E-mini S&P (December)
Yesterday’s close: Settled at 2639.50
Note: Today is the last day we will use the December contract, not switching ahead of Friday Nonfarm.
Fundamentals: Equity markets across the globe are broadly higher on a very strong Chinese Trade Balance read and after a key stepping stone on Brexit talks was passed. Both Exports and Imports soared on the readout of China last night and we can see a direct jump higher above resistance at 2640.75 and the day’s high of 2641.25 at the time. The Nikkei, DAX and FTSE are all up more than 1% this morning. In Europe, the Northern Ireland party had held up talks this week between the UK and the E.U and we noted this as a reason for equity weakness. The discussion moved past phase one in the late hours of the evening and this has also lifted equity markets. Nonfarm Payroll will be front and center this morning and expectations are for 200,000 jobs grained in November with Average Hourly Earnings growth of 3%. We have discussed that as the labor market becomes tighter, the headline read on job growth will have less of an impact once the dust settles. The read on Average Hourly Earnings will be crucial for next week’s FOMC Meeting’s verbiage. Michigan Consumer data is due at 9:00 am CT.
Technicals: Price action remained contained at the 2637.50-2640.75 level through yesterday’s session and after a stubborn afternoon, ultimately led to the retreat to the 2631-2633 level we targeted on the Midday Market Minute. The tape has elevated into this morning and this is exactly what we discussed yesterday with the risk being to the upside ahead of Nonfarm Payroll and ultimately into next week’s Fed rate hike meeting. With the move out above 2637.50-2640.75 we have now become more Bullish and resistance at 2648.25-2651.25 was nearly achieved, but we see a higher high before the session is over. The bears must achieve a close below 2640.75-2643 to encourage further weakness.
Resistance – 2648.25-2651.25**, 2666***, 2679-2685**, 2712****
Pivot – 2640.75-2643.
Support – 2632.25**, 2626*, 2618-2619.25**, 2605-2607**, 2594.50-2596****, 2555.50-2565***
Crude Oil (January)
Yesterday’s close: Settled at 56.69
Fundamentals: Crude Oil is higher this morning and we were clear yesterday that we do not want to push our analysis or in other words, ‘don’t push your luck’. We advised that Crude Oil likes to bottom out by Friday morning and grind higher into the weekend. This is very relevant today with tensions in the Middle East and the threat of a strike in Nigeria that would disrupt production. Furthermore, China released extremely robust Trade Balance data last night and have helped push price action through resistance.
Technicals: We hope that traders out there listened to our call to take profit in the week near the $56 mark early yesterday morning. Price action did remain contained below resistance at 56.75-56.99 through yesterday’s session but we were pretty adamant yesterday morning and in the Midday Market Minute that we expected the tape to extend into the weekend. Resistance does come in at the 57.35 level today and we will evaluate the settlement and as of now plan to reposition short early next week.
Resistance – 57.35**, 57.71-57.92**, 58.97***, 59.96***, 62.58**
Support – 56.54-56.78**, 55.82-55.95**, 55.00-55.25***