Month: December 2017

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CORN (March)

Last Weeks Close: March corn futures finished up 5 cents last week, trading in a range of 6 cents. Funds were estimated to have been sellers of 24,485 contracts which puts their net short position at 223,405; this is just a stones throw from their record short position posted roughly a month ago.

Fundamentals: Weekly ethanol numbers have been an ongoing silver lining for the market recently, but it is far from what is needed to get this market headed further north. Export sales have been spotty at best. The bulls will want to see better than expected weekly export numbers consistently to build a price floor. Weather and crop development in South America continue to be a key talking point and will be until we get new news from the states, that may not come until the January USDA report. There are some forecasts suggesting that parts of Argentina could be drying up over the next week to week and a half which could help put a near term premium in the market.

Technicals: The market made new lows to start last week but managed to rally from there to finish the week on the highs. As with any rallies we have seen over the last few months, we are recommending tempering the expectations. We continue to see the opportunity to trade a nickel on either side of 350 until we get a new fundamental catalyst to give us that next directional move (other than sideways). We see first resistance coming in at 356 ¼, this represents the 50-day moving average. The 50-day moving average is a very basic indicator, but is one we have been talking about for the last six months as it is something the market has struggled to close above since July. If the bulls can achieve consecutive closes above, perhaps then we could see some short covering from the funds; but the first test represents a sell opportunity.

Bias: Neutral

Resistance: 355-356 ½****, 369 ¼-370 ½***, 375****

Support: 345-348**, 334-335 ¼***, 323-325 ¼**

 

SOYBEANS (March)

Last Weeks Close: March soybeans finished down 18 ¼ cents last week, this after trading in a range of 24 cents on the week. Funds were heavy sellers, selling 64,933 contracts which flipped them to a net short of 52,478 contracts.

Fundamentals: Exports have been one of the key points of focus for market participants as the news wires have been relatively quiet. Last weeks export sales numbers came in at the top end of expectations, but we continue to believe that the market will need to see consistency better than expected numbers in order to put an end to the bleed lower in prices. As with corn, we will be monitoring weather in South America as their crop starts progressing at a more rapid pace.

Technicals: The market has been in sell off mode for the last three weeks. Fridays option expiration helped offer some support to the market but that could change with those options off the board. The RSI is sill near that oversold level with a reading of 31 this morning. 950-956 ½ will be first support for this March contract, that was the spike low from September. A break and close below opens the door to additional pressure on the back of funds extending their net short position, the next line in the sand for support comes in at 937 ½. On the flip side, the bulls have a lot of work to do as the chart looks like a technical graveyard. 972 ½ is the first level of resistance they want to see a close above to at the very least encourage some consolidation.

Bias: Neutral

Resistance: 972 ½-975 ½***, 984 ¾-989**, 999-1004**

Support: 950-956 ½***, 937 ½***, 922-929 ¼**, 915 ¼****

 

WHEAT (March)

Last Weeks Close: March wheat futures managed to finish last weeks trade up 6 ½ cents, trading in a range of 13 cents. Fridays Commitment of Traders report showed that funds were buyers of 1,314 contracts, putting their net short position at 164,098.

Fundamentals: Wheat is no different than corn and beans in terms of the export situation. Wheat had great exports last week, but we need to see a string of better than expected numbers as opposed to a great one followed by three subpar reports. Low prices often cure low prices, but ample global supplies will continue to keep a lid on the market for the intermediate term.

Technicals: The market has been grinding higher over the past two weeks after marking new contract lows at 410 ½. We continue to view rallies like this as an opportunity to sell. We see major technical resistance at 437. This represents the 50-day moving average, as with corn this is a simple indicator but one the market has struggled to get out above on a closing basis since July. Consecutive closes above will encourage short covering but will likely set up for another opportunity to sell.

Bias: Bearish

Resistance: 437 ½ ***, 443-445¾ ****, 452 ¾****

Support: 415-418**, 410 ½**, 399-402 ¾****

 

For more information please contact DAW Trading at brokersedge@dawtradingdiv.com or at 877-329-0006 and visit us at http://dawtradingdiv.com/brokers-edge/ 

 

Disclaimer:

Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. DAW Trading (“DAW”) uses various outside sources for research material regarding futures and options on futures trading therefore the views and opinions expressed in this letter may not necessarily reflect the view of DAW or its staff. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to DAW.

 

Starting Jan 5th 2018 you will need to subscribe in order to see the full research

Subscribe here :  http://dawtradingdiv.com/brokers-edge/

 

E-mini S&P (March)

Last week’s close: Settled at 2686

Fundamentals: This trading week might be sandwiched between two holidays but that doesn’t mean we don’t see opportunity. For weeks now, we have been calling for more volatility to start the New Year and as traders potentially ‘buy the rumor sell the fact’ on tax-reform. We discussed in Sunday’s Tradable Events this Week how we expect this week to be the start of such. Many investors expect the Santa Clause rally to last through the end of the year or even pick up steam this week, and this is now just plain wrong. Each year, traders try to front run this inevitable seasonal trade and this year it essentially started in November (did it ever really end last year?). What many don’t realize though is how this has created seasonal weakness for the last week of the year. The S&P has failed to close in the green in this last week of the year for eight years in a row now. Furthermore, it has averaged a loss of 1.1% in that time. This morning Case Shiller is due at 8:00 am CT and Consumer Confidence at 9:00. We don’t expect to see a poor read on Consumer Confidence, that would be fighting a very strong trend. However, it could shape the trade today. Lastly, as we have been discussing, it is important to watch the small caps Russell 2000; a failure to gain fresh ground over the last three weeks has opened the door to sellers.

Technicals: Price action has failed to close out above the pivot at 2688.50-2690.25 for four sessions in a row now and this at a minimum has kept the bulls from gaining an immediate term upper hand. Key first support comes in today at 2679-2680.75 and a close below this level is needed to open the door to further weakness. This first support level is very critical as it aligns multiple levels and most importantly a trend line from the November 15th low. Remember a close above 2688.50-2690.25 will give the bulls an edge though they need to secure a close at or above 2694.50-2696 in order to encourage fresh buying. Yes, the all-time high is 2698 and psychological resistance at 2700 also brings a barrier.

Bias: Neutral/Bearish

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)

Last week’s close: Settled at 58.47

Fundamentals: It was no surprise to see Crude continue its elevation into the long three-day holiday weekend. Price action has begun to pare back marginally into this morning from this seller’s strike. The outage on the Forties pipeline has been a catalyst in driving prices higher. Currently, the pipeline is undergoing testing following repairs and is expected to be back online in early January. Data from Baker Hughes ahead of the weekend showed no change in oil rig count. The question many will begin asking in the first quarter of next year is if global supply is rebalanced by the end of next year as OPEC is calling for, most recently Iraq’s Oil Minister this weekend, then what is their exit strategy? How much Oil will come back online without a production cap in place. The next inevitable questions are, will demand keep up, will China continue to import at a record pace, where will U.S Shale be?

Technicals: Resistance last week was a trend line from the November 24th highs, this now comes in as support at 58.15; we must see a close below here in order to neutralize recent strength. Ultimately though a close below the next support at 57.68-57.81 is needed to signal a developing failure. If the bulls keep price action above Friday’s settlement at 58.47, the will maintain a clear edge.

Bias: Bearish/Neutral

Resistance – 58.60-68.65*, 58.97***, 59.96***, 62.58**

Pivot – 58.47

Support – 58.15**, 57.68-57.81*, 57.38*, 56.90-57.08**, 56.11-56.30**, 55.00-55.25***

 

Gold (February)

Last week’s close: Settled at 1278.8

Fundamentals: Gold put in a strong session Friday ahead of the Christmas holiday weekend and for good reason given data, recent momentum and geopolitical climate. Durable Goods missed by a wide margin on Friday and the Core read contracted. The holiday read on Michigan Consumer Sentiment also disappointed with the worst read in six months. New Home Sales beat, PCE was in line with expectations and Personal Spending and Income data was mixed. We have discussed the seasonal trade at length but just as a reminder, if you bought December 23rd and held through January 11th you made money 13 out of the last 15 years and your average gain in those years was $27. Just to clarify, this was not a recommendation to wait until December 23rd, the session before or session after since it was over a weekend, to buy. In fact, we pounded the table to buy when blood was in the streets, when longs got hit hard the week of the Fed. After a rally of more than 2% from the low we became cautious but that was not fundamental caution, that was technical caution (continued below).

Technicals: It is a fact that last week Gold was running into resistance in the mid 1260’s and a much more concrete level above at the 200-day moving average. We would not be doing our job by recommending for those who missed the buy at a value level to buy against resistance. Gold has now showed tremendous strength and is clearly trading out above the 200-day moving average which comes in today at 1278, a key .618 retracement at 1278.5 and Friday’s settlement at 1278.8. If you are now playing the seasonal trade and buying for the first time, ultimately what you want to look for is a continued close above this area. Furthermore, there are ways to play Gold at this level and reduce risk, please contact our trade desk at 312-278-0500 if you would like to discuss this in more detail, we would be happy to speak with you.

Bias: Bullish

Resistance – 1288-1292.5**, 1303.4-1304.7****

Pivot – 1278-1278.8

Support – 1272.5-1273.9**, 1259.7-1262.3**, 1252.8**, 1237-1241.7**, 1214.5-1225***

 

Natural Gas (February)

Last week’s close: Settled at 2.658

Fundamentals: Snow has hit the northeast and wind chill is well below zero for much of the Midwest and as cold as 40 below for some parts. Natural Gas bulls (yes us) are looking to get vindicated this week. Not so fast though, we have learned in recent weeks that simply a strong start to the week means absolutely nothing with much of it dissipating to new swing lows before the week is over. Regardless of our long-term perspective, the technicals remain key and we will discuss below some of the major levels to watch as the week unfolds.

Technicals: Price action bled to a low of 2.562 last week trading just shy of our rare major four-star support at 2.486-2.522; this is a massive line in the sand and even more so now. Friday’s settlement and today’s session low bring first key support at 2.658-2.681, this also encompasses what was support on the way down last week and resistance on the way up at 2.6795. The level we are now watching most closely on a close today is the same we have had for two weeks at 2.745-2.747; the bulls must keep a close above here in order to maintain what can become an upper hand in the very near term. Bulls with an upper hand in this market? Again, not so fast. Truly, a close out above 2.8095 is needed to neutralize the long-term trend while only a close above 2.886 could turn this thing bullish.

Bias: Bullish

Resistance – 2.745-2.747**, 2.8095**, 2.886-2.88**, 2.96-3.01***

Support – 2.658-2.681**, 2.562***, 2.486-2.522****

 

10-year (March)

Last week’s close: Settled at 123’15

Fundamentals: Yields are staying elevated and that means Treasury prices remain down. We believe that there is a seasonal bid around the corner at the turn of the year and as equity market volatility picks up. Treasuries had absolutely no bid at all on Friday despite the long Christmas weekend ahead or the poor read on Durable Goods. The major focus for now in this market remains the new issues next year both in the U.S and Germany. Tax-reform will require more treasuries to raise capital to cover expanding the debt and this has been a key compressor in the trade. Case Shiller housing data is due at 8:00 am CT and Consumer Confidence will be a key read today at 9:00.

Technicals: We are ready to turn technically bullish if the market can get out of this rut; this would require a close back above what was major three-star support and is now major three-star resistance at 123’27-123’285. First resistance comes in at 123’20-123’225 and this would be the first notch to achieve in order to neutralize immediate term weakness. The RSI is down just above 30 and not low enough to signal oversold as the market has grinded against these lows for the last four sessions, however, these lows provide a nice risk vs reward trade. Key support remains at 123’10-123’135.

Bias: Neutral/Bullish

Resistance – 123’20-123’225**, 123’27-123’285***, 124’06-124’07**, 124’125-124’135**, 124’295-125’00***

Support – 123’10-123’135**, 122’29****

For more information please contact DAW Trading at brokersedge@dawtradingdiv.com or at 877-329-0006 and visit us at http://dawtradingdiv.com/brokers-edge/

 

 

Disclaimer:

Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. DAW Trading (“DAW”) uses various outside sources for research material regarding futures and options on futures trading therefore the views and opinions expressed in this letter may not necessarily reflect the view of DAW or its staff. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to DAW.

CORN (March)

Yesterdays Close: March corn futures closed 1 ¾ cents higher yesterday, trading in a range of 2 ½ cents. Funds were estimated buyers of 4,500 contracts.

Fundamentals: Yesterdays ethanol report showed production at 1.077 million barrels per day, this was down 12,000 from the previous week but still marks the third highest production level on record; the only two higher weeks were the past two weeks. Ethanol stocks came in at 22.3 million barrels, this was down a modest .1 million barrels from the previous week. Export sales this morning came in at 1,558,300 metric tons, this compares to the estimated range from 800,000-1,100,000 metric tons. This is up 80% from the previous and a nice sliver lining going into the Christmas weekend. The bulls really want to start seeing a trend of better than expected exports to help support this market as we look towards 2018; a great number once a month will not do the trick. Weather will continue to be monitored closely in South America as well.

Technicals: January option expiration is tomorrow which could help intensify the magnet towards 350. The open interest on the 350 puts 11,402, there are 6,000 350 calls; there are 22,183 open at 360. January expiration is not as significant as other months (December), but should still be noted. In terms of chart technical, not much has changed as we continue to trade in tight ranges. We would be looking to trade a nickel on either side of 350 with tight stops. If we do get a technical breakdown with consecutive closes below 345, that would open the door to additional pressure towards the December contract lows of 335 ¼. On the flip side, the bulls want to see a conviction close above the 50-day moving average at 356 ½. This is a very simple indicator but is one we have not seen the market close above since July.

Bias: Neutral

Resistance: 355-356 ½****, 369 ¼-370 ½***, 375****

Support: 345-348**, 334-335 ¼***, 323-325 ¼**

 

SOYBEANS (January)

Yesterdays Close: January soybeans closed 2 ¾ cents lower yesterday, trading in a range of 7 ¼ cents on the session. Funds were estimated sellers of 5,000 contracts on the day.

Fundamentals: Export sales this morning came in at 1,742,900 metric tons, this is up 20% from the previous week. This compares with the expected range from 1,300,000-1,800,000 metric tons. As with corn, the market really wants to see better than expected exports become a trend to really offer some support to the market. Within expectations just doesn’t get the job done. Weather concerns in South America have seemingly evaporated for some areas. We will continue to keep a close eye on this as forecasts are consistently changing. If they do get better than expected weather, they could be set for another record crop.

Technicals: The sell off over the last two weeks has left a technical graveyard on the chart. The bulls need to see the market reclaim 967-968 ¼ in order to START repairing damage. This was previous support which was defined by the bottom end of the range along with a key Fibonacci retracement level from the June lows to the July highs. 950 is a psychologically significant level, just below that is a spike low at 947 ½ from the September 12th USDA report. The market is the most oversold since the end of May, this could encourage some consolidation as we head into the Christmas weekend. We are assuming that funds have not only been reducing, but have likely flipped net short at this point. The fear for the bull camp is that the funds will start accumulating a large net short position.

Bias: Neutral

Resistance: 967-968 ¼****, 975 ½ -977 ¾***, 984 ¾-989**, 999-1004**

Support: 947 ½-949 ¾***, 922-929 ¼**, 915 ¼****

 

WHEAT (March)

Yesterdays Close: March wheat futures closed 5 ¼ cents higher yesterday, trading in a range of 8 ¼ cents on the day. Funds were estimated buyers of 2,500 contracts on the day.

Fundamentals: Export sales this morning came in at 796,300 metric tons, up 35% from the previous week. This compares with the expected range from 300,000-600,000 metric tons. Wheat is no different than corn and beans in the sense that the bulls must start seeing better than expected exports to help put a floor in the market. Arguably this premise is most important for wheat with nearly every continent but Antarctica growing wheat. The bulls are hoping that low prices cure low prices, but we feel ample global demand will keep a lid on any significant attempt at a rally.

Technicals: 424 ¼ has been an important line in the sand for us recently, but we are trying to remain patient for 437 ½ to start selling again. This represents the 50-day moving average, a very simple technical indicator, but one we have not seen the market close above since July. If the bulls can achieve consecutive closes above here, we could see short covering from the funds; until then the bears remain in total control. A failure to break out above technical resistance will lead to continued pressure and a possible run towards the $3 handle.

Bias: Bearish

Resistance: 424 ¼**, 437 ½ ***, 443-445¾ ****

Support: 399-402 ¾****, 392-394**, 381-383 ¾***

 

For more information please contact DAW Trading at brokersedge@dawtradingdiv.com or at 877-329-0006 and visit us at http://dawtradingdiv.com/brokers-edge/

 

 

Disclaimer:

Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. DAW Trading (“DAW”) uses various outside sources for research material regarding futures and options on futures trading therefore the views and opinions expressed in this letter may not necessarily reflect the view of DAW or its staff. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to DAW.

E-mini S&P (March)

Yesterday’s close: Settled at 2681.50, down 2.50

Fundamentals: Equity markets around the globe are fairly muted after yesterday’s tax bill was finally passed. Though Washington might want to take a victory lap on tax legislation, they must get to work on passing a budget to avert a shutdown Friday at midnight. Congress heads have said a shutdown will not happen, ultimately, we could see the can kicked down to January 19th. Today we have the final read on Q3 GDP along with Jobless Claims and Philly Fed Manufacturing. We sound like a broken record, but tomorrow is the day we have had circled with PCE Index, Durable Goods and Personal Spending and Income data early and Michigan Consumer data shortly after.

Technicals: Key support at 2681.50-2683.25 has held and this is tremendous for the bull case to finish out the week. Thought the reaction from tax-reform might not be want the bulls want to see, it is likely getting the bears excited and sucking them in. Just look back to what the trend has been for much of this year; sharp decisive moves higher followed by a consolidating but not too sharp of a pull back before making a new all-time high. Yes, there has been the sharper pullback here and there, most recently December 1st. Therefore, traders should manage risk and understand where their line and the sand is. We have been telling clients who call our trade desk that buyers against the first key support should have a stop below the 2675.25 level. You also want to watch the NQ against major three-star support at 6446-6455; this must hold. A close back above 2688.50-2690.25 is needed for the bull camp to begin to regain the immediate term edge with a clear close out above 2694.50, a new closing all-time high, a signal for a melt-up. Keep in mind though that next week, we expect more volatility, the last week of the year has not been so favorable for markets for the last couple.

Bias: Bullish

Resistance – 2694.50**, 2700*, 2715.25***

Pivot – 2688.50-2690.25

Support – 2688*, 2681.50-2683.25**, 2675.50**, 2667.25**, 2651.75-2652.50***

 

Crude Oil (February)

Yesterday’s close: Settled at 58.09

Fundamentals: Yesterday’s EIA report was near-term bullish; the headline Crude draw was more than API at 6.5 mb and production increased only 9,000 bpd. Momentum since last Thursday has been heading north and yesterday’s report just helped it edge higher. However, this by far is not enough evidence to spark a fresh swing high breakout. In fact, the rally remains extremely contained considering the issue in the North Seas and geopolitical drama in the Middle East. Still, the lower 48 states added an estimated 15,000 bpd last week but the question that remains is how much production is pent up and waiting the turn of the year. January 2015 and 2016 brought a bottoming process for Crude, but supply was also at extremes. OPEC had made tremendous strides in 2016 in working to balance supply, especially late in the year. In fact, last year Crude rallied into the end of the year but notched its high the first session of the year before selling off 8%. This is not an exact science, but we believe we are seeing something similar right now that is keeping Crude elevated for the year end.

Technicals: Price action has remained contained below major trend line resistance that comes in today at 58.30. This level will be critical to watch through the end of the week, a failure to move out above here through the close Friday should open the door for a tremendous sell opportunity to start next week. First minor support comes in at 57.70-57.81 and a close below here is simply needed to neutralize the uptrend in the immediate term. It is important to note that the ascending wedge pattern is continuing to form and mature, a failure against trend line resistance and a move back below 57.40 will be an extremely bearish setup.

Bias: Bearish/Neutral

Resistance –58.30**, 58.97***, 59.96***, 62.58**

Support – 57.70-57.81*, 57.40**, 56.90**, 56.11-56.30**, 55.00-55.25***

 

Gold (February)

Yesterday’s close: Settled at 1269.6

Fundamentals: Gold has held extremely well this week given the beating that other safe have assets such as Treasuries and the Yen have taken this week. Tax reform is in the rear-view mirror and Washington now must focus on a budget to keep it open after Friday at midnight though the can will likely get kicked down to January 19th. Today we have the final read of Q3 GDP, Jobless Claims and Philly Fed Manufacturing. These will be important reads but remember the preliminary and second GDP reads are more volatile. Tomorrow has been the day we have circled with PCE, Durable Goods and Personal Income and Spending followed by a holiday Michigan Consumer Sentiment read. We believe today’s session to be more technical and as a long-term bull, the technicals worry us in the next couple sessions.

Technicals: The seasonal buy is only a session or two away. However, Gold is stalling below major three-star resistance which includes the 200-day moving average. We were Bullish and looking for a bottom the week of the Fed meeting, it happened. We are now cautious against major three-star resistance and ahead of tomorrow’s data. We believe it is prudent to capitalize in some degree despite being very Bullish over the next 45 days. We see a tremendous buying opportunity against support at the 1255 level, however, 1259-1259.7 should suffice for an aggressive re-entry.

Bias: Bullish/Neutral

Resistance – 1273.9-1277.1***, 1289**, 1303.4-1304.7****

Support – 1263.9*, 1259-1259.7**, 1255.1**, 1251.2**, 1237-1241.7**, 1214.5-1225***

 

Natural Gas (February)

Yesterday’s close: Settled at 2.636 in a very disappointing session

Fundamentals: Today will be all about the storage data and official estimates as of yesterday came in at -170 bcf. However, traders and analysts are looking for a number closer to -175 bcf, anything bigger than this should be bullish. Next week’s read, demand coming from this week has been a key driver (that and algos during times of low volume) in the suppressed price action, if we can hold lows through next week we would be very surprised not see this market on the way to $3. If you remember back to the beginning of the month, the last week in December has always been the key worry.

Technicals: Price action is sitting against the recent February low at 2.602 and the January low of 2.581, this is support and a hold against this level and a move off it will be tremendous in turning the tide. Let’s not forget that a rare major four-star level at 2.486-2.522 sits just below here. The momentum is south, but today’s fundamental read will dictate price.

Bias: Bullish/Neutral

Resistance – 2.6795**, 2.745-2.747**, 2.778-2.799*, 2.85-2.88**, 2.96-3.01***

Pivot – 2.634-2.636

Support – 2.581-2.602**, 2.486-2.522****

 

10-year (March)

Yesterday’s close: Settled at 123’145

Fundamentals: Treasuries have been under immense pressure this week with tax-reform getting passed and strong housing data. Existing Home Sales was the best in 11 years yesterday. However, this is not only the U.S as we have discussed all week that we believe this exacerbated move is actually because of Germany. Germany announced two days ago that they will issue more bunds next year than they did this year to capitalize on current conditions. German 10-year bund yields have gained more than 10 basis points this week and were up more than 4 basis points yesterday. We are beginning to see some relief into this morning, but this needs to be watched. As we discussed above, the final read on Q3 GDP is today at 7:30 am CT along with Jobless Claims and Philly Fed Manufacturing. Also, tomorrow’s PCE, Durable Goods and Personal Spending and Income data provides a gauntlet for treasury traders.

Technicals: Price action is seemingly stabilizing this morning and the bulls must achieve a close back above 123’20-123’225. Still the real line in the sand to neutralize recent weakness comes in at major three-star resistance at 123’27-123’285, it is unlikely that price action will get out above here on the first test. We believe a strong buy opportunity is setting up into next week. If tomorrow’s data misses this market will trade higher, however, we do not believe you need to pick a low and instead can ride a rally for two to three weeks to begin the New Year.

Bias: Neutral/Bullish

Resistance – 123’20-123’225**, 123’27-123’285***, 124’06-124’07**, 124’125-124’135**, 124’295-125’00***

Support – 123’10-123’135**, 122’29****

 

For more information please contact DAW Trading at brokersedge@dawtradingdiv.com or at 877-329-0006 and visit us at http://dawtradingdiv.com/brokers-edge/

 

 

Disclaimer:

Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. DAW Trading (“DAW”) uses various outside sources for research material regarding futures and options on futures trading therefore the views and opinions expressed in this letter may not necessarily reflect the view of DAW or its staff. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to DAW.

CORN (March)

Yesterdays Close: March corn futures closed ¾ of a cent higher yesterday, trading in a range of 2 ¼ cents on the day. Funds were estimated buyers of 2,500 contracts.

Fundamentals: There has not been much new news on the wires which has kept corn in tight range recently. Weekly EIA ethanol numbers will be out this morning, we have been seeing a strong trend here which has helped offer “support” to corn. We know that traders and other market participants are keeping an eye on South American weather and planting, but it seems majority are waiting for the January USDA report. With the end of the year just a stones through away, it is possible that we could see some position squaring, but we do not see any significant market moves from that. January option expiration is this week, there are nearly 12,000 puts open at the 350 strike; we think that this will provide a floor in the market as we head into the Christmas weekend.

Technicals: The market continues to linger near the 350 level which we think will continue to be a magnet until we get a new fundamental catalyst to give us a technical breakout or a breakdown. We would be looking to trade a nickel on either side of 350 with tight stops. If we do get a technical breakdown with consecutive closes below 345, that would open the door to additional pressure towards the December contract lows of 335 ¼. On the flip side, the bulls want to see a conviction close above the 50-day moving average at 356 ½. This is a very simple indicator but is one we have not seen the market close above since July.

Bias: Bias: Neutral

Resistance: 355-356 ½****, 369 ¼-370 ½***, 375****

Support: 345-348**, 334-335 ¼***, 323-325 ¼**

 

SOYBEANS (January)

Yesterdays Close: January soybean futures closed 7 cents lower, trading in a range of 9 cents on the day. Funds were estimated sellers of 7,000 contracts.

Fundamentals: Soybean prices have been in free fall mode on the back of long liquidation form the funds. South American weather is the key catalyst on the radar for traders and it appears forecasts are looking for more wet conditions than previous expected for some areas of Argentina and Brazil. Outside of that, there has not been much new news across the wire. Export sales will be out tomorrow as usual, the bulls will want to see a better than expected number to help provide some relief into the Christmas weekend. January option expiration is this week, there are no strikes that stick out in terms of open interest; we will update you if that changes.

Technicals: The market has been slicing through technical support levels like a warm knife through butter, creating a technical graveyard. The bulls have a lot of work to do to repair the damaged chart. 967-968 ¼ is the starting point, If the bulls can reclaim this pocket on a closing basis we could see continued buying towards the 100 and 200 day moving average which comes in from 975-977. A failure to break out opens the door for funds to not only liquidate long positions, but flip short and press prices towards 929 ¼. Though we are over 50 cents off of the recent highs in just two weeks, the RSI has not broken below 30 which is the bench mark for “oversold”.

Bias: Neutral

Resistance: 967-968 ¼****, 975 ½ -977 ¾***, 984 ¾-989**, 999-1004**

Support: 947 ½-949 ¾***, 922-929 ¼**, 915 ¼****

 

Yesterdays Close: March wheat futures closed 1 ½ cents lower yesterday, trading in a range of 5 cents on the day. Funds were estimated sellers of 2,000 contracts.

 

Fundamentals: Wheat bulls have been searching for a strong fundamental catalyst to carry this market up out of the mud but have been struggling to do so. Global supply and poor demand have kept a lid on the market and will likely continue to do so. We saw some decent exports over the last week, but the bulls will want to see this become more of a trend and not just a good number followed by three poor numbers. We do have January option expiration this week, this could keep a lid on the chance of a short covering rally.

Tehcnicals: Lower highs and lower lows have been the trend over the past several months and there is no need to fight that. The only buying we have been recommending to clients is short covering. Flipping long might start to be a though on a break and new contract lows. Funds have one of their largest short positions on record so selling at these levels is not the most appealing either. We would wait for a short covering rally towards 438 to look at selling this market again. Sometimes the best trade, is no trade.

Bias: Bearish

Resistance: 424 ¼**, 438 ¾***, 443-445¾ ****

Support: 399-402 ¾****, 392-394**, 381-383 ¾***

 

For more information please contact DAW Trading at brokersedge@dawtradingdiv.com or at 877-329-0006 and visit us at http://dawtradingdiv.com/brokers-edge/

 

 

Disclaimer:

Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. DAW Trading (“DAW”) uses various outside sources for research material regarding futures and options on futures trading therefore the views and opinions expressed in this letter may not necessarily reflect the view of DAW or its staff. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to DAW.

E-mini S&P (March)

Yesterday’s close: Settled at 2684

Fundamentals: The Senate passed historic tax-reform shortly after midnight and today the House will vote once again. Equity prices have recovered from what seemed like profit taking on nerves ahead of the razor thin Senate vote. Though the House passed the bill yesterday, a Senate rule was breached on several provisions. The House will vote again today in what seems like a formality. If all goes well, we should see a press conference with the President around noon CT. Washington isn’t out of the woods just yet as the government is on a path to shut down at the end of the week if a budget is not passed. The House could also vote today on an extension through January 19th. Equity markets in Europe are slightly lower this morning after a miss on German PPI data and as they take yesterday’s U.S weakness in stride. Existing Home Sales are due at 9:00 am CT and the Bank of Japan has a policy meeting late tonight.

Technicals: Yesterday’s pullback held first key support perfectly at 2681.50-2683.25 with a low of 2682.50. The hold and rise into this morning sets the market up for one final push before the end of the week. We do expect more volatility in the last week of the year. Resistance comes in a 2688.50-2690.25 and the market simply must close above here in order to negate yesterday’s weakness. The previous all-time high close at our 2694.50 level must also be watched. The NQ did not get to the major three-star support and tremendous buying opportunity we discussed on yesterday’s Midday Market Minute. However, its recovery is very firm, and we are watching for it to take the lead today, doing so will also signal legs through the end of the week. As we have discussed all week, the Russell 2000 does remain a concern of ours and its lagging below its all-time high from two weeks ago by about 1%; this level must be taken out before the end of the week or it will open the door for profit taking in the last week of the year.

Bias: Bullish

Resistance – 2694.50**, 2700*, 2715.25***

Pivot – 2688.50-2690.25

Support – 2688*, 2681.50-2683.25**, 2675.50**, 2667.25**, 2651.75-2652.50***

 

Crude Oil (February)

Yesterday’s close: Settled at 57.56, the highest in more than a week

Fundamentals: Prices have edged higher into this morning after API inventory data last night showed more of a draw than expected at 5.22 mb vs 3.5 mb. Gasoline did build at 2 mb but was only in line with expectations. Distillates were down 2.85 mb, a little more than expected. Inventory reports, outside of the increase in production estimates, have not helped the bear case. Today’s EIA estimate comes in at -3.769 mb. This would be the fifth draw in a row. The previous four draws have all come in higher than expected. Expectations for Gasoline is +1.895 mb and Distillates are -.87 mb. We expect the headline Crude number to be the key driver and something less than yesterday’s draw will give the bears some ammo. Gasoline’s trending build should also be watched along with production estimates. Outside of drawing down inventories, the bullish case has been the Forties pipeline and geopolitical tension. However, Brent Crude has seemingly traded more contained from last week’s reversal than WTI. This signals a tremendous emphasis on immediate-term action from today’s data.

Technicals: Yesterday we began to Neutralize our Bearish thesis as price action has simply refused to go lower. Fundamental hurdles have been presented and the trade has been stubborn. On the bright side, the slow, slow grind higher has begun to create an ascending wedge. This is a bearish pattern and today’s price action will be critical in maturing the wedge into a failure. The market has not accelerated higher but today’s high of 57.88 is the highest since last Tuesday. Resistance comes in the tune of a trend line from the November 24th highs at 58.35, this is also where strong sell volume came in last Tuesday; this becomes a level that we must see Crude stay contained below but also a very attractive level to sell against.

Bias: Bearish/Neutral

Resistance – 57.65-57.81**, 58.35**, 58.97***, 59.96***, 62.58**

Pivot – 57.33-57.35

Support – 56.99-57.08**, 56.11-56.30**, 55.00-55.25***

 

Gold (February)

Yesterday’s close: Settled at 1264.2

Fundamentals: Gold has shunned price action in other safe havens; Treasuries lost significant ground yesterday with the 10-year trading to the lowest level since March while the Yen is also under pressure. Bitcoin lost about 20% yesterday. But Gold folks, Gold remains extremely constructive. This is all about positioning; imagine that Gold bottomed the week that the Fed hiked rates, the Senate passed their version of the tax bill and we had a killer Retail Sales read. This is because the week before, Gold’s extreme net-long position of about 200,000 contracts tapped out. As of the Commitment of Traders this last Friday (data through Tuesday the 12th) the net-long position has been reduced to only roughly 80,000 contracts. Those longs want back in! The Senate passed the official tax bill around midnight and the House will revote today in what is ultimately a formality. Though we believe the President will hold his news conference at noon CT, the only thing we know about Washington is that we don’t know. Housing data yesterday crushed expectations, but Gold held. Existing Home Sales at 9:00 am CT is the only read today. We look to the final read on Q3 GDP tomorrow, but Friday is circled on our calendar with PCE (inflation), Durable Goods and Personal Spending and Income.

Technicals: We have pounded the table on the bullish seasonality that Gold is about to enter but we remain slightly cautious over the next 24 hours or so. Don’t get us wrong, we are Bullish here, however, if you missed the boat you must remember that there is major three-star resistance overhead. We would love to see a consolidation back to 1250-1253 as a tremendous buy opportunity ahead of the weekend but that may not happen. If you bought Gold on December 23rd and held through January 11th, you have made money in 13 out of the last 15 years and that gain has averaged $27. Furthermore, the month of January has been very kind to Gold, trading positive in 9 out of the last 12 years.

Bias: Bullish/Neutral

Resistance – 1273.9-1277.1***, 1289**, 1303.4-1304.7****

Pivot – 1262.8-1263.2

Support – 1250-1253**, 1237-1241.7**, 1214.5-1225***

 

Natural Gas (February)

Yesterday’s close: Settled at 2.697

Fundamentals: Natural Gas saw some selling pressure into the close yesterday, but it bounced back firmly since. However, the sellers are trying to take it once again from the overnight high of 2.758 after stock drawdown estimates for this week’s report and next have dissipated slightly. We remain cautiously optimist and believe that the bears will be caught off sides over the coming weeks as cold weather persists.

Technicals: For the purposes of argument, yesterday’s price action and settlement held first support at 2.703. It began rising as soon as the settlement bell rang. Still, the 2.745-2.747 level has been a tough one to maintain and this has kept us cautious. Right now, today’s session would be the second lower high against Monday’s 2.789; if price action can out above here the chart will turn immediate-term bullish in an instance, this is the major hurdle we must cross today. A move below support at 2.6795 will scare the bulls and encourage selling ahead of tomorrow’s inventory read.

Bias: Bullish/Neutral

Resistance – 2.778-2.799*, 2.85-2.88**, 2.96-3.01***

Pivot – 2.745-2.747

Support – 2.703**, 2.6795**, 2.634-2.656**,2.581*, 2.486-2.522****

 

10-year (March)

Yesterday’s close: Settled at 123’22

Fundamentals: Treasuries from all ends of the curve got crushed yesterday. Housing data was much better than expected at 7:30 am CT, but the weakness really began overnight as we discussed the German bund in yesterday’s report. The announcement out of Germany that they will issue more bunds than last year weighed tremendously on prices. Now combine that with the new issues in the U.S on the heels of tax reform and we have the 10-year at the lowest level since March. The 2’s at the lowest level since October 2008 and the 5’s hanging by a thread at the lowest level since April 2011 (below here is 2010). The long end even got crushed with a range of two points and is at the lowest level in nearly two months. Bulls must be cautious through the end of the week. The Senate, which was the biggest hurdle, passed the tax bill around midnight. The House will have to vote again this morning and the President could hold a news conference as early as noon CT. Existing Home Sales is due at 9:00 am CT. However, the reason for caution is Friday’s gauntlet of data. At the same time, we have been waiting for all of this fundamentally bearish treasury news to pass in order to present a strong buy opportunity that correlates with seasons. If data misses Friday, we could see a capitulation of sorts.

Technicals: We have remained more Neutral, reminding traders of the potential downside this week as tax reform and next year’s budget gets through. Price action has remained below the 123’27 major three-star support level since breaking it. In fact, today’s session high is 123’265 and this means the bears are clearly in the driver’s seat. Yesterday’s low was 123’20 and the next key support level is 123’10. Only a close back above 123’27 will begin to neutralize the immediate term weakness.

Bias: Neutral/Bullish

Resistance – 124’21**, 124’295-125’00***

Pivot – 124’135-124’15

Support – 124’07**, 124’015**, 123’27***, 123’10**, 122’29****

For more information please contact DAW Trading at brokersedge@dawtradingdiv.com or at 877-329-0006 and visit us at http://dawtradingdiv.com/brokers-edge/

 

Disclaimer:

Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. DAW Trading (“DAW”) uses various outside sources for research material regarding futures and options on futures trading therefore the views and opinions expressed in this letter may not necessarily reflect the view of DAW or its staff. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to DAW.

BrokersEDGE Futures News 12-19-17 Grains

CORN (March)

Yesterdays Close: March corn closed ¼ of a cent lower yesterday after trading in a narrow 2 ¼ cent range. Funds were estimated sellers of 1,500 contracts on the day.

Fundamentals: Export inspections yesterday morning came in at 594,281 metric tons, this was below the low end of expectations from 600,000-800,000 metric tons and below last week’s 717,919. Export inspections are on par with the five-year average but still lagging what the USDA needs to see to get in line with their projections for 2017/2018. We need to see exports come in better than expected to offer some support and encourage short covering in the market. We are talking about a trend of better than expected exports, not just one here and one there. Ethanol numbers have been phenomenal recently which has certainly held things together better than it could be; if those numbers come off we could see that put pressure on prices. Weather in South America is still being monitored closely. Dry weather is said to have slowed the planting pace down, recent reports have Argentina at 60% planted. This is just 3% behind the same time last year, but the slowest pace going back to 1995.

Technicals: Not much has changed on the technical side of things. We continue to feel that the bears remain in control but there is opportunity to play a nickel on either side of 350 with a tight leash. 350 was a big magnet for the December contract and we feel that will hold true again for the March contract. However, if we do close below 345, we could see accelerated selling pressure enter the market and press us down towards 335 ¼, this represents the December contract lows. On the resistance side of things, the market needs to achieve consecutive closes above resistance to encourage short covering. The first line in the sand on that front comes in at 356 ¾, this represents the 50-day moving average. A very simple indicator but one that the market has not been able to close above convincingly since July.

Bias: Bias: Neutral

Resistance: 355-357****, 369 ¼-370 ½***, 375****

Support: 345-348**, 334-335 ½***, 323-325 ¼**

 

SOYBEANS (January)

Yesterdays Close: January beans finished Mondays session down 5 ¾ cents, this after trading in a 13 ¼ cent range. Funds were estimated sellers of 8,000 contracts on the day.

Fundamentals: Export inspections yesterday morning came in at 1,774,555 metric tons, this was well above the expected range from 1,100,000-1,400,000 metric tons and was up from last week’s 1,233,440 metric tons. We did get a sale of 396,000 metric tons of beans to China for the 2017/2018 marketing year. Weather in South America has been on the radar (no pun intended) of many market participants recently and will continue to be. Planting in Argentina is lagging at just over 60% complete. This not only lags last year’s pace but also the longer-term average. Areas that remain dry have some wet weather working into the forecast which could be the reason for some of the recent pressure.

Technicals: The market has been under tremendous pressure over the last two weeks, trimming as much as 57 cents off of prices in just nine sessions. Despite the dramatic sell off on the back of long liquidation, the RSI (relative strength index) is only reading 35. We feel there is opportunity at these levels for a short-term relief rally, but risk needs to be tight. This was a big level back and June and the original breakout point on July 3rd. This has area has also been significant in August, September, and October. Risk vs reward is favorable in our minds. For bulls looking for a bigger move, you want to see a close back above 967-968, this would open the door to an extension towards 975 ½-977 ¾. If the market cannot regain its footing, we could see funds flip net short and press prices significantly lower; this is why you need to keep your risk tight.

Bias: Bullish

Resistance: 967-968 ¼****, 975 ½ -977 ¾***, 984 ¾-989**, 999-1004**

Support: 957 ¼**, 947 ½-949 ¾***, 952-929 ¼**, 915 ¼****

 

WHEAT (March)

Yesterdays Close: March wheat futures finished yesterdays session up 2 cents, trading in a range of 4 cents on the session. Funds were estimated to have been buyers of 1,000 contracts.

Fundametnals: Yesterday morning’s export inspections came in at 585,637 metric tons, this was above the expected range from 250,000-450,000 metric tons and up from last week’s 354,527 metric tons. As we have been mentioning for several months now, we need to start seeing consistent beats with the weekly export data. Low prices tend to cure low prices so perhaps that is on the horizon and could help put a floor in the market. With that said, we will also likely have a ceiling in the market as ample global supplies will likely halt any attempt at a significant rally.

Technicals: The market has slowly but surely been grinding higher. 424 ¼ has been our first line in the sand to look at selling, but we think patience for higher prices could pay off. The next line in the sand we are looking at comes in at 438 ¾. This represents the 50-day moving average, a very simple technical indicator but like with corn, it is one we have not been able to close above since July. Consecutive closes above could encourage a short covering rally so be sure to manage your risk properly.

Bias: Bearish

Resistance: 424 ¼**, 438 ¾***, 443-445¾ ****

Support: 399-402 ¾****, 392-394**, 381-383 ¾***

 

 

For more information please contact DAW Trading at brokersedge@dawtradingdiv.com or at 877-329-0006 and visit us at http://dawtradingdiv.com/brokers-edge/

 

 

Disclaimer:

Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. DAW Trading (“DAW”) uses various outside sources for research material regarding futures and options on futures trading therefore the views and opinions expressed in this letter may not necessarily reflect the view of DAW or its staff. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to DAW.

E-mini S&P (March)

Yesterday’s close: Settled at 2694.50, a new all-time high

Fundamentals: Prices continue to elevate in anticipation of tax-reform moving to the President’s desk this week. Today will be a crucial day as the House plans to vote this afternoon. Democrats might do what they can to slow the process, but the Senate could get the bill today. The Senate requires 10 hours of debate, split between parties. This would put the bill on a path for a vote at the absolute earliest late tonight but more likely early tomorrow. The 10 hours of debate is flexible as either party could cede time and the Republicans would likely do that. Markets in Europe are mostly mixed this morning after a miss on German Business Confidence. We look to Building Permits and Housing Starts this morning at 7:30 am CT as U.S begins a stretch through the rest of the week.

Technicals: The market settled at our 2694.50 level yesterday and is attempting to extend gains into this morning. However, the psychological round 2700 has posed a barrier after a two-day run of about 1.5%. We remain Bullish and believe our upside and yearend high target of 2715.25 is within reach. To clarify, we are traders, a yearend target for us simply needs to be achieved as a high, not a yearend close. This is important to understand because it is likely that next week brings volatility. The NQ is still in a breakout mode and the two levels we are watching as targets are 6600 and 6643. However, the small caps Russell 2000 remains a laggard and this concerns us greatly. It has not affected our opinion on the ES or NQ yet, but a failure to close out above 1564.40 this week could signal weakness to come over the next two to three weeks.

Bias: Bullish

Resistance – 2700*, 2715.25***

Pivot – 2694.50

Support – 2688*, 2681.50-2683.25**, 2675.50**, 2667.25**, 2651.75-2652.50***

 

Crude Oil (February)

Yesterday’s close: Settled at 57.22

Fundamentals: Crude Oil is edging higher into this morning as the Forties pipeline crack continues to keep a bid under the market. Also jolting prices higher is news that Yemen Houthi rebels fired a ballistic missile at Riyadh which Saudi state news reported was intercepted over the capital. Yesterday, a U.S shale oil report said that shale is predicted to add 94,000 bpd in January. Though bearish, it did not affect price action much as it is simply in line with an EIA report last week. Inventories will come into the picture today with API due at 3:30 pm CT, another draw of about 3.5 mb is expected.

Technicals: Despite the spike on the Yemen missile, price action is inside of yesterday’s. Resistance at 57.65 was breached for a short period before failing and to the downside key support at 56.99-57.08 was treated the same with a session low of 56.88 before settling right in the middle. There is not only a consolidation on a short time frame, but we also discussed yesterday the well-defined wedge dating back to mid (lows) and late (highs) November. In the near term, a close out above 57.65-57.81 will spark further buying while a close below 56.88-57.08 is needed to spark further selling. Ultimately, a break out of the wedge at 58.40 or 56.11-56.30 will garner a decisive move into 58.97 (and higher) or $55 respectively. We still have a Bearish bias in the more intermediate term as this upside move did achieve our target and the net-long position remains at overextended levels. However, the failure to remain suppressed is discouraging to the bearish thesis and must be recognized.

Bias: Bearish/Neutral

Resistance – 57.65**, 58.40**, 58.97***, 59.96***, 62.58**

Pivot – 57.33-57.35

Support – 56.99-57.08**, 56.11-56.30**, 55.00-55.25***

 

Gold (February)

Yesterday’s close: Settled at 1265.5

Fundamentals: Gold continues to show life as longs reposition on U.S Dollar weakness. The bottoming process seems to have happened quickly and though we are Bullish, traders must remember that tax-reform could move to the President’s desk in about 48 hours. When this is done we expect to see a marginal bump up in the U.S Dollar, and this will give Gold bulls who missed the buy last week a second chance. We are entering a very seasonally bullish time of year for the metal, ultimately, one that does not start until December 23rd. There are several key data points we must watch this week, and this begins with today’s housing reads at 7:30 am CT. For us, the biggest reads come on Friday with PCE, Durable Goods and Personal Income and Spending data. Fed dissenter Neel Kashkari spoke this morning. As expected, he was dovish and said there is no reason to raise rates while inflation is low and falling. He added concern on wage growth and how the long end of the yield curve hasn’t moved. This has helped support Gold prices.

Technicals: Price action has taken out resistance at the 1262.8-1263.2 level, settling at 1265.5 yesterday. Major three-star resistance comes in at 1273.9-1276.9 and we find it very hard to believe that Gold will chew through here on the first test. If you bought last week when we turned Bullish, we would advise trading and taking profit against this level and look to reposition into the end of the week.

Bias: Bullish/Neutral

Resistance – 1273.9-1276.9***, 1289**, 1303.4-1304.7****

Pivot – 1262.8-1263.2

Support – 1247-1250**, 1237-1241.7**, 1214.5-1225***

 

Natural Gas (January)

Open interest is steadily moving to February, we will roll this week

Yesterday’s close: Settled at 2.745

Fundamentals: Though recent weather has been moderate, weather models for the last week of December and first of January show a blast of cold that has ramped up stock drawdown expectations and contributed directly to price action over the last 24 hours. We continue to believe the bear camp will be caught offsides and though wintery weather may be coming late, better late than never; we compare price action on the close last week and to start this week to that of the close on November 7th, 2016.

Technicals: Yesterday minimal held into the 2.73-2747 level which we denoted was necessary in beginning a neutralization of the bear camp. Today will be key because we must not see a drip lower, something that has happened consistently after strong Monday sessions. It will be key for price action to hold the 2.703 level, the .382 from yesterday’s high. This will signal only a minor consolidation to regather buying interest and not the bears regaining control. Price action must close at or above 2.745-2.747 while a move out above first resistance against yesterday’s high will spark short covering.

Bias: Bullish/Neutral

Resistance – 2.778-2.799*, 2.85-2.88**, 2.96-3.01***

Pivot – 2.745-2.747

Support – 2.703**, 2.6795**, 2.634-2.656**,2.581*, 2.486-2.522****

 

10-year (March)

Yesterday’s close: Settled at 124’075

Fundamentals: Treasury markets are suppressed and focused on tax-reform actually getting passed this week and less on the logistics on the legislation getting to the President’s desk. Let’s face it, as we have discussed here for weeks, it is going to get done before Christmas. Yields across Europe have worked higher into this morning as well despite a disappointing read on German Business Climate and wages, ultimately, they are likely focusing on U.S tax-reform and the stronger growth prospects we continue to hammer on the FX Rundown. Building Permits and Housing Starts are due at 7:30 am CT and get a busy week of data underway. We are circling PCE, Durable Goods and Personal Spending and Income data Friday. Fed dissenter Neel Kashkari spoke this morning and was dovish as expected, siting low inflation a slow wage growth as the main reason to not hike rates.

Technicals: Support remains at the124’07 level but we are likely going to see further pressure over the next 48 hours as tax-reform moves through congress. However, we remain intermediate to long term bullish the 10-year and believe a bottoming process will begin late this week and set up for the opportunity to go long before the New Year; something we have been discussing for weeks.

Bias: Neutral/Bullish

Resistance – 124’21**, 124’295-125’00***

Pivot – 124’135-124’15

Support – 124’07**, 124’015**, 123’27***, 123’10**, 122’29****

 

 

For more information please contact DAW Trading at brokersedge@dawtradingdiv.com or at 877-329-0006 and visit us at http://dawtradingdiv.com/brokers-edge/

 

 

Disclaimer:

Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. DAW Trading (“DAW”) uses various outside sources for research material regarding futures and options on futures trading therefore the views and opinions expressed in this letter may not necessarily reflect the view of DAW or its staff. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to DAW.

 

Cattle Commentary: Cattle futures gapped open to start the week on follow through momentum from Fridays session. That was enthusiasm was short lived as prices retreated for the remainder of the day. February live cattle futures finished the day -.30 at 120.725 after trading in a range o f 1.875. Despite trading lower today, we still remain in a seasonally strong time of year. In fact, if you had bought February live cattle on December 13th and held to December 28th for the past 15 years, you would have been profitable for 14 of them with the average gain being 2.41. January feeder cattle squeezed out a .05 gain finishing at 147.80, they traded in a range of 2.200 on the day. Fridays Commitment of Traders report showed that funds reduced 17,262 live cattle contracts. We saw some decent cash trade late Friday from 120.00-120.50. Cash trade will continue to be monitored closely this week, but Fridays Cattle on Feed and Cold Storage report will be big events. Fridays reports will be released during the trading day which could shake things up a bit considering we could see a thinner volume with Christmas right around the corner. We will have our estimates for these reports in the coming days.

PM Boxed Beef Choice Select

Current Cutout Values: 203.15 185.01

Change from prior day: 1.28 1.76

Choice/Select spread: 18.14

 

Cattle Technicals

Live Cattle (February)

Fridays session was constructive with a close above 120.70, a level we have been keeping an eye on for the past month; this represents the middle of the range from the August lows to the November highs. Though futures closed lower, we did hold this level on a closing basis which could encourage some buying activity. If the market can continue to firm up, we could see the market make a run towards 123.35-123.80. This pocket represents a key Fibonacci retracement level as well as the 50-day moving average. On the chart you can also see that this was the breakout level on October 24th and the breakdown level on December 1st. If you have bought the market or reduced hedges over the last week, this would be your exit target. We know that funds have been reducing their long position over the past several weeks and a failure to break out above resistance will lead to additional long liquidation. Ultimately, we expect the market to consolidate into a “tighter” range as we round out the year.

Resistance: 123.35-123.80****, 126.6**

Pivot: 120.70

Support: 119.45***117.575**, 116.24-116.80****

 

Feeder Cattle (January)

January feeder cattle finished the day lower but managed to close off of the lows. The market failed against last week’s technical resistance from 148.85-149.075, this pocket represents the 100-day moving average and the 50% retracement from the August lows to the November highs. If the market can achieve a conviction close above this pocket we could see momentum buyers step back into the market and press us towards 152.25-153, this pocket represents the 50-day moving average and a key Fibonacci retracement level. If the market cannot gain traction above first resistance, it is possible we see funds continue to liquidate their long positions and press us back towards the bottom end of the recent range near 145. The RSI (relative strength index) has worked itself back towards neutral levels with a reading of 43.

Resistance: 148.85-149.075***, 152.25-153.00**, 155.55-155.95***

Support: 146**, 144.15-144.55****, 142.15-142.60***, 136.10**

 

Lean Hog Commentary & Technicals

February lean hogs opened up on a higher note to start the week, but that enthusiasm faded as markets not only went negative, but also gave up nearly all of the gains from Fridays session. The technical reversal appears to be putting the bears in a good position to start the week. First technical support comes in from 66.50-66.90, this pocket represents the 100 and 200 day moving average, as well as the 50% retracement from the August lows to November highs. Stable cash has been a catalyst for the recent support, but we feel other fundamentals such as weights will keep a lid on any significant rally. We also have a Cold Storage report on Friday, this will be during market hours and could have a big impact on prices over the intermediate term.

Resistance: 68.40**, 69.125***, 70.28**, 72.25-72.45**

Support: 66.50-66.90****, 65.40**, 64.75**

 

 

 

For more information please contact DAW Trading at brokersedge@dawtradingdiv.com or at 877-329-0006 and visit us at http://dawtradingdiv.com/brokers-edge/

 

 

 

 

 

Disclaimer:

 

Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. DAW Trading (“DAW”) uses various outside sources for research material regarding futures and options on futures trading therefore the views and opinions expressed in this letter may not necessarily reflect the view of DAW or its staff.  The information provided is designed to assist in your analysis and evaluation of the futures and options markets.  However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to DAW.

 

Euro (March)

Session close: Settled at 1.18675, up 22.5 ticks

Fundamentals: The Euro put in a decent session, trading higher on Dollar weakness. This is a critical week for tax-reform as a final bill is projected to hit the President’s desk by Christmas. However, the Dollar lost some muster from the bull camp and this is right in line with our ‘buy the rumor sell the fact’ expectations on tax-reform for the greenback. CPI data for the Eurozone was in line with expectations this morning, coming in at 1.5%. German Business Climate is due tomorrow morning at 3:00 am CT and Eurozone Wages follows at 4:00, we will watch both reads closely. Building Permits and Housing Starts are due in the U.S at 7:30 am CT. Neel Kashkari, the known Fed dissenter speaks tomorrow morning.

Technicals: Prices are running into a pretty thick net of resistance between 1.19 and 1.20. We remain long term Bullish and the bottoming from today’s session could easily gather legs this week. Trend line resistance from the highs aligns with the 1.1998 level and comes just in front of 1.20435; a close out above these levels will ignite a bull leg higher. The 9-day moving average is trading below the 21-day but rounding out and a trade above first resistance will spark this bullish momentum indicator. Line in the sane major three-star support has held tremendously and comes in at 1.1797-1.1799; a move below here will damage the near and intermediate term perspective for the Euro.

Bias: Bullish

Resistance – 1.1891**, 1.1920-1.1931**, 1.1946-1.1949**, 1.1998**, 1.20435***, 1.2180-1.22135****

Support – 1.1797-1.1799***, 1.1742**, 1.16485***

 

Yen (March)

Session close: Settled at .89355, up 2.5 ticks.

Fundamentals: The Yen put in a steady session after a very strong read on Trade Balance data. Despite the strong Exports, the Yen didn’t do much and traders are watching the U.S Dollar as they wait for the Bank of Japan’s policy meeting late Wednesday night. For weeks now, we have documented comments from BoJ council members who fear the law of diminishing returns signaling their support for tightening policy or tapering purchases before the bank reaches its inflation goals. However, BoJ Governor appeared to fade those rumblings earlier this month. For now, we wait until Wednesday.

Technicals: Price action has consolidated since the Dollar began weakening on the heels of the Fed rate hike. For now, this consolidation has remained above the 9-day moving average but must move out above first resistance in order to build for a cross and spark bullish momentum. We remain long term bullish and have been eyeing the last week of December and the first two weeks of January as a high probability setup fundamentally while the technicals seem to be preparing for such as well.

Bias: Bullish

Resistance – .8957**, .8984**, .9060-.9091***, .9164**

Pivot – .8928-.89355

Support – .8916**, .88405**, .8782-.8808***

 

Aussie (March)

Session close: Settled at .7665, up 21 ticks

Fundamentals: The Aussie gained nearly 2% last week in its best since July. Minutes from the RBA Meeting are out at 6:30 pm CT tonight and while this should bring some volatility, it is very likely that we see volatility begin to decrease after last week’s slew of data.

Technicals: The technicals have been very constructive off the December 8th low but the 200-day moving average at .7668 remains a key hurdle. However, major three-star resistance stands at .7724-.7728 and remains the key hurdle that the Aussie must get out above in order to negate its recent downtrend.

Bias: Neutral/Bullish

Resistance – .7668**, .7724-.7728***, .7799**, .7870-.7884***

Support – .7636**, .7572-.7594**, .7498-.7501***, .7390***

 

Canadian (March)

Session close: Settled at .7785, up 5.5 ticks

Fundamentals: The Canadian finished last week on a negative note due to a very poor read on Manufacturing Sales. Thursday is the day traders have circled on their calendar, ADP Employment data, CPI and Retail Sales are all due out of Canada. We expect the currency to continue a consolidation pattern into here while remaining at the mercy of U.S Dollar swings due to tax-reform.

Technical: Price action is again testing major three-star support at .7730-.7754, a close below here will open the door for a 1% move to the next key level. Friday’s failure from Thursday’s strength has opened the door for further weakness and only a close back above .7858-.78795 will negate this.

Bias: Neutral

Resistance – .7858-.78795**, .7931-.7959***, .8022**

Support – .7730-.7754***, .7671**, 7550***

 

For more information please contact DAW Trading at brokersedge@dawtradingdiv.com or at 877-329-0006 and visit us at http://dawtradingdiv.com/brokers-edge/

 

 

Disclaimer:

Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. DAW Trading (“DAW”) uses various outside sources for research material regarding futures and options on futures trading therefore the views and opinions expressed in this letter may not necessarily reflect the view of DAW or its staff. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to DAW.

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