Month: February 2018

Breaking Grain market new- BrokersEDGE 2-16-18

CORN (March)

Yesterday’s Close: March corn futures finished the day up 1 ½ cents, trading in a range of 3 ¼ on the day. Funds were estimated buyers of 5,500 contracts.

Fundamentals: Export sales yesterday morning came in at 1,974,400 metric tons, well above the top end of expectations which ranged from 1,000,000-1,500,000 metric tons; last week’s read was 1,769,595 metric tons. If we continue to see these type of export numbers become a trend, that will help offer support to the market. It is a three-day weekend, so we may see some weather premium linger through the session, leaving the possibility (probability) of a gap move come next week. March options go off the board next week, there are a significant amount of ITM (in the money) calls; this may keep a lid on a breakout move for the next week.

Technicals: March corn futures are testing the top end of the range that was developed back in September and October. Our resistance pocket remains at 366 ½-369. If the bulls can chew through this we would expect prices to grind higher towards 373-374; not the most exciting thing to report but it is what it is, the corn market. The charts have been very constructive, and we would welcome a pull back as a buying opportunity. The most opportunistic spot would be 357-358 ½, this pocket represents recent lows as well as the 100-day moving average. Funds have been covering for several weeks, and we expect to see that reflected in this afternoons Commitment of Traders report.

Bias: Neutral

Resistance: 366 ½-369****, 373-374***, 379 ½**

Support: 357-358 ½**, 350-352 ½***, 345-346 ½***

 

SOYBEANS (March)

Yesterday’s Close: March soybeans finished the session up 7 cents, trading in a range of 9 ¼ cents. Funds were estimated buyers of 9,000 contracts on the day.

Fundamentals: Yesterdays export sales came in at 640,400 metric tons, this was within the expected range from 450,000-750,000 metric tons; last week’s read was 743,223 metric tons. Yesterday’s NOPA crush report came in at 163.11 million bushels, this was below the expected 165.511 million bushels. Nonetheless it was a record for the month and cracked the top 10 on record. Weather continues to be a key catalyst in price action. Meal has been a leader on the back of those weather concerns as Argentina accounts for nearly half of world shipments. With a three-day weekend, we expect to see a gap come next week’s open.

Technicals: The market has taken advantage of the breakout above resistance at 1006, the buying accelerated and now has prices towards the top end of our next pocket which we have outlined as 1020-1027. If the bulls can achieve a conviction close above this level, there is not a lot from stopping it from extending towards 1044 ½-1050 ½. The funds have been reducing short positions for a while now and are likely net long, we should see that confirmed in this afternoons Commitment of Traders report. The RSI (Relative Strength Index) is currently at 69.55, the highest read since July. Shorts have been swinging at a piñata and falling short while the bulls remain in full control.

Bias: Neutral

Resistance: 1020-1027***, 1044 ½-1050 ½****

Support: 1013**, 1001-1006***, 986 ¼-989 ¾***

 

WHEAT (March)

Yesterday’s Close: March wheat futures closed down 4 ½ cents yesterday, trading in a range of 7 for the day. Funds were estimated sellers of 4,500 contracts.

Fundamentals: Export sales yesterday morning came in at 311,100 metric tons, this was within the expected range from 200,000-450,000 metric tons; last week’s report showed 393,437 metric tons. Bulls need to see better exports to see this market extend its rally. Weather has been a key driver with KC wheat being the leader on that front. Some areas are expecting rain in the near future which could put pressure on prices if they are realized. Currency volatility continues to be something we are watching as it has spill over effect on commodities.

Technicals: Consolidation has been the word of the week as prices have traded sideways for the last week and a half. There’s going to be a lot of resistance from 470-472 ¾, if the bulls can pac-man through this pocket we expect to see another 10-15 cents in the rally. A failure to get that breakout sends us back towards 438 ¾-441 ¾. This pocket represents last week’s lows as well as the 100-day moving average. Bulls are in control as the market has managed to make higher lows and higher highs over the past two months.

Bias: Neutral

Resistance: 470-472 ¾***, 481 ¼-484 ¾****, 507 ¾**

Support: 452 ¼**, 438 ¾-441 ¾***, 427 ¼-429 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 2734

Fundamentals: The 10-year treasury yield hit a high of 2.944 early yesterday and has backed off since. On the flip side we have a rare major four-star support in the 10-year treasury futures at 119’20-120’00 and yesterday’s low was 120’01 before bouncing. The relief in yields has helped equity markets find a path of least resistance higher. Additionally, Asian markets stopped bleeding lower on Wednesday. Earlier in the week we discussed how the Nikkei was down 12% from its high and the delay in BoJ chief Kuroda’s reappointment has encouraged a path of least resistance higher in the Yen; a stronger currency will hold back domestic equities. Overnight, the reappointment was made official and to no surprise the Yen began paring gains. Also to no surprise, the Yen turned around after achieving our rare major four-star resistance. To finish out the week Build Permits and Housing Starts are due at 7:30 am CT and the first look at February’s Michigan Consumer data is due at 9:00 am CT.

Technicals: Yesterday morning we called for a test into major three-star resistance at 2726.75-2733 and that is exactly what we got by the day’s end. We also noted that if you have not been in, don’t force a trade, it is important to protect your capital. After a strong close, the overnight high was 2746.75 and our next key level at 2745 has so far held strong. We would imagine the market is getting a bit tired at this point and we are completely Neutralizing our Bias ahead of the weekend. There is a trend line from the lows that is rising sharply and comes in this morning at 2595.50, we would reconsider a long position upon a test into here.

Bias: Neutral

Resistance: 2745**, 2763***. 2794.50-2796***

Pivot – 2726.75-2733

Support: 2595.50-2701.75**, 2686.50-2688**, 2764**, 2738**, 2712-2719***

 

Crude Oil (April)

Yesterday’s close: Settled at 61.17

Fundamentals: Another session of Dollar weakness yesterday extended overnight to put the Dollar Index at the lowest level since December 2014. This continues to be a very supportive story for Crude Oil. Another major catalyst this week is not only jawboning from Saudi Arabia but some action. They have stepped up to defend the $60 level by saying they would rather see an undersupplied market while announcing a reduction of 100,000 bpd in production next month coupled with capping exports. Furthermore, it would seem they are working on new acronyms to bring fear to the bear camp.

Technicals: Price action in the April contract traded to a session high of 61.73 before peeling back slightly into this morning. We are watching the 61.14 level on a closing basis and we must see a close below here to keep the bulls from maintaining an edge on yesterday’s reversal. The March contract does not fall off the board until Tuesday, at this point we believe the market could see renewed selling pressure.

Bias: Neutral/Bearish

Resistance: 61.75*, 62.15**, 62.63-63.15***, 64.39**, 66.00**, 66.66-66.87***

Pivot – 61.14

Support: 59.85**, 58.99-59.03**, 57.26-57.95***

 

Gold (April)

Yesterday’s close: Settled at 1355.3

Fundamentals: Gold’s rise is as much a Dollar story as it is anything else. But let’s not underestimate the power of inflation in this rise. You don’t have to look further back than the summer of 2016 to see the last time Gold truly put the $1400 barrier to the test with a high if 1377.5. Yes, the Brexit was a crucial geopolitical uncertainty driving price action, but it was not coincidence that U.S Core CPI also peaked that summer. Gold’s trend is very healthy, and we maintain that we believe the metal will breakout above $1400 in the next three to six months; just as we said last week when Gold was nearing $1300. As for the Dollar, it is important to note that the Yen, which has been a driving force in Dollar weakness, hit and reversed from our rare major four-star resistance level detailed in our FX recap. In the short-term, U.S data will drive swings, Building Permits and Housing Starts are due at 7:30 am CT and the first look at February Michigan Consumer data is at 9:00.

Technicals: Price action traded to a high of 1364.4 overnight. We have major three-star resistance at 1367.8-1370 and because of this test, we are Neutralizing our Bias slightly. Let us be clear though, we are unequivocally long term bullish on Gold. Traders should use opportunities like this to take advantage of strong weeks..

Bias: Neutral/Bullish

Resistance: 1367.8-1370***, 1377.8**, 1392.6***, 1432.9**

Support: 1347-1351.4**, 1340.4**, 1328.4**, 1302.3-1309****

 

Natural Gas (March)

Yesterday’s close: Settled at 2.58

Fundamentals: Yesterday’s storage draw came in higher than expected at -194 bcf. Price action lifted briefly but could not hold ground at 2.60. The bears contain a clear edge and a warmer front has begun to move through the Midwest. This has worked to keep price action depressed and has directly affected storage expectations two weeks out. Though we are more Neutral, remember there is value at this level and the market is not pricing in a wintery surprise.

Technicals: The technicals remain undeniably weak. However, our rare major four-star support sits just below the market and is working to keep price action propped up. It is a solid value play here ahead of the weekend as long as traders can keep risk managed. One way to do it is buying a put to avoid a gap.

Bias: Neutral/Bullish

Resistance: 2.607*, 2.681-2.693**, 2.8134-2.837***, 2.896-2.902**

Support: 2.486-2.532****

 

 

 

10-year (March)

Yesterday’s close: Settled at 120’145

Fundamentals: Price action came off overnight session lows into yesterday morning. Let’s not underestimate the technical rejection against our rare major four-star support as price action neared the psychological 3% yield area with a high of 2.944. Data today will be key, but one thing we believe is favorable to higher prices is the slight flattening we are seeing on the yield curve. Building Permits and Housing Starts are due at 7:30 am CT while the first look at February Michigan Consumer data is 9:00.

Technicals: If you blinked early yesterday morning, you missed the test near major four-star support. A level in which we have told clients over the phone we view as a generational support. Price action is testing into the key pivot area at 120’15-120’18 and a close above here will work to neutralize such extreme weakness. Still, the tape is extremely weak, but the selling feels as if it has once again been exacerbated.

Bias: Neutral/Bullish

Resistance: 120’315-121’05***, 121’15-121’175**, 121’31-122**, 122’25-122’29***

Pivot – 120’15-120’18

Support: 119’20-120****

 

 

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 market news – BrokersEDGE 2-15-18

Cattle Commentary: Cattle finished the day stronger despite the lack of new news on the wire. April fats finished the session up 2.05 at 127.275, trading in a range of 2.20. March feeders finished the session up 1.725 at 149.90, trading in a range of 2.18. Cash cattle continues to be non-existent, if we don’t see anything develop by the afternoon tomorrow bulls will likely be feeling pretty comfortable going into a three-day weekend. Our bias remains bullish with an objective of contract highs. Obviously, cash developments and outside market volatility could throw a wrench into that, so we remain nimble. Boxed beef finished the day stronger.

PM Boxed Beef / Choice / Select

Current Cutout Values: / 209.04/ 205.14

Change from prior day: /1.23/ 1.63

Choice/Select spread: / 3.90

 

Cattle Technicals

Live Cattle (April)

April live cattle finally caught the bid we were looking for today, breaking out above our resistance pocket from 126.125-126.30, this opened the door to our next pocket that we have had listed as 127.20-127.35. Previous resistance now becomes first support. We continue to believe that the market will make a run at the contract highs from November 6th, this comes in at 130.10. If the bulls cannot take advantage of price action and prices dip back below 126.125, look for another leg lower towards 122.50-123.30. The RSI (relative strength index) is showing 63, the most overbought levels since November.

Resistance: 127.20-127.35**, 130.10****

Support: 126.125-126.30****, 122.45-123.25***, 120.20-120.625****

 

Feeder Cattle (March)

March feeder cattle managed to feed off of yesterday’s momentum posting a high of 150.125 and testing the next line of resistance which we had listed in yesterday’s report as 150.25. If the bulls can chew through this level, then we would expect to see 152. We continue to believe there is a lot of strength left in this market and a run at contract highs would not be out of the question. On the flip side, previous resistance now comes in as first support, that comes in from 148.35-148.65.

Resistance: 150.25**, 151.60-151.95***, 153.95***, 158.925****

Support: 148.35-148.65**, 146.45-146.75**, 145.05-145.525**

 

Lean Hog Commentary and Technicals (April)

April lean hog futures made a run at technical resistance which we had listed in yesterday’s report from 71.15-71.35, the market failed to attract new buyers which invited the sellers back into the market. April futures finished the session down .95 at 69.70, trading in a range of 1.625 on the session. Though there is probably intermediate term value here the market may continue to overextend itself on the down side. 67.91 is the “last line of defense” a break and close below could accelerate the selling pressure down towards the 65 level.

Resistance: 71.15-71.35***, 72.55**, 73.10-73.60***

Support: 67.75-68.00****, 64.85-65.05***

 

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.

FX market Recap – BrokersEDGE 2-15-18

Euro (March)

Session close: Settled at 1.2530, up 67.5 ticks

Fundamentals: The Euro traded to an overnight high of 1.25335 before retreating on weaker Trade Balance data. U.S data was mixed with a beat on PPI and a miss on Industrial Production. The intraday low of 1.24805 held last night’s reopen and buyers resumed yesterday’s trend pushing the Euro back to session highs upon settlement. ECB heads Mersch, Praet and Lautenshlaeger didn’t move the meter much this morning. We expect a little more from Coeure tomorrow and the trend seems to be pointing to hawkish jargon. The Euro is up 7.5% against the Dollar since November and yes this has raised quite a few eyebrows at the ECB, especially as U.S politics came into the picture. However, all currencies are up sharply against the Dollar, and the Pound/Euro is essentially flat during that time frame and the Euro/Yuan is rangebound since the rally into last August’s high (it did just double bottom and is up 3% on the week to retest that August high). The point here is that though the ECB is concerned about the Euro/USD it is not a dire situation where the Euro has appreciated against other currencies in the same manner. Because of this, we expect to see that hawkish jargon from ECB heads. From the U.S, Building Permits and Housing Starts are due at 7:30 am CT and Michigan Consumer Sentiment is at 9:00.

Technicals: Price action finished the session out above our key resistance at 1.2508-1.2514 which also aligned with a trend line from the highs. This confirms our Bullish Bias and though resistance is above here at the recent highs, we believe the path is paved for our initial target of 1.2608 and above. The longer price action stays above 1.24805-1.2514, the more bullish the tape becomes.

Bias: Bullish

Resistance: 1.25575-1.25765*, 1.2608***, 1.2695-1.2727***, 1.2919***

Support: 1.24805-1.2514**, 1.2434-1.2436***, 1.23805**, 1.2209-1.2222***, 1.2112-1.21405***, 1.2003***

 

Yen (March)

Session close: Settled .9427, up 70.5 ticks

Fundamentals: The Yen continued its bullish run even as equity markets notched a remarkable session with the S&P gaining more than 1%. Asian markets paused their drop today and volume is likely to be light due to the Lunar New Year. The Yen strength is nearing a place where we would not be surprised to see officials from the Bank of Japan verbally intervene. For now, U.S Dollar weakness along with speculation that the BoJ will continue tapering stimulus measures as the year unfolds is driving price action. Data on Foreign Buying is due tonight at 5:50 pm CT.

Technicals: Price action continues to surge, and we have now upped resistance to a major four-star level. This area aligns multiple proprietary indicators as well as a trend line from the 2016 highs. Though we are remain outright Bullish in Bias, traders should capitalize against this level.

Bias: Bullish

Resistance: .9480-.9491****

Support: .9279-.9285**, .92015**, .9154-.91665**, .9113**, .9062-.9075***

 

Aussie (March)

Session close: Settled at .7934, up 22 ticks

Fundamentals: The Aussie punched higher last night on momentum but also a solid read on Employment Change data. Like most U.S Dollar denominated assets, the Aussie retreated through the first half of the day session but quickly bottomed heading into the afternoon as the U.S Dollar weakened once again. RBA Governor Lowe speaks tonight at 5:30 pm CT. Motor Vehicle Sales data is due at 6:30 pm CT. Look for U.S data to push the tape tomorrow.

Technicals: Today’s price action played out extremely technical and is a great reminder of how the levels work. Yesterday’s momentum carried over early, but it was key that today’s pullback held .7901-.7915, previous three-star resistance that we now have as a pivot. This helped keep the technicals healthy and build for a secondary push towards .7991 into the weekend.

Bias: Bullish

Resistance: .7991**, .8046-.8051***, .8135-.8151****

Pivot – .7901-.7915***

Support – .7868**, .7733-.7757***, .7640**

 

Canadian (March)

Session close: Settled at .8009, up 19.5 ticks

Fundamentals: The Canadian had a quiet but solid session seeing strength from a weaker U.S Dollar and a solid read on ADP Nonfarm Employment. This data showed an increase of 10,700 jobs and helps relieve the dismal part-time job loss seen in the government data last week. Bank of Canada Deputy Governor Schembri spoke with a balance tone on being cautious on the next rate hike but how inflation pressures are real. Tomorrow we look to Manufacturing Sales and Foreign Securities Purchases at 7:30 am CT.

Technicals: The technicals likely held the Canadian back from further gains. Resistance at the .7996-.8006 level has been sticky after a tough month. We remain extremely upbeat on the Canadian in the long-run but a lack of enthusiasm on today’s follow through might signal that value might be had at a better price.

Bias: Bullish

Resistance – .7996-.8006**, .8070**, .81195-.8163***, .8290***, .8524****

Support – .7931-.7949***, .78805**, .7752-.7787***

 

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)

Yesterday’s Close: March corn futures finished yesterday’s session up ¼ of a cent, trading in a range of 3 ¾ for the day. Funds were estimated buyers of 5,000 contracts for the session.

Fundametnals: Yesterdays weekly EIA report showed ethanol production at 1.016 million barrels per day, this was down from the 1.057 million barrels we saw in the previous week. There was an export sale of 123,000 metric tons to “unknown” for the 2017/2018 marketing year. This morning’s export sales came in at 1,974,500. The expected range was for 1,000,000-1,500,000 metric tons; last week’s came in at 1,769,600 metric tons. Weather and crop developments continue to be watched very closely in Argentina as concerns still linger. Brazils first crop is estimated to be 17% complete which is close to in line with last year’s pace. Producers are starting to get active on some sales as December new crop futures approach the $4 handle.

Technicals: Lack of new news and conviction from the bulls or the bears has the market treading water at the top end of resistance. Our resistance pocket from 366 ½-369 continues to hold, but bears want to see more of a rejection against this pocket to encourage more pressure. The more times a technical lever is tested, the less significant it becomes (like a wrecking ball against a building). If the bulls can achieve a breakout we expect to see additional short covering from funds press prices towards 373-374 ¼. First significant support comes in from 357-358 ½.

Bias: Neutral

Resistance: 366 ½-369****, 373-374 ¼***

Support: 357-358 ½**, 350-352 ½***, 345-346 ½***

 

SOYBEANS (March)

Yesterday’s Close: March soybean futures finished yesterday’s session up 6 ¼ cents, trading in a range of 13 ½ cents for the day. Funds were estimated buyers of 8,500 contracts.

Fundamentals: Weather in Argentina continues to be the dominate catalyst as drought concerns have kept a premium in the market. There are some areas that are expecting rain over the weekend, but similar forecasts have fell short of expectations in recent weeks. NOPA crush numbers will be released at 11 am cst this morning. The average estimate is for 165.51 million bushels; this would be a record for the month of January and one of the largest numbers on record. Soybean meal has been on fire which has also helped the bean market. Some traders are waiting for a top in that market as a point to look short beans. Export sales this morning came in at 640,400 metric tons. The expected range was from 450,000-750,000 metric tons; last week’s came in at 743,200 metric tons.

Technicals: The market continues to grind higher and squeeze shorts who are trying to step in its way. The move out above 1006 opened the door for a move to our next resistance pocket which we have outlined as 1020-1027. The market has been strong posting higher lows and higher highs but is approaching its most overbought level in several months; the RSI (relative strength index) is currently at 67.25. If the market is able to break out above resistance, there are nearly no technical roadblocks until 1044 ¾-1050 ¾. Previous resistance now becomes first support from 1001-1006.

Bias: Neutral

Resistance: 1020-1027***, 1044 ¾-1050 ¾****

Support: 1001-1006***, 986 ¼-989 ¾***, 980 ½-981 ½**

 

WHEAT (March)

Yesterday’s Close: Wheat futures finished yesterday’s session down 4 ½ cents, trading in a range of 7 for the day. Funds were estimated sellers of 4,500 contracts.

Fundamentals: Wheat prices are in a bit of a limbo as market participants wait for new news to cross the wires. The drought concerns for areas of the plains have helped provide a premium to the market. Some of those areas are expected to get some moisture in the near future which could put pressure on prices. Currency volatility continues and that could start to have more of an effect on exports going forward. Export sales this morning came in at 311,100 metric tons. The expected range was for 200,000-450,000 metric tons; last week’s came in at 393,400 metric tons.

Technicals: The market has been in consolidation mode for the better part of the last week as the bulls and bears wait for a reason to do something. The bulls are in control on the chart as they have continued to market higher lows and higher highs. First technical resistance continues to come in from 470 ¾-472 ¾. A breakout above this pocket opens the door to 481 ¼-484 ¾. On the flip side, we see first support a way away from 438 ¾-441 ¾. Needless to say, the market is in a bit of a “no-mans” land here.

Bias: Neutral

Resistance: 470 ¾-472 ¾***, 481 ¼-484 ¾****, 507 ¾**

Support: 438 ¾-441 ¾***, 427 ¼-429 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 2697

Fundamentals: Investors are turning a blind eye to what setoff selling not last week, but the week before; rising yields. This is perfectly fine… for now. We discussed in yesterday’s Midday Market Minute that a move out above resistance at 2680-2686 will encourage a another 1% in gains over the next 24 hours; last night’s high was 2919.50 and there you have 1%. Yesterday’s CPI read was good, Core came in at 1.8% YoY and 0.3% MoM, but this was not the 1.9% or 2.0% we said would “create pressure on equity markets”. Yes, the S&P whipsawed sharply and if you spoke with our trade desk upon such action, we said the best trade is no trade until there is more clarity. One thing lost in translation yesterday was December’s Core CPI MoM read that was released at 0.3% in January and revised lower yesterday to 0.2%; this means yesterday’s data was a gain upon a lower benchmark. Retail Sales data was atrocious and concerning, but as we did in the FX Rundown, let’s put the stagflation argument to rest for now; Core CPI has been trending lower for 18 months and this is the first drop in Retail Sales data of late. The VIX dropped back below 20 yesterday and while fear is taking a break, momentum is the main factor behind this price action. Remember Friday and Monday both notched gains of 1%+, this was the first time the S&P has done this since the Brexit bottom and the time before that was the February 2016 bottom. As for the 10-year yield, it hit a high of 2.944 overnight and if the S&P elevates to major three-star resistance, we are likely to see a test to 3%. By this time, if the market has not yet already, it would be due for a retreat. PPI, NY Empire State Manufacturing and Philly Fed are due at 7:30 am CT. Industrial Production and Manufacturing are due at 8:15. NAHB Housing at 9:00. TIC Transaction and US Foreign Buying data is due later at 3:00 pm CT.

Technicals: With a high last night of 2619.50, our call for a likely gain of 1% upon a breakout above 2680.25-2686.50 has come to fruition. Momentum is strong, and we are likely to see a test into major three-star resistance at 2762.75-2733 today. If you are not in, it is important to remind yourself that sometimes no trade is the best trade; protect your capital. Support on the session now comes in at 2701.75-2703.75 and only a move back below the 2680.25-2686.50 level could begin to signal a failure as it is likely to garner selling.

Bias: Neutral/Bullish

Resistance: 2719.50*, 2726.75-2733***, 2745**, 2763***

Support: 2701.75-2703.75**, 2680.25-2686.50**, 2759.50-2762**, 2719-2727***

 

Crude Oil (March)

Yesterday’s close: Settled at 60.60

Fundamentals: Yesterday’s EIA report was not bearish, but we did get builds. As we always discuss, API set a bar for these expectations with a more bearish report across the board Tuesday night. If sellers had planned to sell because of inventories, they already did so Tuesday night. As for the headline, Crude EIA came in at +1.841 mb vs 2.825 mb expected. Furthermore, only 20,000 bpd in production was added. The real story of the session was the Dollar getting taken to the woodshed, it was hammered. We probably sound like a broken record, but the Dollar has played a crucial role in the price of Crude. Yesterday, the Dollar Index lost 1.5% from its session high, and Crude gained more than 4.5% from its low to high. Also supporting prices was the strongest comments on the production deal from the Saudi Oil Minister yet. He said they would rather see an undersupplied market and that removing the cap is unlikely to be on the agenda this year. The jawboning is here, but remember when they start this early, it becomes less effective as the year unfolds unless true fundamentals line up as they did in the back half of last year; U.S production remains the main headwind.

Technicals: Price action reached an overnight high of 61.55 as it stuck it nose out above major three-star resistance at 60.70-61.21 for a cup of coffee. This level remains critical in our eyes as resistance intraday and on a closing basis. We cautioned against rising prices yesterday due to options expiration and massive open interest in the puts; RIP greedy put holders at $60 in below. Yesterday’s reversal is not conducive for an immediate turnaround though price action has traded more than a dollar from its high already this morning. We are watching first key support at 60.27 today, a move below here is necessary to negate yesterday’s activity, until then the bulls will have a slight edge.

Bias: Neutral/Bearish

Resistance: 60.83-61.21***, 61.55*, 62.78-63.00***, 64.15-64.26**, 66.66-66.87***

Support: 60.27**, 59.87**, 59.05-59.29**, 57.26-57.95***

 

Gold (April)

Yesterday’s close: Settled at 1358

Fundamentals: Yesterday, Gold wasn’t just on the minds of Olympians in South Korea, it put in a monster session trading nearly $40 from its low to reach the highest level since January 25th. The Dollar got clobbered, losing 1.5% from its session high after CPI data wasn’t much better than expectations and Retail Sales contracted. Essentially every dollar denominated asset capitalized but Gold is leading the way in an already strong year. We remain unequivocally long-term bullish Gold and it was only last week that we called for a breakout above $1400 in the next three to six months. Data today will play a critical role in calling yesterday’s reaction exacerbated. PPI, NY Empire State Manufacturing and Philly Fed are due at 7:30 am CT, Industrial and Manufacturing Production are due at 8:15 and later today at 3:00 is Foreign and TIC Transaction data.

Technicals: Gold at times is known to get the carriage out in front of the horse. Let’s not forget that major three-star resistance comes in at 1367.8-1370 and there is a tremendous wall of resistance at this level. First and foremost, Gold must, must, must, close out above here on a weekly basis. When it does, there is still resistance up to 1392.6. However, the fact that it tested here less than a month ago and is coming to knock on the door again is extremely positive. Once rallying yesterday, it never pulled back below the 1347-1351.4 level, the longer this holds the more positive the tape becomes. Only a move back below key support at 1340.4 will neutralize this rally.

Bias: Bullish/Neutral

Resistance: 1367.8-1370***, 1377.8**, 1392.6***, 1432.9**

Support: 1347-1351.4**, 1340.4**, 1328.4**, 1302.3-1309****

 

Natural Gas (March)

Yesterday’s close: Settled at 2.587

Fundamentals: Today’s storage read comes into the picture and expectations are a range of -183 bcf to -187 bcf. While next week is expected to be in the ballpark of -125 bcf, today’s read is likely to be the last large one of the season. Or at least, that is what the market has priced in with price action remaining depressed against long term major four-star support. While today’s read will be key, the focus has already shifted to builds of less than 100 bcf two and three weeks out. Unless we see a much larger dray near -200 bcf today look for prices to remain at the low end.

Technicals: Price action made a new low overnight down to 2.53. We are overall Neutral here, however, believe there is great value at this level during a time of year that is known to surprise the bears; why Natural Gas is called the widow maker. Only a move out above 2.681-2.693 will begin to neutralize this weakness.

Bias: Neutral/Bullish

Resistance: 2.681-2.693**, 2.8134-2.837***, 2.896-2.902**

Support: 2.486-2.532****

 

10-year (March)

Yesterday’s close: Settled at 120’105

Fundamentals: Prices have continued to see pressure overnight as equity markets in the U.S extend gains and global markets lift from recent lows. Yesterday’s CPI read confirmed that inflation is bottoming out, but as we discussed in the E-Mini S&P section, because of revisions, it is not accelerating as much as one would believe. Remember, inflation has been arguably trending lower for the last 12-18 months and fell below 2% after the Fed first hiked rates. Janet Yellen’s fear was that they did not hike rates gradual enough and this stopped inflation in its tracks. The fact that it has stabilized now increases the likelihood of four hikes this year; though only at about 25%. This morning is PPI, NY Empire State Manufacturing and Philly Fed at 7:30 am CT. Industrial and Manufacturing Production is at 8:15. Later today, Foreign and TIC Transactions are at 3:00. There is also a 30-year TIPS auction at noon.

Technicals: We have been Neutral since finally getting the counter trend rally last week. For over a month now, we have had a rare major four-star support level at 119’20-120. This is now coming into play and as prices fall and yields reach near a potential 3% ceiling, another equity market pullback could bring great timing with a buy against this level.

Bias: Neutral

Resistance: 120’315-121’05***, 121’15-121’175**, 121’31-122**, 122’25-122’29***

Pivot – 120’15-120’18

Support: 119’20-120****

 

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: Gained nearly a penny

Fundamentals: Today’s U.S Core CPI was better than expected by one tenth for both YoY at 1.8% and MoM at 0.3%. But guess what, the Dollar lost more than 0.5% on the session and 1% from its swing high. Along with CPI was a very poor read on Retail Sales; headline came in at -0.3% and Core at 0.0%, both missing by 0.5%. This immediately sparked the stagflation argument. First, we want to put stagflation to rest for now as this is the first sharp drop in spending while CPI has been essentially trending lower for the last 18 months. However, yes this raises the fear gauge on stagflation and this coupled with extremely strong technicals in the Euro and extremely weak technicals in the Dollar has encouraged a directional move today. Earlier this morning Eurozone GDP was in line with expectations while Industrial Production was much stronger. Tomorrow is Eurozone Trade Balance data at 4:00 am CT. ECB members Praet and Lautenschlaeger speak at 4:45 am CT and 6:00. U.S PPI is due at 7:30 am CT along with weekly Jobless Claims, NY Empire State Manufacturing and Philly Fed. Industrial Production is due at 8:15 am CT.

Technicals: Today’s outside bullish reversal and move out above major three-star resistance at 1.2434-1.2436 has added fuel to our Bullish Bias. The longer it stays above here the more bullish the tape becomes. The 9-day moving average crossed below the 21-day only yesterday and today’s reversal signals a rejection. The next major level to watch from here is 1.2508-1.2514 and this now aligns with a trend line from the highs.

Bias: Bullish

Resistance: 1.2434-1.2436***, 1.2508-1.2514**, 1.2608***, 1.2695***, 1.30***

Support: 1.23805**, 1.2209-1.2222***, 1.2112-1.21405***, 1.2003***

 

Yen (March)

Session close: Gained about half a penny

Fundamentals: The Yen is moving higher not only on weakness in Asian equity markets but on a deep-seated sentiment shift. There is clear speculation that the Bank of Japan will catch up with other central banks and tighten or taper policy later this year. The hesitance in reappointing BoJ chief Kuroda has been an understated catalyst. It is also likely that a reduced carry trade has added support. On the other side of the coin, extreme Dollar weakness as mentioned above has helped the Yen trade to the highest level since November 2016. Japanese GDP missed expectations last and halted the rally before it was reinvigorated in U.S hours following CPI and Retail Sales. Core Machinery Orders is at 5:50 pm CT and Industrial Production is at 10:30 pm CT.

Technicals: Price action is in a melt-up for the Yen and the bullseye is major three-star resistance, our only level above. The session low was .9285 and this now aligns with .9279 to bring support, a close below here will not only neutralize this rally but potentially begin to signal a failure; longs must manage risk to this point.

Bias: Bullish

Resistance: .9480-.9491***

Support: .9279-.9285**, .92015**, .9154-.91665**, .9113**, .9062-.9075***

 

Aussie (March)

Session close: Gained about half a penny

Fundamentals: Today was a massive whipsaw in the Aussie Dollar upon the release of U.S CPI data. In the end, the Aussie put in a strong session and has seen tremendous strength today along with the commodity sector and Dollar denominated assets. However, the day is just getting started in Australia and Employment Change data is due 6:30 pm CT. Analysts expect an addition of 15,300 jobs.

Technicals: Today’s session finished with an extreme outside bullish reversal. The session low held major three-star support and closed out above major three-star resistance. Nine times out of ten this is an all systems go buy signal. However, today is that one time and traders must keep an eye on Employment Change. We are Bullish in Bias and will remain so outright as long as tonight’s data does not flop.

Bias: Bullish

Resistance:.7991**, .8046-.8051***, .8135-.8151****

Pivot – .7901-.7915***

Support – .7868**, .7733-.7757***, .7640**

 

Canadian (March)

Session close: Gained about half a penny

Fundamentals: Like the other three currencies mentioned, the Canadian put in an extremely strong session on U.S Dollar weakness. This has been a very quiet week on the data front out of Canada, but tomorrow is ADP Employment at 7:30 am CT which is a private read on the heels of last week’s hideous government read. Also, tomorrow Bank of Canada Governor Council Member Schembri speaks at 12:30 pm CT. Crude Oil also reversed sharply from its session low and the EIA inventory report was not bearish. With the price of Oil back above $60 for now this should be supportive to the Canadian.

Technicals: Price action did not settle above resistance at .7996-.8006 but it made its way into this level ahead of the electronic close. Watch for this area to hold through the end of the week to confirm a bottom. Today’s outside bullish reversal is very positive and we have been adamant that we are long term bullish the Canadian with a target of .8524 before the end of the year. Today’s session low was .7908 and we will adjust major three-star support to align with here; a move back below this level will signal a failure.

Bias: Bullish

Resistance – .7996-.8006**, .8070**, .81195-.8163***, .8290***, .8524****

Support – .7931-.7949***, .78805**, .7752-.7787***

 

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.

Futures Breaking news – BrokersEDGE 2-2-18

CORN (March)

Yesterday’s Close: March corn futures finished yesterdays session unchanged, trading in a range of 3 ½ cents on the day. Funds were estimated buyers of 8,000 contracts on the day.

Fundamentals: Yesterdays export sales came in at 1,850,000 metric tons, this compares to the expected range from 1,000,000-1,700,000 metric tons. Corn bulls want to see a continued trend of better than expected exports to encourage additional short covering and new buying interest. The USD has been trading near multiyear lows which has helped revive some global demand. Weather in South America continues to be monitored as some are concerned of potential yield loss in areas of Argentina. Private estimates for the Brazilian crop have been increased from 23.44 mmt to 23.87 mmt.

Technicals: The market has been firming up over the past few weeks and it looks as though that may continue. The bulls must maintain price action above 357 ¼-358 ½ to remain in control. This pocket contains the 100-day moving average, along with a key retracement level. The next level of resistance comes in from 366 ½-369. If the bulls cannot defend support, we expect to see the market trickle back towards 350-352. The RSI (relative strength index) is currently at 69.32; a level we have not seen since we peaked last July.

Bias: Neutral

Resistance: 366 ½-369****, 373-376***

Support: 357 ¼ -358 ½**, 350-352***, 345-346 ½***

 

SOYBEANS (March)

Yesterday’s Close: March soybeans finished yesterdays session down 12 cents, trading in a range of 18 cents. Funds were estimated sellers of 8,000 contracts on the day.

Fundamentals: Soybean futures took a turn south yesterday on the back of very disappointing export sales. Weekly export sales came in at 358,900 metric tons, this compares to the estimated range from 600,000-1,200,000 metric tons. On top of the poor exports sales, chances of rain have worked back into the forecast for areas of Argentina that have been relatively dry. There are some seasonals in play that should be encouraging for the bulls. We have recently referenced a May buy, the November buy starts today. If you had bought on February first and sold on the 17th, you would have been profitable for 13 of the last 15 years, with the average gain being about 12 cents.

Technicals: Soybean futures tested and held the first test of 980 on a closing basis yesterday, but the market is under pressure and testing 980 again this morning. This puts the bulls back on their heels as we head towards the open. 971 ¼ is going to be the key line in the sand we are watching for as we round out the week; we like the value at this level on the first test. This represents a key Fibonacci retracement from the June lows to the July highs. The bears want to defend 986 ½-988 ¼ on a closing basis.

Bias: Neutral/Bullish

Resistance: 986 ½-988 ¼***, 999-1006***, 1020 ¼-1027****

Pivot: 980

Support: 971 ¾***, 961 ¼-963 ¼****

 

 

WHEAT (March)

Yesterday’s Close: March wheat futures closed ¼ cent lower yesterday, trading in a range of 8 ¼ cents on the day. Funds were estimate buyers of 500 contracts.

Fundamentals: Wheat futures were under pressure to start yesterday morning as weekly export sales came in at 289,100 metric tons, this compares to the expected range from 300,000-600,000 metric tons. Weather premium has been the catalyst for encouraging higher prices on the back of fund short covering. The bulls need to see more bad news to continue the rally, neutral or no news will likely invite sellers back into the market. The USD is trading near multiyear lows which has also offered some support to the market.

Technicals: Wheat futures tested and held first support at 442 ¼ yesterday, finishing the day near unchanged. That support level remains a key focus today, another test and close below will likely mark a near term top as we would expect sellers to come back in and press us back towards 429 ¾. On the resistance side of things, the bears must defend 456 ¼-458 ¾. The RSI (relative strength index) has come off of overbought levels and is reading 60.78 this mornings.

Bias: Bearish

Resistance: 456 ¼-458 ¾***, 472 ¾***

Support: 442 ¼ **, 429 ½***, 410 ½-413 ¼****

 

E-mini S&P (March)

Yesterday’s close: Settled a 2822.50

Fundamentals: Equity markets are again under pressure this morning and investors await the release of January’s Nonfarm Payroll Report at 7:30 am CT. The S&P hit our main target at 2798 with an overnight low of 2797. Stocks in Europe are also sliding sharply, the DAX is down more than 1% again today and has lost more than 5% since its peak January 23rd. The Nikkei is down nearly 1%. Amazon is in a planet of its own, trading up about 5% after earnings last night. Apple was up more than 2% but has now gone red in the pre-market. Google is down nearly 4% this morning. The key catalyst in all of this is the rise in Treasury yields, a story we have been discussing for some time now. If you are simply watching the Dollar, you might be missing the story of global growth. The Dollar is unwinding its rally that began in 2014 when the Fed was the only central bank tightening. But just because the Dollar is weakening doesn’t mean the growth story isn’t there. Just yesterday, the Atlanta Fed said it projects first quarter GDP at a whopping 5.4%. Inflation has shown signs of rising and the Fed expects it to reach their 2% target and stabilize there later this year. All of this allowed the Fed to pave the way for four rate hikes this year at their meeting Wednesday. Treasury markets are seeing strong selling, which pushes yields higher as this global tightening gets priced in. Higher yields begin to attract investment out of the equity market and furthermore, costs more money to service. Today’s Nonfarm Payroll will be critical in this story, strong growth in jobs and wages will likely add further pressure to equities in the near term. Expectations come in at 184,000 jobs created and Average Hourly Earnings growth of .3% on the heels of .3% last month while the Unemployment Rate is expected to be stable at 4.1%. As we discussed in the Tradable Events this Week on Sunday, the U6 Unemployment Rate has risen for the last two months to 8.1% and this is a data point to watch.

Technicals: Though are Bias has been Neutral all week, we have been adamant about a few things. The sellers are in control until a move out above first resistance while the immediate downside is exposed with a continued close below 2825.50-2828; yesterday’s settlement was 2822. Our first target to the downside is 2807-2808.50 while our main target is 2798. Lastly, you don’t want to be short and just close your eyes. First resistance yesterday was 2838-2839.75 and this is now second resistance but still the line in the sand as a move out above here will completely neutralize the tape. First resistance now is 2825.50-2828.25 and we maintain that continued close below here is needed to keep the bears in complete control. The 2847.75 level is second resistance and a spot that if taken out could cause a strong move higher. With 2798 being achieved with a low of 2797, the next support level comes in at 2773-2777 while our next major three-star level is 2748.25-2752 and this aligns multiple levels as well as a rising trend line from November. If we see a close below 2798, this level is then in play and should present a spot to go long.

Bias: Neutral

Resistance – 2825.50-2828.25**, 2837.75-2839.75**, 2847.75**, 2858*, 2878.50**, 2887***, 2920***

Pivot – 2807-2808.50

Support – 2798***, 2773-2777**, 2748.25-2752***

 

Crude Oil (March)

Session close: Settled at 65.80

Fundamentals: Crude extended gains from Wednesday’s early low by more than $2.50 to 66.30 overnight. Today is Friday, and Friday’s have been very friendly to the energy complex. Today is also Nonfarm Payroll, a report that should influence the Dollar. Right now, the Dollar is slightly higher on the session and this likely has a small hand in Crude retreating from session highs. Do not underestimate the influence that the weaker Dollar has had in Crude Oil above $60 and in the month of January. If the Dollar recovers firmly from oversold territory, we expect this to become a key catalyst coupled with rising North American production in sparking a correction in Crude.

Technicals: Trading to 66.30, price action has extended near the top end of its recent range. If the tape stays contained today, this could build a lower high than Monday’s peak of 66.46 and the swing high on January 25th of 66.66. Remember, the only major three-star level we have had above $60 is 66.87 and this level has held well so far. Our Bias is now slightly more Bearish than Neutral. Traders do not need to pick a top but if today stays contained with a lower high, we believe the door is wide open for the sellers Sunday night. First key support comes in at 65.29 while a move back below 64.98 should encourage further selling.

Bias: Bearish/Neutral

Resistance – 66.30-66.46*, 66.87***, 68.43**

Pivot – 65.80-65.95

Support – 65.29**, 64.98**, 64.67**, 63.67-63.70**, 62.78-63.00***

 

Gold (April)

Yesterday’s close: Settled at 1347.9

Fundamentals: We continue to believe that the long-term picture for Gold is positive. However, we also maintain near-term caution. Since achieving above $1360 our Bias in Gold has been Neutral and we have exuded caution to longs that are pressing their largely profitable position from mid-December. Today’s Nonfarm Payroll report is crucial, and 184,000 jobs are expected to be created. Average Hourly Earnings is expected to grow .3% on the heels of .3% growth last month. Despite the rise in Treasury yields, historically a strong headwind for Gold, the metal has held ground tremendously. What Gold will not be able to ignore is a strengthening Dollar and that is why this report will be key to the near-term trade.

Technicals: A swing high of 1354.3 was achieved yesterday, but the metal struggled to hold above first resistance at 1349.7-1351.4. The near-term technicals look weak due to falling back from the session high. A close above this level today, with Nonfarm in the rear-view mirror, we could imagine becoming bullish again. However, we continue to believe the value is limited until the overcrowded long-position gets cleansed. The market would need to go to major three-star support at 1321.7 in order to begin doing that. Though we can make an argument to begin buying against first key support.

Bias: Neutral

Resistance: 1349.7-1351.4**, 1365-1370***, 1377.8**, 1392.6***, 1432.9**

Support: 1329.1-1331.9**, 1321.7***, 1307.6-1312***

 

Natural Gas (March)

Session close: Settled at 2.856

Fundamentals: Yesterday’s storage report came in at -99 bcf, the lowest drawdown reported since December 14th. Prices have been under pressure since the expiration of the February contract, retreating from a level in which they probably should not have tested to. Now the question is, have prices retreated too much ahead of a weekend and while headlines still warn of chilling temperatures over the next two weeks. Because of this, we would not be surprised to see a consolidation higher ahead of the today’s close.

Technicals: Price action traded sharply below major three-star support at 2.896-2.902 and traded to a low of 2.837. Our next key support level comes in at 2.786-2.81 and this has kept price action in check. We are neutralizing our Bias slightly ahead of the weekend, but the bears will continue to have a clear edge if price action stays below 2.896-2.902.

Bias: Bearish/Neutral

Resistance – 2.981-2.998**, 3.035-3.051**, 3.181-3.197***, 3.27*, 3.32**

Pivot – 2.896-2.902***

Support – 2.786-2.81**, 2.693**, 2.53****

 

10-year (March)

Yesterday’s close: Settled at 121’07

Fundamentals: The global growth story is real and along with the Fed being upbeat on inflation and paving the way for four rate hikes this year, the Atlanta Fed now projects first quarter GDP at 5.4%. The 10-year yield is pushing 2.8% and on the other side of the coin, this is now weighing on equity markets and if the selling in equities picks up any more than this, we believe the 10-year will see strong waves of buying. Today’s Nonfarm Payroll is key for the trade and we have a strong focus on Average Hourly Earnings growth and the U6 Unemployment Rate that has dropped for two consecutive months.

Technicals: We continue to have a contrarian perspective in this market and it has not paid off in a very tough week. Price action has stayed suppressed below 121’17-121’18 which keeps the sellers in clear control. However, watch for a close below 2798 in the E-mini S&P to bring support ahead of the weekend. The session low comes in at 121’02 and we really don’t want to see this taken out.,

Bias: Bullish/Neutral

Resistance – 121’25**, 121’31-122’015***, 122’15-122’175**, 122’26-122’29***, 123’10**

Pivot – 121’17-121’18

Support – 121’02**, 119’20-120****

 

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

Yesterday’s close: Settled at 2825.75

Fundamentals: Equity markets remain subdued with an early evening recovery dissipating into this morning as the 10-year yield treks higher. Facebook whipsawed yesterday after earnings; a reversal back into the green carried both the S&P and NQ higher after the evening reopen. Facebook remains up more than 2% while both major indices have retreated to near unchanged. Yesterday’s Fed meeting brought even less surprise than the reduced expectations. They put themselves on a trajectory to hike four times this year. However, the key component remains inflation; which they believe will stabilize around their 2% target. If Inflation continues to lag, the pace in which they hike will be more ‘gradual’. Nonfarm Payroll tomorrow will be the main event to finish out the week. Still, today we have weekly Jobless Claims, Nonfarm Productivity and Unit Labor Costs at 7:30 am CT. Manufacturing PMI is at 8:45 am CT and the bigger ISM Manufacturing read is at 9:00.

Technicals: The S&P pushed to a new swing low of 2813 before seeing dip buying into the close. Price actin remains subdued but first key resistance which has now moved down to 2838-2839.75 has kept the tape in check entirely. As we discussed in detail yesterday, this first resistance level is critical and in holding strong it has left the bears with the clear upper hand. A move out above 2845.75-2847.75 will neutralize things entirely. Our first downside target remains 2807-2808.50 while 2798 is the main level and one in which for now the argument to go long could be made. A close below 2825.50-2828 is needed to keep things suppressed into tomorrow morning.

Bias: Neutral

Resistance – 2838-2839.75**, 2845.75-2847.75**, 2853.50**, 2858*, 2878.50**, 2887***, 2920***

Pivot – 2825.50-2828

Support – 2815*, 2807-2808.50**, 2798***, 2770-2777**

 

Crude (March)

Yesterday’s close: Settled at 64.73

Fundamentals: Crude Oil has grinded higher on the heels of the EIA posting the largest inventory build since March 8th, 2017. Though Crude inventories gained 6.776 mb, Gasoline was the key story with a surprise draw of 1.98 mb. This was the first time Gasoline inventories fell since November 8th. Gasoline ended up gaining more than two cents on the session and gaining more than 2.5% from its low. We discussed here yesterday the technical reasons why Gasoline will be crucial to the Crude trade, but this surprise draw also abates some of the near-term fundamental weakness it has been bringing to the table. Production data yesterday showed a jump of 41,000 bpd, bringing the weekly estimated total to 9.919 mbpd. Also, data from the EIA on a monthly report showed production in November reached an average of 10.03 mbpd, the highest since November 1970. This news was taken with a grain of salt in the near-term due to the reversal in Gasoline and the common expectation that the U.S will easily achieve this benchmark for some time now. Today’s session will be crucial in determining if yesterday’s price action and reversal was exacerbated due to the last day of the month.

Technicals: The rise back above the $65 mark undoubtedly hurts the bear case in the very near term. However, it doesn’t change the fact that the long side is extremely overcrowded and because of this we maintain to see the upside very limited until a cleansing that forces weak longs to jump ship. Price action is testing resistance that comes in today at the 65.17 mark; this will be crucial on a closing basis. A move back below 64.63 could encourage additional selling.

Bias: Neutral/Bearish

Resistance – 65.17**, 65.52-65.56**, 65.95**, 66.87***, 68.43**

Support – 64.63**, 63.67-63.70**, 62.78-63.00***

 

Gold (April)

Yesterday’s close: Settled at 1343.3 ahead of the Fed decision

Fundamentals: Gold continues to hold value very well and the Dollar is playing a large role in this. The Fed didn’t surprise to the hawkish side because much of what they said was arguably expected. They have set themselves on a trajectory to hike four times this year if inflation continues to tick up. They expect inflation to stabilize later this year near their target of 2%. The good news for Gold is that we don’t expect this alone to increase the value of the Dollar relative to its peers as inflation should be doing the same in Europe. However, we continue to believe that the Dollar is due for a near term bounce and therefore we are being patient with Gold at these levels. For now, Treasury yields are grinding higher and this is also holding back Gold. Nonfarm Payroll is tomorrow. Today is weekly Jobless Claims, Nonfarm Productivity and Unit Labor Costs at 7:30 am CT. Manufacturing PMI is at 8:45 am CT and the bigger ISM Manufacturing read is at 9:00.

Technicals: Price action has retreated from its post-Fed bounce that reached a high of 1351 and failed against our first key resistance. We maintain that we are long-term bullish Gold but are waiting for a more attractive reentry point. We cannot make a strong argument to do so until at least 1329.1-1331.9 is tested and the Dollar relieves some of its oversold technicals.

Bias: Neutral

Resistance: 1349.7-1351.4**, 1365-1370***, 1377.8**, 1392.6***, 1432.9**

Support: 1329.1-1331.9**, 1321.7***, 1307.6-1312***

 

Natural Gas (March)

Yesterday’s close: Settled at 2.995

Fundamentals: Natural Gas lost 20 cents and more than 6% yesterday. Price action continues to be under pressure and as we have been saying for the last week and a half, the rally last week was unwarranted. For those that faded that as well, we want to express caution heading into today’s inventory report as expectations are much milder than in recent weeks and have not priced in a potential bullish surprise. Furthermore, there are still Polar Vortex worries and Natural Gas can use that to bottom out ahead of the weekend. In short, traders should capitalize on this pullback. Expectations for today’s read are at -100 to -104 bcf.

Technicals: Once price action broke below first key support at 3.035-3.051 the flood gates opened. S2 at 2.981 brought support through settlement but now the tape is testing major three-star support at 2.896-2.902. We maintain that it is crucial for traders to capitalize into this level ahead of today’s data.

Bias: Bearish/Neutral

Resistance – 3.035-3.051**, 3.181-3.197***, 3.27*, 3.32**

Pivot – 2.981

Support – 2.896-2.902***, 2.786-2.81**

 

10-year (March)

Yesterday’s settlement: Settled at 121’185

Fundamentals: The 10-year traded to a new swing low this morning. After testing down to 121’105 after the Fed, price action quickly recovered to 121’22. However, it began fading back out. It almost seemed as if once Facebook recovered from early selling post-earnings and equity indices reopened after 5:00 pm CT, the Treasury recovery dissipated just as quickly. Equity markets remain subdued as the 10-year hit 2.75%. We believe the higher yield will continue to put pressure on equities which in turn will spark buying in the 10-year. Data today will be important as we have weekly Jobless Claims, Nonfarm Productivity and Unit Labor Costs at 7:30 am CT. Manufacturing PMI is at 8:45 am CT and the bigger ISM Manufacturing read is at 9:00. However, tomorrow’s Nonfarm Payroll will really set the tone for this market over next week.

Technicals: The tape remains weak and it is tough to be a contrarian in this market. That is why it is important to be leveraged properly if you are sticking this out. We must see a close hold the 121’17-121’18 level to keep the sellers from being in complete control while a close back above 121’25 is a good sign. We continue to like the yield curve flattening spread, a trade that we introduced a couple weeks ago.

Bias: Bullish/Neutral

Resistance – 121’25**, 121’31-122’015***, 122’15-122’175**, 122’26-122’29***, 123’10**

Pivot – 121’17-121’18

Support – 121’10*, 119’20-120****

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: Wednesdays trade started out relatively tame but turned south towards the end of the session. April live cattle finished the session down 1.425 at 122.75, trading in a range of 1.725. March feeders were down 2.375 at 144.80, trading in a range of 2.65. The bulk of this week’s cash trade has come in at 126 and some sales that pulled back to 125. Packers have decent inventory which give them a slight advantage here. We have been very clear with our stance on the market being mostly range bound until we get a new fundamental catalyst to give us that breakout or break down that the perma-bulls and perma-bears keep talking about.

PM Boxed Beef / Choice / Select

Current Cutout Values: / 210.06 / 204.32

Change from prior day: / .37 / (.05)

Choice/Select spread: / 5.74

 

Cattle Technicals

Live Cattle (April)

April live cattle finished the session in our first support pocket which we had outlined as 122.475-122.75, making todays trade and close more meaningful for setting the tone over the next week. This pocket contains the 50 and 100 day moving average, a key Fibonacci retracement, and a some previously significant price points. If we o see a break and close below, we expect to see a move towards 120.20-120.625. This would be the spot where we consider working with clients on the buy side regardless if they are a bull or a bear (buy back shorts/start establishing a long position). There is significant support below this pocket at 117.90-118.70.

Resistance: 125.20-125.35***, 127.20-127.35***, 130.10****

Support:122.475-122.75***, 120.20-120.625****, 117.90-118.70****

 

Feeder Cattle (March)

March feeders broke down and closed below first support, that will now become resistance in today’s session; that comes in at 146.45. We continue to feel that there is likely a little more room to wiggle down. 143.35-143.50 is a pocket we are keeping a very close eye on. This pocket represents trend line support from the December lows, the 200-day moving average (We have traded but never closed below in this March contract), and a key Fibonacci retracement. If the market does break and close below it is likely we see accelerated selling pressure press us down towards 139.85.

Resistance: 146.45**, 147.85-148.00***, 149.40-150.00***, 153.95*****

Support: 143.35-143.50****, 142.10-142.60**, 139.85-140.125***

 

Lean Hog Commentary & Technicals (April)

April live cattle futures continue to be under pressure, finishing the session down .75 at 72.15, trading in a range of 1.30. If the market cannot find footing, we expect to see long liquidation open the door to a run at 70.625-71.15. We have been pretty clear about liking the short side in this market against technical resistance. Now that we are approaching the bottom end of the range, we would consider looking to the buy side whether that be short covering or establishing a long position. We feel this market will continue to be mostly range bound until we get a new fundamental catalyst for a bigger directional move.

Resistance:72.80**, 74.00-74.375**, 76.225-76.40**

Support: 70.625-71.15***, 67.75-68.00****

 

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.