E-mini S&P (March)
Yesterday’s close: Settled at 2669, a new all-time high
Fundamentals: Yesterday was just another quiet grind higher for equity markets with the S&P trading to a new all-time high of 2675.50 and settling just below there, also at a record. Republicans are moving tax-reform through congress and a bill seems on track to hit the President’s desk next week. The Federal Reserve raised interest rates yesterday and Fed Chair Yellen, in her last meeting, sited strong job growth and rising wages. However, there were two dissenters for the first time as inflation continues to lag. This has been a perfect recipe of ‘not so hot, not so cold’ that has supported equity markets. You can view the Fed Dot Plot on our website here. This morning traders buckle up for the final ECB meeting of the year with a policy announcement at 6:45 am CT. No surprises are expected, and they are to release economic projections through 2020. ECB President Mario Draghi’s press conference begins at 7:30 am CT. Equity markets in Europe are lower with bank stocks weighing on the action despite robust reads on Manufacturing from across the continent. Fixed Asset Investment and Industrial Production data out of China last night both missed the mark by a tenth. In the U.S Retail Sales is due at 7:30 am CT and Manufacturing and Services PMI data at 8:45.
Technicals: We remain outright Bullish and rightfully so. Price action settled above major three-star resistance yesterday and the path of least resistance remains north, and our yearend target is 2715. The NQ’s slight descending wedge, a bullish pattern, is now attempting to create a bull flag and a move through new all-time highs above 6446.50 will spark the next leg.
Resistance –2673, 2681.50, 2688, 2694.50, 2715.25
Pivot - 2666-2667.75
Support – 2659.25, 2650.25-2654, 2643.75-2644.75, 2640.25, 2630.50-2632.50, 2622.50, 2506.25, 2596-2598
Crude Oil (January)
Session close: Settled at 56.60, 5¢ from the low and more than a dollar from the highs
Fundamentals: We could not have asked for a better setup than we got yesterday from the weakness and outlying API report on Tuesday as we headed into EIA. The numbers for EIA when considering them as a whole were bearish; though Crude inventories were drawn down 5.2 mb, this was less than API and offset by Gasoline which built by 5.7 mb. Production increased by 65,000 bpd in the lower 48 states with an additional 8,000 from Alaska. The IEA added to pressure this morning in their IEA Monthly Report siting that additional U.S production will offset OPEC’s production cap. For us, the groundwork is in place for a lower session, but remember, price action likes to bottom very early in Friday’s session (overnight or even late Thursday) so traders must look to capitalize in some way on the move this week before the end of the session.
Technicals: Price action is weak, and the momentum is in the hands of the bears. We must see a close below last week’s low and support at the 55.82-55.95 level but at a bare minimum maintain a close below 56.85-56.93. Today is option expiration for the January contract and at a glance calls outweigh puts by more than 2:1, especially right at the 55 strikes. If anything, this can add to pressure early to squeeze those long call holders.
Resistance – 56.85-56.93, 57.83-57.99, 58.45-58.60, 58.97, 59.96, 62.58
Support – 56.46*, 55.82-55.95, 55.00-55.25