E-mini S&P 500 (March)
Last week’s close: Settled at 2690.25
Fundamentals: What a time to trade! It would seem that each week "Trumps" the previous, shedding a brighter spotlight on the economic data, policy conversation and the direction of the market because of such. Elections in Europe have found another deadlock, this time in Italy’s parliament. The White House is set to impose a 25% tariff on steel and 10% on aluminum as early as this week. However, this is likely to drag out for a week or two as the conversation heats up and blurs party lines. It also brings an interesting twist to this week’s NAFTA talks. Both the Bank of Japan and European Central Bank meet on Thursday, will the central banks who led the dive in rates below zero take a step toward tightening? China begins its National People’s Congress; a two-week long political meeting where they set policies for the year and a path to achieve their growth forecast at 6.5%. Federal Reserve members are scattered to speak throughout the week. Will Chairman Powell’s assertive tone continue to reproduce as it did with NY Fed President Dudley on Thursday?
All in all, the most impactful to the S&P 500 could be one number that is not released until Friday’s Nonfarm Payroll Report; wage growth. We explored some of these in yesterday’s Tradable Events this Week. Equity markets were steady Friday after a sharp wave of selling Thursday. The solid close to the week helps us believe that the ‘tariff talk’ is just that. As we discussed in yesterday’s report, the selling was likely exacerbated due to this new environment; “sell first, ask questions later.” The S&P traded to a low of 2663.75 last night, a higher one than Friday, and recovered as much as 1% to consolidate into this morning. At these levels, the market does not feel like it is rattled with fear and we expect the consolidation to continue in a slight upward trajectory until some of this week’s events come to a headwind Thursday. ISM Non-Manufacturing is due out at 9:00 am CT today; a number that we watch closely as a barometer to the overall economy. Markit Composite and Services PMI are due out first at 8:45 am CT. Fed Governor Quarles is due to speak at 12:15 p.m. Central.
Technicals: Exactly as we discussed on Friday, critical to the trade is holding major three-star support on a closing basis. 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)
Last week’s close: Settled at 61.25
Fundamentals: The IEA released their medium-term outlook and said that, “the U.S is set to put its stamp on global oil markets for the next five years.” They added that production growth from the United States, Canada, Brazil and Norway will be more than enough to meet demand growth through 2020. They were very bullish on production over the next five years, however, this is a ‘what can out do for me now’ market and crude is trading higher today on outages in Libya. After testing $60 last week, price action consolidated higher in Friday fashion and gained some support from dollar weakness. This came head of the largest energy conference known as CERAWeek. Oil ministers from OPEC and other major producing countries along with executives from the top companies in the energy sector embark on Houston, Texas. One event that has gained notoriety is a dinner hosted by OPEC for U.S shale firms tonight. This will be important to watch, but ultimately not only is it extremely unlikely to see any consensus agreement between parties, such would test U.S legal framework. Traders do not want to lose focus of the Dollar this week with data and Fed speakers on the schedule. Furthermore, a large build last week could have set the tone for an upcoming trend; it was the inventory report from March 8 last year that sparked a loss of 9% that week.
Technicals: Price action tested the $60 benchmark head-on twice last week but failed to take it out. This helped pave the way for a higher tape on Friday and Sunday night. Ultimately, a key level at... Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and proprietary bias and levels.
Last week’s settlement: Settled at 1323.4
Fundamentals: The gold trade never died, it just momentarily lost some interest as new Fed Chair Powell sole the spotlight. However, the White House announced it plans to impose tariffs on steel and aluminum; the global trade uncertainty that this brings quickly reinvigorated the gold market. On Thursday morning upon comments from Powell, NY Fed President Dudley and a better ISM Manufacturing read, gold traded to a low of $1,303.6 per ounce, which was -2% on the week and -3% from its high on the week. However, the metal settled the week down only $5 per ounce. With a big week of data and Fed commentary ahead, the dollar will remain critical to this trade and must be watched very closely. Today, ISM Non-Manufacturing is due at 9:00 am CT. Ahead of this key read is Markit Composite and Services PMI at 8:45 a.m. Central. The only guarantee this week is Dollar volatility with the ECB and BoJ set to meet on Thursday and Nonfarm Payroll due Friday.
Technicals: Last week’s price action opened the door to a tremendous opportunity for bulls to reposition.
Natural gas (April)
Last week’s close: Settled at 2.695
Fundamentals: Natural gas spiked to a high of 2.726 on the open last night as Winer Storm Riley brought hurricane force winds up the Atlantic. This was the third failed spike against a brick wall of resistance just above 2.70 since Thursday’s EIA storage read and the second lower on in a row. It is important to remember that through some of these storms, there is less usage as schools, power plants and factories shut down. Additionally, weather in other parts of the country was mild for this time of year. Though drawdowns in the weeks to come remain mild, this week’s expectations have picked up a bit.
Technicals: Key resistance at the 2.7247 level has held extremely well and this is building to.
10-year Treasuries (June)
Last week’s close: Settled at 120’06
Fundamentals: Friday’s price action gave back all of Thursday’s spike. When the White House announced the potential tariffs on Thursday the 10-year traded to the highest level since February 9th while equity markets sold off hard. Things stabilized much better than expected this ahead of the weekend and not only was this a good thing for equity markets but its signals that the focus this week would be more data dependent. ISM Non-Manufacturing is due at 9:00 am CT, this is a crucial data point that we watch as a barometer of the economy. Markit Composite and Services PMI are due just before at 8:45 am CT. Traders want to keep an eye on Fed speakers and the ECB and BoJ this week but more importantly wage growth on Friday’s Nonfarm Payroll. Fed Governor Quarles is due to speak at 12:15 pm CT today and he is also getting his sea legs; we could hear more from him than his first public appearance last week.
Technicals: Price action failed hard against resistance at R1 on Friday but has found support against S1 into this morning... Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and proprietary bias and levels.