdown in crude inventories in the United States.

This week’s American Petroleum Institute (API) and U.S. Energy Information Administration (EIA) inventories reports are expected to show a slight draw down.

Natural Gas Price Fundamental Daily Forecast – Traders Await Further Confirmation of Late October Cold Spell

Natural gas futures are inching lower early Tuesday after failing to follow-through to the upside overnight, following two days of higher gains. It’s probably too early to pass judgment on the price action, which is suggesting investor indication and impending volatility.

The market could also be going through a transition period after last week’s steep sell-off as weather models show colder temperatures arriving in late October. Buyers are being a little tentative, however, because they aren’t sure if the weather pattern is indicating a “cold snap” or something more pronounced.

The catalysts underpinning the market are stronger spot market prices amid forecasts pointing to cooler temperatures in store for the Great Lakes and Northeast later this week.

Additionally, guidance from both the American and European models reflected a colder pattern in the 11-to-15 day period, according to Bespoke Weather Services.

At 11:47 GMT, December natural gas is trading $2.504, up $0.006 or +0.24%.

Short-Term Weather Outlook

According to NatGasWeather for October 15-21, “A strong cool shot will sweep across the Midwest the next few days after tracking out of the Rockies and Plains with lows of 20s and 30s. Texas and the southern US will be mostly comfortable with highs of upper 60s to lower 80s, although locally hotter over the Southwest, South Texas & Florida. The West will see a mix of weather systems and warm breaks, coolest Northwest with 50s and 60s, while hottest over California and the Southwest with 70s to near 90 Fahrenheit. Overall, stronger demand this week compared to last week due to cooling across the North.”

Mid-Term Weather Outlook

Bespoke chief meteorologist Brian Lovern said, “…models appear to be bringing a wave of tropical forcing out toward the central Pacific, allowing a warmer ridge to develop in the West, sending a colder trough into the eastern half of the nation. The bulk of the forcing hands back over the Indian Ocean, however, and without blocking in place, it is possible that this colder push is simply another transient one.”

Daily Forecast

The shift in the weather pattern has been just enough so far to chase out a few of the weaker shorts. The stronger short-sellers want to see stronger evidence of a prolonged cold spell.

“Even with the colder trends over the weekend, gas-weighted degree day totals over the next 15 days are still on track to fall below normal,” Bespoke said.

“We respect the model output but want to see more in order to be convinced that this is a fundamental shift in base state toward higher than normal demand, as opposed to just another window of variability,” Bespoke chief meteorologist Brian Lovern said.

The daily chart indicates the direction of the market on Tuesday will likely be determined by trader reaction to a minor 50% level at $2.278. Holding above it will indicate the short-covering is getting stronger.

EUR/USD Mid-Session Technical Analysis for October 15, 2019

The Euro is trading lower against the U.S. Dollar shortly after the U.S. opening. Earlier in the session, the single-currency traded higher, helped by more positive vibes about a Brexit deal and as dimming optimism over a U.S.-China trade deal kept the greenback in a range.

In other news, the German ZEW headline numbers for October came in better-than-expected at -22.8 versus an estimate of -27.0 and the previously reported -22.5.

It’s another light day in the U.S. with FOMC member speakers George and Bullard on tap. Traders are likely to continue to focus on any new developments over U.S.-China trade relations. If conditions continue to sour then look for the U.S. Dollar to strengthen due to safe-haven buying.

At 11:09 GMT, the EUR/USD is trading 1.1012, down 0.0015 or -0.14%.

EURUSD
Daily EUR/USD

Daily Technical Analysis

The main trend is down according to the daily swing chart. However, momentum has been trending higher since October 1.

The minor trend is up. A trade through 1.1063 will indicate the buying is getting stronger. A move through 1.0941 will change the minor trend to down, shifting momentum back to the downside.

The main range is 1.1164 to 1.0879. Its retracement zone at 1.1021 to 1.1055 is resistance. This zone stopped the rally at 1.1063 last Friday.

The minor range is 1.0879 to 1.1063. Its retracement zone at 1.0971 to 1.0949 is the next downside target.

Daily Technical Forecast

Based on the early price action and the current price at 1.1021, the direction of the EUR/USD the rest of the session on Tuesday is likely to be determined by trader reaction to the main 50% level at 1.1021.

Bearish Scenario

A sustained move under 1.1021 will indicate the presence of sellers. This could trigger a break into the uptrending Gann angle at 1.1001, followed by an uptrending Gann angle at 1.0979. If this angle fails to hold then look for the selling to possibly extend into 1.0971 to 1.0949.

Bullish Scenario

A sustained move over 1.1021 will signal the presence of buyers. If this move can create enough upside momentum then look for the rally to possibly extend into a resistance cluster at 1.1055.