E-mini S&P (March)
Yesterday’s close (Thursday, Feb. 22): Settled at 2711.50
Fundamentals: U.S. equity markets struggled to hold gains late in yesterday’s session as technical selling pushed price action to a new intraday low. In yesterday’s Midday Market Minute, we said that a move below 2,715 will invite further selling. The market is in a consolidation phase at the level in which selling picked up on February 2nd and 5th and we view this week’s price action as nothing less than healthy. The technicals remain a predominant part of the intraday tape and after recovering early yesterday on dovish comments from St. Louis Fed President Bullard, price action merely failed at the scene of the crime post-FOMC Minutes.
Buoying the market is a reluctance in Treasury yields to extend gains. In fact, the 10-year has not even retested the FOMC spike to a high of 2.957% and is working to give back all gains on the week. The S&P recovered well overnight, trading to a session high of 2727.75, about 1% from its pull back low late yesterday. Equity markets in Asia have led the way with the Nikkei up 0.7% and the Yen seeing a little relief from its sharp rally yesterday on risk aversion. There is no major economic data on the calendar to finish out.
We will be eyeing Fed speak; NY Fed President Dudley and Boston Fed President Rosengren are due at 9:15 am CT. Cleveland Fed President Mester who might see her role expanded at the Fed speaks at 12:30 pm CT. San Francisco Fed President Williams is due just ahead of the close at 2:40 pm CT. The Fed is due to release their semi-annual Monetary Policy Report today, ahead of new Chairman Powell’s testimony to Congress next week.
Technicals: After a weak last hour of trading yesterday, the S&P snapped back at the closing bell. Overnight price action reached a high of 2727.75, lower than yesterday’s peak of 2731. This is beginning to be a key area of... Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and proprietary bias and levels.
Crude Oil (April)
Yesterday’s close: Settled at 62.77
Fundamentals: Crude Oil gained more than a dollar after the release of the EIA inventory report yesterday. It confirmed a surprise draw of 1.616 mb, a little more than API’s 907k. The products didn’t give the market much fuel to trade higher. In fact, neither did the production data which shoed a drop of 1,000 bpd because of Alaska. The lower 48 states added 10,000 bpd. Ultimately, this proved to be some relief to a bull camp who has been fearful as rigs quickly come online. Additionally, though it was no surprise imports dropped, the increase in exports is bearish.
What acted as further support yesterday was the equity market on a stronger footing at the time of this release, Treasury yields seeing some relief and of course a weaker U.S Dollar. In yesterday’s Midday Market Minute, we said that we like positioning short up here, however, do not expect to be profitable ahead of the weekend but envision lower prices early next week. More jawboning from OPEC has been favorable to price action this morning. The Saudi Oil Minister said the market is rebalancing, the decline in inventories will continue and soft demand is transitory.
Technicals: A firm tape from yesterday has still yet to break out above major three-star resistance.
Yesterday’s close: Settled at 1332.7
Fundamentals: Price action moved up firmly yesterday morning on the heels of dovish comments from St. Louis Fed President Bullard. The tape spiked at 7:30 am CT and the catalyst sure wasn’t Weekly Jobless Claims data at a new 45-year low. The dollar is trading in a slightly subdued range below major resistance, however, a flat inflation read out of Europe has helped buoy its price action. With no major economic data on the calendar we look to fresh Fed speak to guide the session. aversion.
There is no major economic data on the calendar to finish out. We will be eyeing Fed speak; NY Fed President Dudley and Boston Fed President Rosengren are due at 9:15 am CT. Cleveland Fed President Mester who might see her role expanded at the Fed speaks at 12:30 pm CT. San Francisco Fed President Williams is due just ahead of the stock market close at 2:40 pm CT.
Technicals: Price action in the April contract held key support at 1319-1321 throughout the week. This paves the way for a higher low and a solid technical setup.
Natural Gas (April)
Yesterday’s close: Settled at 2.676
Fundamentals: Yesterday’s EIA storage report showed a bigger draw than expected at -124 bcf vs -120 bcf. Still, price action stalled to take out Wednesday’s session high and this clearly opened the door for the bear camp. With price action in the March contract depressed for the entire month of February, the expiration is now likely to keep natural gas subdued. Today is options expiration for the March contract. Weather remains very mild and storage draw expectations continue to reduce, this has also weighed on the market.
Technicals: We continue to believe there is value down just below 2.60.
Yesterday’s close: Settled at 120’135
Fundamentals: Though there is no major economic data, a lineup of Fed speakers will be critical. Furthermore, the Fed releases their semi-annual Monetary Policy Report ahead of next week’s congressional testimony by newly appointed chairman, Jerome Powell. NY Fed President Dudley and Boston Fed President Rosengren are due at 9:15 am CT. Cleveland Fed President Mester who might see her role expanded at the Fed speaks at 12:30 pm CT. San Francisco Fed President Williams is due just ahead of the stock market close at 2:40 pm CT. Remember, yesterday we said that though the 10-year yield spiked on the FOMC Minutes to a new high, the 10-year futures price did not make a new low. This has opened the door for a reversal. Furthermore, dovish comments from St. Louis Fed President Bullard help buoy the market. Ultimately, speakers have not surprised to the dovish side much, its just that they have not sounded as hawkish as they have been in the past.
Technicals: Price action is out above our pivot level of 120’15-120’18 this morning.