Futures Market Insights w/John Caruso - 02/19/2019

February 19, 2019 8:20AM CST

Bull and Bear Market

More disappointment in terms of the data out of the Eurozone last night. German ZEW continue to flash warning signs of a soft economy, and Italy….well more of the same out of Italy. So, as Europe weakens, the ECB begins to take notice and acknowledge the soft spots in the economy by promising stimulus or saying things like “all policy tools are available if needed” which is the same thing.  On top of Europe, the BOJs Kuroda also made mention last night that he’s ready to open his “first aid kit” as well if needed.  This sent the yen down overnight, but it’s fighting to regain its footing thus far – we’ll monitor this closely. 

Oil- big time reflation here.  Up 24% from the Dec lows of $42 bbl – trading at 56.30 bbl this morning.  The model suggests energy as being one of our “overweights” headed into Q2 2019.  Our trendline is around 55.25 and we’d like to see that hold to confirm that the trend is now moving up. 

Volatility- here’s a concern I have – despite having 0 fundamental information that supports a reacceleration of the growth cycle – if Volatility can hold below the 15-16 level, this would tip our quantitative signal back to “bullish trend” of U.S. equities. I need a little more time and space to determine this.  As we head into a back loaded week of US economic data, and of course the Q4 GDP number due out next week, we’ll attempt to be a little more patient.  As far as the US/China trade deal discussion “we’re closer than ever” we’ve been told by Trump over the weekend. 

Metals- One of the highlights of our positioning has been metals. We’ve made some timely buys in gold and silver, and to be honest, don’t think we’ve quite seen ANYTHING yet.  Gold is playing with a 5-6yr resistance are and if it breaks through, could really accelerate higher.  Of course what the main catalyst will be has not yet come to fruition, that being a weaker USD.  Likely the reason being is the ECB has recently taken the lead in the latest round of “dovish speak” towards the market.  Of course this takes us back to 2015 when we saw an ongoing “currency war” between major central banks and we could be on the brink of this again.   Furthermore, the strong dollar has already been mentioned by companies as major headwind for profits and earnings moving fwd.  Interesting to see how this plays out for Q1 2019 earnings.   Bullish on Gold and Silver reiterated.  Have a great day and Good Luck!

 Actionable Ranges;

Market

Trend

Range Low

Range High

Notes

 

 

 

 

 

SP500

Bearish

2675

2784

 

Nasdaq Comp

Neutral

7210

7503

Moved to Neutral Trend

10yr Yield

Bearish

2.60%

2.73%

 

VIX

Bullish

14.89

20.03

 

Oil

Neutral

49.85

54.66

Moved to Neutral Trend

Nat Gas

Bearish

2.49

2.89

Added by request

Gold

Bullish

1282

1306

 

USD (Cash)

Neutral

95.92

97.5

 

EUR/USD

Bearish

1.11

1.14

 

USD/JPY

Bearish

1.0925

1.1123

 

 

Feel free to reach out to John Caruso at jcaruso@rjofutures.com or 1-800-669-5354 if you’d like to get a 2 month free trial of our proprietary trade recommendations by email. 

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