E-mini S&P (March)
Yesterday’s close (Tuesday, Jan. 17): settled at 2783.50
Fundamentals: The S&P traded to 2808.50 yesterday morning and hit our major three-star resistance at 2807. The rally over the holiday weekend was on momentum alone ahead of earnings season and after a strong close to the week that saw JP Morgan gain 1.65% on Friday. As we discussed here yesterday morning, the exuberance coming into the session felt overdone. When this happens, any one thing can quickly spook the market. The looming government shutdown at the end of this week did just that. Talks in Congress hit a snag yesterday with immigration continuing to be a key argument.
The S&P traded to a session low of 2769.25 before working its way back near unchanged. However, this morning the S&P is back positive on the week and news that Speaker Paul Ryan has put together a stopgap bill to keep the government open through February 16th is a key catalyst. We could see a vote tomorrow. Earnings from Bank of America and Goldman Sachs are due this morning. We also have Industrial Production data at 8:15 am CT. The Bank of Canada is expected to hike rates at 9:00 am. Fed Presidents Evans, Kaplan and Mester speak at 2:00 pm CT, 2:15 and 3:30.
Technicals: Price action slipped hard yesterday but has regained footing into this morning. On yesterday’s Midday Market Minute, we discussed buying the first test into support at 2783.50-2788.75, which was broken. However, S2 held with a low of 2769.25 and the quick bounce back gave traders flexibility...
Crude Oil (February)
Yesterday’s close: settled at $63.73 per barrel
Fundamentals: Nothing has changed on the fundamental front as traders await inventory data that begins to come into the picture later today. We discussed yesterday how this move feels overdone and should have become exhausted in an exacerbated holiday session. Brent truly achieves $70 before reversing and this seems to be enough to encourage some longs to take profits and bears to jump on board. Furthermore, with a record net-long position, anyone who wants to buy, has already bought. Today is options expiration for the February contract and this has likely had a helping hand in containing prices.
Technicals: We reintroduced a Bearish Bias yesterday but remain hesitant to put more emphasis on this until a close below major three-star support.
Yesterday’s close: settled at $1337.1 per ounce
Fundamentals: The dollar continues to find some footing at the key 90 level in the Dollar Index and this will be critical for the gold trade in the near-term. The metal retreated about 1% from its Sunday night high and now is seemingly awaiting more information. Equity markets saw short-lived pressure in the second half of yesterday which helped gold retest its swing high. However, as stopgap budget deal could be voted on tomorrow the equity market has recovered along with the dollar and treasuries are seeing pressure; not a great combination for gold in the very near term. Industrial Production data is due at 8:15 am CT and Fed Presidents Evans, Kaplan and Mester speak at 2:00 pm CT, 2:15 and 3:30.
Technicals: We remain unequivocally bullish gold in the long-term. In the near term, first support at the 1327.3-1330.5 is very important and a close below here will signal a healthy pullback.
Natural Gas (February)
Yesterday’s close: settled at $3.129 per thousand cubic feet
Fundamentals: Near month prices are up strong today as next week’s storage draw estimates (for consumption this week) ballooned due to the snow that has hit the Midwest and is heading to the east coast. Cash natural gas is up more than $1 today, trading above $5.
Technicals: Price action is retesting the key 3.18-3.21 level this morning.