E-mini S&P (March)
Yesterday’s close (Wednesday, Dec. 27): Settled at 2685.50
Fundamentals: The bears tried taking the reigns yesterday as a little more volume crept back into the market. Consumer Confidence retreated from 17-year highs, but housing data continues its tear with a strong read on Pending Home Sales. Today we look to weekly Jobless Claims, Goods Trade Balance and Wholesale Inventories due at 7:30 am CT. Chicago PMI is due at 8:45 am CT. Tech stocks put in a decent recovery yesterday from major support and it will be key to watch those today as we believe they could be a leader in either direction.
Technicals: Price action has remained below the 2688.50-2690.25 pivot and this will be key to watch through today’s session. However, the bears were unable to take it below first support yesterday at 2679-2680.75 with a session low of 2681.50. As well, the Nasdaq has traded into, breached briefly and ultimately has held major three-star support at 6446-6450 and a move back above 6500 will encourage further buying. Trend line resistance in the Nasdaq comes in today around 6480 and this must be watched as well.
Resistance – 2694.50-2696**, 2700*, 2715.25***
Pivot – 2688.50-2690.25
Support – 2679-2680.75**, 2675.25-2675.50**, 2667.25-2669.75**, 2651.75-2652.50***
Crude Oil (February)
Yesterday’s close: Settled at 59.64
Fundamentals: Yesterday’s API reported an estimated draw of six million barrels of crude oil while Gasoline built slightly more than expected at 3.1 million barrels. Though Crude came in higher than the 3.8 mb expected, a surprise build in Distillates offset much of this. Prices remain elevated due to the Libya and North Sea outages, but we believe the market has digested all of this. Especially if Libya can get back online next week, we believe their outages to be overcompensated for. Tighter supply accompanied with China releasing higher import quotas for 2018 have kept a bid in the market.
However, we remain focused on buyers already buying and not only look forward to Friday’s CoT but the OPEC argument on how to remove its production cap in the coming months. Expectations for today’s EIA report due at 10:00 am CT are for -3.97 mb Crude, -1.278 mb Gasoline and -.584 Distillates. Production will remain key, especially since we have not seen additional rigs come on line in the Baker Hughes survey.
Technicals: We continue to have a Bearish bias, one that got thrown for a loop with the Libya news this week. However, prices have remained contained and not only is $59.96 per barrel a very long-term resistance level, it aligns closely with what has become a tremendous psychological barrier at $60. If this can hold through today, we remain extremely hopeful next week. However, the bears must be nimble and not beat a dead horse, if this market rallies above $60 today, remember tomorrow is Friday and there is another long weekend ahead. Also, remember how crude put its high in on the first trading day of the year last year so save the ammo.
Resistance – 59.96***, 62.58**
Support – 58.97-58.99***, 58.32-58.52**, 58.06*, 57.60**, 55.88-56.11***, 55.00-55.25***
Yesterday’s close: Settled at 1291.4U
Fundamentals: The U.S. dollar is finishing out its worst year since 2003. Not only have we been and remain Dollar bears, but we expect to see a decline of at least another 5% and believe gold is primely positioned to capitalize in the coming months. Since bottoming the day before the Fed hiked rates, Gold has settled higher in 10 out of the 11 sessions. This morning we have weekly Jobless Claims, Goods Trade Balance and Wholesale Inventories due at 7:30 am CT. Chicago PMI is due at 8:45 am CT.
Technicals: Price action has clearly extended above resistance at $1,288-$1,292.5 and is eyeing the psychological $1300 market and rare major four-star resistance just above at $1,302-$1,303.4. If you have missed this move, don’t worry, we remain Bullish as of now through the month of January and the strong seasonal trades that we have discussed here are still right in the mix. However, remember this is strong resistance and we have designed several strategies to mitigate risk and capitalize on a pullback while maintaining long exposure. There is risk, as with every trade, but please call our trade desk at 312-278-0500 to open an account and discuss how we are doing this.
Resistance – 1302-1303.4****, 1312.7*, 1317**, 1335.8**
Pivot - 1288-1292.5
Support –1278-1278.8**, 1272.5-1273.9**, 1259.7-1262.3**
Natural Gas (February)
Yesterday’s close: Settled at 2.732
Fundamentals: The stock read is due at 9:30 am CT and official expectations are right in the middle of our -110/-115 estimate at -113. This read has been baked in for some time now but still a stronger draw than expected should add to already bullish momentum coming into today. As for the weeks to come, it only looks like the Polar Vortex weather is further solidifying itself over the next 10 days and should keep a bid under prices as it pushes shorts against the wall. The CoT for this last Friday was the second report in a row that showed a net-short positions, two Friday’s ago was the first time Natural Gas Managed Money went net-short since September 2016.
Technicals: Price action did not secure a close out above 2.745-2.747 but today is priming to do so. With the tape above R2 a close above here will officially neutralize the tape while a close above 2.886-2.88 is needed to truly squeeze the shorts.
Resistance – 2.8095**, 2.886-2.88**, 2.96-3.01***
Support – 2.745-2.76**, 2.658-2.681**, 2.562***, 2.486-2.522****
10-year Treasuries (March)
Yesterday’s close: Settled at 123’31
Fundamentals: Treasuries finally got off the ground Tuesday and showed some follow through yesterday after a retreat in Consumer Confidence. Remember, bottoming is a process, not a price. Furthermore, it is important to trade a position and capitalize off solid bounces, if you were talking to our trade desk yesterday, this is what we recommended. We remain long and intermediate term bullish the 10-year. However, it could be due for a consolidation session after this bounce and since the S&P failed to take out first support. Data today includes weekly Jobless Claims, Goods Trade Balance and Wholesale Inventories at 7:30 am CT. Chicago PMI is at 8:45 am CT and this other than tomorrow’s ECRI Weekly is the last piece of domestic data for 2018.
Fundamentals: Price action is flirting with three-star resistance at 123’27-123’285 and this will remain key on a closing basis. Support now comes in at what was resistance at 123’20-123’225 and ironically this is now for a completely different reason; we like to see this, and this helps us put strong emphasis on a level.
Resistance –123’27-123’285***,124’01*, 124’06-124’07**, 124’125-124’135**, 124’295-125’00***
Support – 123’20-123’225**, 123’10-123’135**, 122’29****