Tag: 10 year notes

E-mini S&P (March)

Yesterday’s close: Settled at 2803.75

Fundamentals: There is no new all-time high overnight, let’s say that U.S equity markets are settling in after yesterday’s rip your face off rally. We have not wavered from our Bullish Bias this week or anytime in the recent past. Even when we exuded caution here Tuesday morning we discussed pullbacks and support levels as buying opportunities. Congress is expected to vote and pass a stopgap budget deal today, a failure to do so could bring some pressures so traders must keep an ear to the ground. Though major indices in the U.S are peeling back and ‘settling in’, the DAX is playing catch up gaining .5%. The US Dollar gained some footing late yesterday on technicals and an upbeat Beige Book along with Dallas Fed President Kaplan. The stronger Dollar brought a weaker Euro, and we have discussed here how a weaker Euro can lift European equities. Also helping is firm GDP, Fixed Asset Investment and Industrial Production data from China. We say firm because they all beat by about .1%; what a surprise. A lot of talk this morning calling these numbers fixed. We believe that the US Dollar is going to attempt to stage a consolidation higher and though we do not expect a sharp pullback in the S&P, it should keep price action in check at, around and just above yesterday’s high and our major three-star resistance at 2807. This morning we have Building Permits, Housing Starts, weekly Jobless Claims and Philly Fed at 7:30 am CT. The ECB’s Coeure speaks at 8:30 am CT.

Technicals: A new all-time high of 2809.50 is ‘settling in’ after failing to secure a close out above major three-star resistance yesterday. The market is Bullish and ultimately only a close below major three-star support at 2769-2771.75 will give us a reason to go short. Price action might not be ready to extend higher yet today, but it is likely that we see this before the weekend. The next level above here is 2828 and a close above major three-star resistance today will push the tape directionally. The Russell lagged in retracing yesterday and faces stiff resistance at 1595.8; a move out above here could get things going all around. Major three-star support remains at 1560-1564.4 and a close below here will encourage waves of selling.

Bias: Bullish

Resistance – 2807-2809.50***, 2828**, 2847.75***

Support – 2800*, 2794.25**, 2788.75-2789.25**, 2783.50-2784.50**, 2769-2771.75***

 

Crude Oil (March)

Yesterday’s close: Settled at 63.92

Fundamentals: Yesterday’s February option expiration worked to contain price action. This morning OPEC said in their Monthly Report that production increased 42,000 bpd in December per a secondary source. They revised non-OPEC supply higher due to the U.S and Canada. They reiterated that compliance was strong. They also forecasted a small uptick in demand growth for 2018. Crude had a muted initial reaction. API inventories showed a draw of 5.12 mb, this would be the ninth weekly draw in a row if confirmed by EIA today. They also reported a build of 1.782 mb in Gasoline and 609k build in Distillates. The numbers as a whole were on the bullish side with Crude drawing more and Gas building less. Today’s EIA read expects -3.536 mb Crude, +3.426 mb Gasoline and +.086 mb Distillates. Crude inventories have been drawn down by at least 4.5 mb each week for the last six weeks and this has been a tremendous catalyst in keeping prices bid. Crude production will be a key on this read as it dropped 290,000 bpd in last week’s due to the winter storm. The question today is how much production comes back online? Traders also want to keep an eye out for headlines with Nigeria as rebels have threatened attacks.

Technicals: Price action has been fairly quiet as traders await today’s EIA read. First resistance comes in at 64.23-64.28, a move out above here could attract more buyers. As price action consolidates traders should remember that Friday’s have been very supportive for Crude. Furthermore, only a close below the weekly trend line and major three-star support at 63.00-63.25 signal a potential correction, until then the bulls have a clear upper hand.

Bias: Neutral/Bearish

Resistance – 64.23-64.28**, 64.83-64.89**, 66.87***, 68.43**

Support – 63.00-63.25***, 62.43**, 61.87**, 59.96-60.45***

 

Gold (February)

Yesterday’s close: Settled at 1339.2 before selling off late in the session

Fundamentals: The Dollar stabilized late yesterday on technicals, an upbeat Beige Book and Dallas Fed President Kaplan. The Dollar Index double bottomed on the session and quickly paired losses ahead of the electronic close which sent Gold to a session low of 1326.6 and about 1% from its settlement. Price action has held ground very well into this morning and we have a big board of data at 7:30 am CT to digest; Building Permits, Housing Starts, weekly Jobless Claims and Philly Fed. As we said yesterday, we are unequivocally bullish Gold in the long-term, however, price action is due for a consolidation lower at minimum. This is what we are seeing and the technicals will be key.

Technicals: Price action breached first key support amidst strong selling but is attempting to bottom out into this morning. Ultimately, a minor correction or consolidation lower will be extremely healthy for the metal. Resistance on the session comes in at 1332.2-1334.7, near the key closing level of 1335.8, a long-term level that the bulls want to maintain a close above in order to keep the immediate-term upper hand. A close below 1327.3-1330.5 will keep selling pressures. These levels are tight, but each is important in their own respect to immediate term momentum.

Bias: Bullish/Neutral

Resistance – 1332.2-1334.7**, 1335.8**, 1340.9*, 1345**, 1358-1365***

Pivot – 1327.3-1330.5**,

Support – 1321.6**, 1307.1-1308.9**, 1302-1303.4***

 

Natural Gas (February)

Yesterday’s close: Settled at 3.232

Fundamentals: Cash Natural Gas is down more than a $1 today from over $5. Today’s storage expectations range from -196 to -199. The month of January is already drawing significantly from storage and next week’s expectations continue to mount near previous record highs. Considering this, look for price action to respond on a bigger draw than expected. For now, the technicals have kept the tape in check.

Technicals: Price action has battled against the 3.18-3.21 level while facing the 200-day moving average just above at 3.257. Today this 3.18-3.21 level will consolidate to 3.199, a close below here will neutralize the tape. Yesterday’s session high was 3.288 before settling back in, resistance is tiring the tape but can only do so for so long. A bullish read today and close above the 200 dma will give the bulls fire power to 3.43.

Bias: Neutral

Resistance – 3.258-3.288***, 3.43***

Pivot – 3.199

Support – 3.115-3.134**, 3.039** 2.971-2.989***

 

10-year (March)

Yesterday’s close: Settled at 122’21

Fundamentals: Treasury prices were under pressure for much of the session as equity markets bounced back strongly from Tuesday’s weakness. However, the real selling through major support came in the second half of the day on an upbeat Beige Book and a hawkish Dallas Fed President Kaplan who is concerned about overheating the market and feels strongly about three hikes this year, eluding to a potential fourth. A big slate of data at 7:30 am CT includes Building Permits, Housing Starts, weekly Jobless Claims and Philly Fed. The technicals will keep pressure on this market but misses in data will neutralize the tape.

Technicals: Price action closed below major four-star support yesterday at 122’245-122’29 and this has kept pressure on the tape. However, we do see support against the lows of the session at 122’125. A consolidation back into 122’245 will help neutralize the weakness, but right now the sellers have an edge. We believe there will be a buy opportunity at some point in the near future, but this may not be until after the Fed meeting in two weeks.

Bias: Neutral

Resistance – 123’10-123’135**, 123’215**, 123’27-123’28**, 124’01*, 124’06-124’07

Pivot – 122’245-122’29****

Support – 122’125**, 121’25**, 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.

CORN (March)

Yesterdays Close: March corn futures closed up 1 ¼ cent, trading in a range of 2 ¾ cents on the session. Funds were estimated to have been buyers of 4,500 contracts.

Fundamentals: Trade estimates are starting to circulate which is ramping up the anticipation of Fridays USDA report, arguably the biggest report of the year. The headline number will be yields, but the valuable nuggets will be in the ending stocks data. Corn yield estimates are ranging from 173.7-176.4 with the average estimate at 175.2. Trade estimates for US quarterly stocks are ranging from 12.23-12.68 billion bushels with the average estimate at 12.41 billion bushels. US ending stocks estimates are ranging from 2.26-2.52 billion bushels with the average estimate at 2.44 billion bushels. We will get updates from CONAB tomorrow on South American production.

Technicals: The market continues to hug the 350 level which continues to be a magnet for front month futures. Although it has been a trader’s paradise trading the tight range over the past several months, many market participants are looking for a new direction (other than sideways). If you are in that camp, volatility is cheap, meaning options should be on your shopping list. If we get a friendly report and a technical close above resistance, we could see continued short covering from the funds. The 50-day moving average is the first line in the sand at 353 ½, above that the market has room to run towards 359 ¼-359 ½. On the support side, a close below 345-346 ½ opens the door to 334-335 ¼.

Bias: Neutral

Resistance: 353 ½ -355 ¼***,359 ¼-359 ½***, 367-369 ¼****

Support: 345-346 ½**, 334-335 ¼***, 323-325 ¼**

 

SOYBEANS (March)

Yesterdays Close: March soybean futures finished down 3 ¾ cents, trading in a range of 7 ½ cents on the day. Funds were estimated to have been sellers of 3,000 contracts.

Fundamentals: Market participants continue to gear up for Fridays USDA report which is arguably one of if not the biggest report of the year. Yield numbers will be the headline number, but ending and quarterly stocks will be the more significant numbers. Quarterly stocks estimates range from 2.96-3.31 billion bushels with the average coming in at 3.19 billion bushels. US Ending stocks estimated range is from .425-.595 billion bushels with the average of .445 billion bushels. Weather in South America will continue to be monitored. Rains are coming in and going out of forecasts on a continued basis, this has led to a bit of a choppy trade here to start the week.

Technicals: The market has been chopping around between 960 and 970 give or take for the last week and a half, likely shaking out a lot of week shorts and longs as we head into Fridays USDA report. 971 ¾ continues to be the first line in the sand the bulls want to close above. If they can achieve this, we will likely see funds start to cover their short position and press prices back towards 986-988 ¼. This pocket contains a handful of indicators including the 50 and 100 day moving average, along with the 50% retracement or the middle of the range from the June lows to the July highs. On the support side, there isn’t a while lot until 950-952 ¼, this would be the most ideal spot to look long futures. If you wanted long exposure ahead of the report without worrying about swings in futures, consider looking in the options market.

Bias: Neutral

Resistance: 971 ¾**, 977-979 ¼**, 986-988 ¼***, 999-1004**

Support: 950-952 ¼***, 937 ½***, 922 ¼****

 

WHEAT (March)

Yesterdays Close: March wheat futures finished up 4 ¾ cents yesterday, trading in a range of 8 ½ cents. Funds were estimated buyers of 4,000 contracts.

Fundamentals: The market has been working higher on some colder temperatures and drier weather are coming back into the forecast over the weekend. On top of that, we also have an important USDA report on Friday that is likely prompting some short covering. US quarterly stocks estimates range from 1.80 billion bushels to 1.91 billion bushels with the average at 1.85 billion bushels. US ending stocks are estimated to come in from .855 billion bushels to .987 billion bushels with the average estimate at .96 billion bushels.

Technicals: March wheat futures are testing the 50-day moving average again in the early morning trade. The fact that the market has not rejected prices again from this level could lead to some short covering. If the bulls can achieve a conviction close above, we could see funds cover shorts and press prices towards 443-448 ¼. Baring any significant change in fundamentals, we think this would set up for an excellent opportunity to sell. Bears wan to defend 435-437 ½ on a closing basis to prevent short covering.

Bias: Bearish

Resistance: 435-437 ½ ***, 443-448 ¼ ***, 459-461 ¼**

Support: 416 ½-420 ¾**, 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.

E-mini S&P (March)

Yesterday’s close: Settled at 2752.25

Fundamentals: Equity markets are directly under pressure due to rising treasury yields. The S&P hit our major three-star resistance on the high yesterday while the NQ hit our target on its high, all major indices backed off into the close. If you were in contact with our trade desk late yesterday, we reminded you of our concern for the Russell 2000 and how the repeated failure to close out above 1564 presented a sell opportunity with stops above session highs. CPI data from China missed the mark last night which has helped pressures. However, the true story here is all about treasury yields as the 10-year prices are reaching the lowest level since 2011. China is still a part of this story as Bloomberg has reported that “officials reviewing China’s foreign-exchange holdings have recommended slowing or halting purchases of U.S Treasuries”. Though equity markets are only beginning to see true effects right now, the treasury selling kicked into high gear on Monday night after the BoJ announced that it will trim its bond purchases in issues longer than 10 years. We are in the camp that we don’t believe treasury yields will rise for longer (yields are the inverse of treasury prices), however, when pertaining to equity markets the key factor is the velocity in which yields rise; a quick rise will encourage pressure on equities. Import and Export Price Index is due at 7:30 am CT. Chicago Fed President Charles Evans, a Fed dissenter, speaks today at 8:00 and Wholesale Inventories are at 9:00. St. Louis Fed President James Bullard speaks at 12:30 pm CT.

Technicals: We have completely Neutralized our bias in the S&P after it tested major three-star resistance at 2759.25 yesterday and after the NQ hit our 6707 target. Furthermore, we favored a sell on the close yesterday in the Russell 2000 after it failed to hold 1564. Major support in the Russell comes in today at 1547 and a close below this trend line could get the ball rolling. With pressure on equity markets this morning we cannot see ourselves buying the S&P until major three-star support that we discussed on Monday is achieved, this level is now adjusted slightly to 2724.75-2728.75. A close below this level will signal further pressure down to the 2700 area, one in which we have now marked as a rare major four-star level. We are now watching 2740.50 on a closing basis and simply holding this will help neutralize weakness. Only a close back above 2747.75-2752.75 will turn this immediate term bullish.

Bias: Neutral

Resistance – 2747.75-2752.75**, 2759.25***

Support – 2740.50**, 2724.75-2728.75***, 2713**, 2698.25-2703****

 

Crude (March)

Yesterday’s close: Settled at 62.96

Fundamentals: Crude Oil broke out above the May 2015 highs and finished at the highest level since early-December 2014 ahead of inventory data today. As we discussed yesterday, the EIA is expecting the sixth major drawdown in a row and yesterday’s API read heightened those expectations by coming in at -11.19 mb. If confirmed by EIA, this would be the largest draw since September 2016 came in -14.513 mb. That read back then was following Labor Day weekend, and a draw of this size, at this time of year is very uncommon. API reported a build of 4.338 mb in Gasoline and a build of 4.685 in Distillates. This sets a bar for today’s EIA report and we want to remind traders, that a vast majority of traders willing to buy because of inventories have likely already bought. We will now need to see a draw in the ballpark of API to maintain prices at these levels. However, it will be important to look at the read as a whole; including the products which equates to a draw of 2.167. EIA expects a -3.89 mb Crude, +1.46 mb Distillates and +2.625 mb Gasoline which actually equates to an overall build. We will also be keeping a close eye on production coming back online.

Technicals: Price action is in a melt-up mode and we backed away from a potential sell opportunity and our slight Bearish Bias earlier in the week. The next resistance at 63.39 has been taken out with a high of 63.67. As we said yesterday, there is no technical reason to sell and furthermore, the market could easily stay bid through the expiration of the February contract. Price action will now need to settle back below 62.21-62.58 in order to neutralize this immense strength. Still, we see no value in buying at this level and a reversal will need to be sparked by over exaggerated expectations on today’s inventory report.

Bias: Neutral

Resistance – 63.39-62.67**, 66.87***, 68.43**

Support – 62.21-62.58**, 61.80*, 59.87-59.96***, 58.97-58.99***

 

Gold (February)

Yesterday’s close: Settled yesterday at 1313.7

Fundamentals: Gold continues to focus on the Dollar and we cannot emphasize enough how incredibly constructive this continues to be for the metal as we remain long term bearish the Dollar. The even better news here is that Gold investors, buyers, traders. . . everyone, has ignored the rise in global treasury yields. Traditionally, Gold sells off as yields rise which in normal times is a signal of strong economic growth but also a higher cost of storage; all of this is normally tied to a rising Dollar. Instead, we are seeing a tapering of bond purchases from central banks other than the Fed. Remember, the Fed did this years ago and the Dollar rallied on this getting priced in. Now, other currencies are rallying against the Dollar as they taper. Gold is priced in Dollars and this is favorable for Gold. Data from the U.S includes Import and Export Price Index as 7:30 am CT and Wholesale Inventories at 9:00. Chicago Fed President Evans speaks at 8:00 am CT and St. Louis Fed President Bullard speaks at 12:30.

Technicals: After settling just below first key support yesterday and nudging a new swing low last night of 1308.9, Gold has achieved the bull flag that we discussed yesterday. The beautiful thing about this is the short order in which it all happened! Price action traded to a new swing high of 1328.6 this morning and we are watching for a close out above its previous swing high of 1327.3 to confirm this extremely bullish move. The next resistance comes in at 1335.8 and this should be within reach before the end of the week at the latest. A failure to hold 1322.3-1323 on a closing basis will be disappointing while a close below first support at 1317 will begin to signal a failure. Only a close below major three-star support at 1302-1303.4 will signal a breakdown.

Bias: Bullish

Resistance – 1327.3*, 1335.8**, 1358-1365***

Pivot – 1322.3-1323

Support – 1317-1317.2**, 1314.6-1314.8**, 1302-1303.4***, 1292.9**, 1279.5*** 

Natural Gas (February)

Yesterday’s close: Settled at 2.923

Fundamentals: Expectations for tomorrow’s record storage draw continue to build. But the question we must ask is how much of this is priced in? While a key catalyst in the selling that came late last week was the potential shutdowns, many took profits as these storage expectations climbed to unheard of levels, a read that will be tough to see. Furthermore, more mild weather that has followed the “bomb” storm has also whipsawed price action. Might we just say, what an awful name for a storm.

Technicals: Prices settled at yesterday’s pivot and have nudged above first resistance. The key level to watch remains 3.00-3.01 and it’s a spot where if price action stays below here, the bears will continue to have the upper hand. If we see a close above here, then this could encourage a two to three-week bottom and higher price action.

Bias: Neutral

Resistance – 3.00-3.01***, 3.108-3.145**

Pivot – 2.9415-2.963

Support – 2.9215-2.923**, 2.859-2.887**, 2.734-2.7664**, 2.562***, 2.486-2.522****

10-year (March)

Yesterday’s close: Settled at 123’015

Fundamentals: Treasuries are under immense pressure today and this comes on the heels on Monday night’s news that the Bank of Japan will trim bond purchases in issues longer than 10 years. We have seen a spike in global yields sense. Furthermore, there has been mounting speculation for months that China will trim its purchases of U.S Treasuries and this was confirmed by a Bloomberg article that states, “officials reviewing China’s foreign-exchange holdings have recommended slowing or halting purchases of U.S Treasuries”. As these officials review their investments and compare them to other higher yielding assets, traders are jumping on board the wave lower. Bill Gross, an outspoken bond bear discussed a breakdown in long term technicals last week. We are in the camp that we do not believe yields will go higher for longer, or treasury prices will not go lower for longer. In fact, this could potentially be the capitulation we have been waiting for. Today’s Fed speakers, Chicago Fed President and rate hike dissenter Charles Evans speaks at 8:00 am CT and St. Louis Fed President Bullard speaks at 12:30.

Technicals: Price action has dropped below major three-star support at 122’25-122’29 and this will be critical to watch on a closing basis. The tape feels a bit exacerbated and we will need to continue to watch today’s session unfold before drawing further conclusions in the immediate term.

Bias: Neutral

Resistance – 123’10-123’135**, 123’215**, 123’27-123’28**, 124’01*, 124’06-124’07

Support – 122’25-122’29****, 121’25**, 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 (March)

Yesterday’s close: US Equity markets are edging higher after a more or less quiet overnight session. The NQ, as we have discussed, is leading the way and nearing our target of 6707. Nikkei futures are .5% lower after the BoJ announced last night it will trim bond purchases in durations over 10 years. Friday will be crucial for the S&P as it marks an official start of earnings season with JP Morgan and Wells Fargo set to release. This morning we have JOLTs Job Openings data while the Dollar Index works off the lowest level since September in a consolidation phase. Fed speak yesterday didn’t necessarily give the Dollar reason to jump and we attribute this move to technicals. Fed dissenter, Minnesota Fed President Neel Kashkari, speaks today at 9:00 am CT, the same time JOLTs will be released. Commodity prices put in a strong 2017 but an even stronger 4th quarter. Chinese CPI and PPI data tonight will be a key read; Energies and Basic Materials have been a strong component for the S&P.

Technicals: Yesterday’s early drop proved to be short lived and ultimately didn’t give us the buying opportunity we wanted at 2728.75-2730. Resistance at the 2747.75 level has been a bit sticky, though prices traded a new all-time high on today’s session, the fifth in a row. The NQ seems to be the leader and is nearing our target of 6707, we advise against pressing longs upon this achievement. Our main reason for not encouraging the pressing of longs and instead looking for specific trade setups is that the Russell 2000 still has failed to close out above 1564. In our opinion, the continued failure to do this leaves the overall market vulnerable.

Bias: Bullish/Neutral

Resistance – 2747.75**, 2759.25***

Support – 2740.50**, 2728.75***, 2718.25*, 2708.50-2711**, 2698.25-2700***

 

Crude Oil (March)

Yesterday’s close: Settled at 61.73

Fundamentals: Crude spiked early in the overnight session to mark the highest since May 2015. However, it failed that May high and our key resistance by 2 cents. Taking that level out would put Crude at the highest since the collapse in December 2014. Shorts are anxious ahead of inventory data this week, and for good reason, the EIA is expected to report its eighth straight drawdown in Crude. With early expectations of -4.1 mb, this would be the sixth week in a row with a draw of at least 4 mb. API data is due out at 3:30 pm CT. Production was somewhat stagnant at the end of the year and has helped support prices. This comes at a time when OPEC compliance has been top notch and is now coupled with worries that Iran could see fresh sanctions keeping their Crude off the market. Yes, we do see value in selling up here over the long haul. We are nearing a period where inventories seasonally build, and this coupled with our belief that rigs will come back online and translate directly into production allows us to believe that there is in fact value in selling at this level over the long haul.

Technicals: Yesterday’s settlement stayed below the 61.79 level we pointed to, but price action has not. Last night’s spike to a high of 62.56 was a knee jerk move and price action has stayed below R2 at 62.21 for much of the time. Though we don’t have 62.58 as a three-star level, a failure to get out above there today could evolve it to one. Right now, there is no outright immediate term technical reason to sell other than finding value at the highest level since May 2015 with the idea that everyone who wants to buy has already bought and the anticipation that the fundamental story has been as bullish as it can get over the last two months and is ready to shift.

Bias: Neutral/Bearish

Resistance – 62.21**, 62.58**, 63.39**, 66.87***, 68.43**

Pivot – 61.73-61.79

Support – 61.37**, 61.11**, 60.85**, 59.87-59.96***, 58.97-58.99***

 

Gold (February)

Yesterday’s close: Settled at 1320.4

Fundamentals: The Dollar has strengthened from its lowest level since September putting slight pressure on Gold to start the week. Regardless, the metal has remained very constructive and its ok to go through a healthy consolidation phase. Today at 9:00 am CT, JOLT Job Openings data is due and Neel Kashkari, the Fed dissenter is due to speak. Today will be a good test for the metal after Japan announced last night that they will trim bond purchases in durations over 10 years. The Yen is higher on the session, but this is an act of tightening. We expect Gold to take this is stride and hold well as the week sets up for reads on inflation Thursday and Friday.

Technicals: Gold is hugging the key 1317-1317.2 level into this morning after a test down to S2 overnight. This slight breather is allowing the overbought RSI to refresh, while at the same time, continuing to remain constructive. Ultimately, this could develop into a bullish flag pattern. The next couple session will be key in the development of a more bullish pattern that would lead to the next leg higher.

Bias: Bullish

Resistance – 1323*, 1335.8**, 1358-1365***

Pivot – 1317-1317.2

Support – 1314.6-1314.8**, 1302-1303.4***, 1292.9**, 1279.5***

 

Natural Gas (February)

Yesterday’s close: Settled at 2.835

Fundamentals: Natural Gas is working to recover from yet another bloodbath. Though we are expected to see a little relief from recent cold temperatures, drawdown expectations over the next three weeks are holding steady and this has reinvigorated the bull camp. This week’s draw is expected to be a record and in the range of -330/-345.

Technicals: There was a significant amount of damage done to the chart late last week and price action trading back through 2.88-2.887 is attempting repair that. This is a level we discussed selling the first test yesterday, however, it never got there. Resistance today comes in at 2.9415-2.963 and the main level that traders must watch this week is the psychological $3 mark, a level that price action has struggled to hold.

Bias: Neutral/Bearish

Resistance – 2.9415-2.963**, 3.00-3.01***, 3.108-3.145**

Pivot – 2.9215

Support – 2.859-2.887**, 2.734-2.7664**, 2.562***, 2.486-2.522****

 

10-year (March)

Yesterday’s close: Settled at 123’155

Fundamentals: Overnight the 10-year traded to key support and the lowest level since December 2016 after the Bank of Japan announced they will trim bond purchases in durations over 10-years. The Yen is seeing strength into this morning and this is the sort of exit from Japan that we have been looking for if you have been following our FX Rundown. Still, we do not believe the move lower in the treasury market is sustainable but for now, in the immediate term, the path of least resistance might be lower. JOLT Job Openings is due at 9:00 am CT and Minnesota Fed President Neel Kashkari is also due to speak then. PPI and CPI are due Thursday and Friday and weak reads here will help this market recover firmly.

Technicals: What was attempting to be constructive price action early yesterday, dissipated throughout the session as equity markets recovered back to all-time highs. Price action is still holding and hugging the key 123’10-123’135 level after trading to a low of 123’095 overnight. Today’s close will be critical and we still see tremendous long-term support in front of the 122’29 level

Bias: Neutral/Bullish

Resistance – 123’215**, 123’27-123’28**, 124’01*, 124’06-124’07

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.

BrokersEDGE Futures trading News 1-8-18

E-mini S&P (March)

Last week’s close: Settled at 2742.50, its third record high close in a row.

Fundamentals: Equity markets have picked up this week right where they left off last. Most major European indices are up more than .33% while the Nikkei is up nearly 1% (futures which saw some of these gains on Friday are up nearly .5%). Friday’s read on Nonfarm Payroll showed steady job growth and though much less than expected, last month’s revision higher helped the overall read. Average Hourly Earnings came in at a respectable +.3% MoM and overall this is not a report that is going to encourage the Fed to tighten policy faster than already priced in. Data out of Europe this morning that included Business Confidence and Retail Sales was superb. Fed speak and reads on inflation will be the highlight. Fed president Bostic speaks at 11:40 am CT, Williams at 12:35 pm CT, and Rosengren at 3:00 pm CT. The Russell 2000 took out its all-time high last night before retreating, this will continue to be a concern of ours and we will watch this closely.

Technicals: The S&P gained 2.5% in the first week of the year and we remain Bullish though introducing some slight Neutrality as price action is due to take a breather for a session or two. Yes, we refrained from an outright trade recommendation in the second half of last week once our target of 2728.75 was hit, but our levels and Bias continue to work. From Friday’s levels price action achieved and settled near R1 and extended to hit R2 Sunday night. Our next major upside target is 2759.25, we have made this major three-star resistance. However, as for an outright recommendation, we would like to be buyers closer to what is now major three-star support at 2728.75. The NQ is also in a breakout trade, we put out a target of 6707 last week. The small caps Russell 2000 continues to concern us, and is a factor in waiting for a pull back in the S&P before recommending stepping in. Last night it traded to a new all-time high of 1565.9, but has since failed to hold ground, key support levels to watch here are 1557, 1551-1552 and then major three-star support at 1543.

Bias: Bullish/Neutral

Resistance – 2747.75**, 2759.25***

Pivot – 2740.50

Support – 2728.75***, 2718.25*, 2708.50-2711**, 2698.25-2700***

 

Crude Oil (February)

Last week’s close: Settled at 61.44, the highest weekly close since December 2014

Fundamentals: Prices are edging up into this morning after Baker Hughes reported a drop in U.S Oil Rigs Friday afternoon from 747 to 742. Unrest in Iran continues to take center stage as it has led to speculation that the U.S could use this as another reason to withdraw from the nuclear deal signed in 2015. Doing so will further tighten supply with the interesting factor being OPEC’s reaction regarding the current production cap. Though an official decision might not come until July, every three months the president must waive sanctions. The last deadline was October 15th, and the next is right around the corner.

Technicals: Friday’s weekly settlement was the highest since Oil plummeted in Q4 2014. Last week’s swing high of 62.21 fell shy of our resistance mark and the May 2015 highs at 62.58. From here, we introduced a Bearish Bias in order to begin positioning for a consolidation lower this week at minimum. Price action traded to a low of 61.09 on Friday, testing into S2 before moving back north. We are watching the 61.79 level today which was edged this morning. However, it will be more critical on a closing basis and the bulls look to settle prices out above here in order to regain the immediate-term upper hand.

Bias: Bearish/Neutral

Resistance – 61.79**, 62.21**, 62.58**, 63.39**, 66.87***, 68.43**

Support – 61.37**, 61.11**, 60.85**, 59.87-59.96***, 58.97-58.99***

 

Gold (February)

Last week’s close: Settled at 1322.3, the highest since September 15th

Fundamentals: In a choppy Nonfarm Payroll session, Gold came out a winner on the day gaining 60 cents. Headline job growth fell largely short of expectations at 148k vs 190k, however, a revision higher from the previous month of 24k helped chip into some of it. Average Hourly Earnings were a respectable +.3% MoM and met expectations, however, last month was revised a tenth lower to +.1%. In a seasonally bullish time of year for the metal, bulls should walk away satisfied. Today, Fed president Bostic speaks at 11:40 am CT, Williams at 12:35 pm CT, and Rosengren at 3:00 pm CT.

Technicals: Gold remains about as constructive as you can get and by maintaining a close above 1317 it has left the bulls with the clear upper hand. We remain immediate term Bullish until a close back below major three-star support at 1302-1303.4. However, we are beginning to be concerned that much of the bull camp has already positioned, with the net-long position at the highest since the 21:1 on the week ending November 28th. Still, it is only at young but mature 8.5:1. While some longs may have added late last week, we believe this read still eludes to upside potential on a technical basis.

Bias: Bullish

Resistance – 1323*, 1335.8**, 1358-1365***

Support – 1317-1317.2**, 1314.6-1314.8**, 1302-1303.4***, 1292.9**, 1279.5***

 

Natural Gas (February)

Last week’s close: Settled at 2.795

Fundamentals: With a storm being dubbed the “Bomb Cyclone” bitter cold temperatures reinvigorated Natural Gas prices to start the year. Not so fast, prices in the front month February contract finished the week 10% from the high on the first trading day of the year. As we discussed last week, the cold temperatures that not only spread across the northeast but as south as Texas and Florida can also have a two-sided effect. When schools and factories are shut down, demand also drops. Cash Natural Gas, saw a meteoric rise, one that was only felt in a minor fashion in the futures before disappearing altogether by Friday. Prices have edged higher into this morning but if a storm like this cannot keep futures above $3, then what will?

Technicals: Our Bias began to turn Neutral last week when prices failed to hold $3. Friday’s low of 2.746 and settlement did hold first key support at 2.734-2.7664 which has helped encourage a bounce this morning. The key level to watch today is 2.88-2.887, this is first resistance, a key retracement, Friday’s high and Thursday’s settlement. We are now introducing a slight Bearish Bias and believe if prices stay below this first key level, the bears will take it lower once again. Remember, we are expecting a record storage draw this week between -325 and -340, but this is already priced in.

Bias: Neutral/Bearish

Resistance – 2.88-2.887**, 2.9215**, 2.9415**, 2.963**, 3.00-3.01***, 3.108-3.145**

Pivot – 2.795

Support – 2.734-2.7664**, 2.562***, 2.486-2.522****

 

10-year (March)

Last week’s settlement: Settled at 123’15

Fundamentals: Strength in the global equity market has brought cash off the sidelines to further support momentum and this has kept a heavy tape in the treasury complex. Friday’s Nonfarm Payroll report as we discussed above was not something that would force the Fed to tighten policy at a faster pace. We believe Friday’s weakness is a direct correlation to global equity markets extending record gains. This can be seen even closer this morning as the S&P peeling back just a slight bit has brought in some support for treasuries. This week will be all about Fed speak and reads on inflation Thursday and Friday.

Technicals: We were Neutral last week as prices were depressed. However, we are introducing a slight Bullish Bias as we believe there is value in the lower half of 123. Key support at 123’10-123’13 has remained sticky and has kept price action in check. First resistance comes in at 123’215. Friday’s Nonfarm spike stayed in complete check against the 123’27-123’28 level and this will be key to watch on the week.

Bias: Neutral/Bullish

Resistance – 123’215**, 123’27-123’28**, 124’01*, 124’06-124’07

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.

  1. Fed Speak

Members of the Federal Reserve spoke late last week for the first time since the December 13th rate hike. We are looking forward to hearing much more from them this week, especially their opinion on growth now that tax-reform is passed. In their dovish hike in December they refrained from factoring in the tax legislation. The verbiage we hear this week will be key for a Dollar that has started the year off on its back foot and has lost more than 2% since the December Fed meeting. San Francisco Fed President Williams said this morning that the Fed should hike three times this year and expects growth to accelerate due to tax-reform. He also predicts the unemployment rate will grind to 3.7% this year without a large jump in inflation. Fed members Bostic, Williams and Rosengren speak tomorrow afternoon. Minnesota Fed President Kashkari, a rate hike dissenter, speaks Tuesday while his companion in dissenting, Chicago Fed President Evans speaks Wednesday. St. Louis Fed President Bullard who spoke last Thursday also speaks on Wednesday. Outgoing NY Fed President Dudley speaks on Thursday.

 

  1. Inflation data

To add fuel to the interpretation of Fed speak are fresh reads on PPI Thursday and the more closely watched CPI on Friday. As we all know, lagging inflation has been the key argument in only gradually tightening policy. In her last statements in December, outgoing Fed Chair Janet Yellen expressed concern on whether recent rate hikes stopped inflation in its tracks. Also on Friday is Retail Sales which has been trending strongly in recent months. As we know, inflation worries are not only domestic and are a major concern around the world. We remain long term bearish the Dollar and believe that we can see it close out the first quarter by losing somewhere in the ball park of 4%. However, between these reads and the Fed speak, an oversold Dollar with a 14-day RSI near 30 has struggled to follow through on the downside this last week. It would be prudent to take something off the table if you have been playing either the Dollar short or the Euro long and look for an opportunity to reposition at a better spot on volatility this week.

  1. China data

Data out of China this week includes CPI and PPI on Tuesday night and reads on Trade Balance Thursday night. These will be critical for several markets that have performed extremely well to start the year. Crude Oil is at the highest level since May 2015. Palladium traded to a new all-time high of 1101.70 and took out the January 2001 level at 1090, it is currently up 92% since the start of 2017. The Aussie has gained about 5% in a month but faces our major three-star resistance overhead at .7870-.7884. All three of these are likely to continue higher in the long-term, however, choppy reads on China data should open the door for a nice swing trade lower this week. Also, be aware that Australia has some of its own data this week; Building Approvals on Monday night, Business Confidence Tuesday and Retail Sales Wednesday.

  1. Earnings season underway

The S&P and NQ both set record high closes on Friday and the momentum is extremely strong. With the NQ taking the lead, we are targeting 6707 this week. Earnings season gets underway and JP Morgan and Wells Fargo report on Friday. The banking sector put in a very strong 4th quarter gaining nearly 10% (XLF) but some have expressed concern over tax-reform legislation slowing earnings in the near-term. Also, we have been putting a lot of emphasis on the small caps lagging. The Russell 2000 still has not taken out its December 4th all-time high. It finished Friday’s session just shy of that 1564.4 mark, it must close out above here this week to confirm this move in equities. 

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 2723.75

Fundamentals: Global equity markets continue their surge as the DAX joins the party gaining more than 1% this morning for two reasons; a blowout German Retail Sales number coupled with a Eurozone CPI read that fell just shy of expectations. Domestic indices capitalize off weaker currencies, i.e. the U.S Dollar and S&P. This was a great domestic read for Germany, however, the Eurozone CPI coupled with the anticipation ahead of U.S Nonfarm Payroll has encouraged a lower Euro. Asian markets continued their push after Japan finally took out the 1992 highs. The S&P and NQ are also higher ahead of today’s Nonfarm Payroll due at 7:30 am CT. Expectations are for job growth at 190k, we expect a number in the ballpark of 220k. However, for us, as always, the Average Hourly Earnings Growth is most important. Expectations come in at +.3% and we expect a number at .2%; ultimately this is great for equities to some earnings growth but ultimately this lagging indicator along with inflation will keep the Fed from moving any faster than markets have priced in. As discussed for the last three weeks, we will continue to watch the Russell 2000 small caps which have still failed to take out their December 4th all-time high. Lastly, let’s not forget that ISM Non-Manufacturing data, a read we watch very closely, is at 9:00 am CT.

Technicals: Our S&P target of 2728.75 was hit yesterday, congrats to those who jumped on board and especially to those who chased our recommendation above 2700. Both the S&P and NQ are in melt-up mode and we remain Bullish. If you exited as we suggested yesterday and have been following us, there is no reason to force the next trade ahead of data today, especially if you caught the move lower last week. Resistance comes in at 2740.50 and then again at 2747.75, look for a test into this. However, the Russell 2000 continues to concern us and must close out above 1564 today to keep the market as a whole wildly bullish, also coinciding with a continued close above 2728.75 in the S&P.

Bias: Bullish

Resistance – 2740.50**, 2747.75**

Pivot – 2728.75***

Support – 2718.25*, 2708.50-2711**, 2698.25-2700***

 

Crude Oil (February)

Yesterday’s close: Settled at 62.01

Fundamentals: Yesterday’s EIA report was actually bearish despite a Crude draw of more than 2 mb than expected at -7.42 mb. This is because Distillate inventories gained 8.9 mb and Gasoline 4.8 mb. This explains the higher than seasonally usual run rate in the read last week; Crude was drawn significantly to create products. Furthermore, production did bounce back from the drop in last week’s report to finish the year at 9.782 mbpd. As we have discussed all week, the situation in Iran has kept a bid under the market and not because of domestic supply disruptions but more so what will happen with the U.S and the nuclear deal/sanctions in a market that is seeing supply currently tighten. Yemen militants took credit for a missile launched at Saudi that was intercepted.

Technicals: Price actin traded to a high of 62.21 yesterday and failed against that May 2015 high and resistance at 62.58 we discussed yesterday. We are now introducing a Bearish Bias to Crude at these levels and traders can look to risk a stop above yesterday’s high. We are not afraid to add on a bounce, however, if it makes new highs traders must not be stubborn. The tape is now hugging where we had support at 61.50 yesterday, this level is now 61.37 today. We have three layers of support above what is now a major three-star level at 58.87-59.96. This is our target to the downside, however, a close below here should get the ball rolling on further selling. We expect to see a record net-long position in today’s CoT, if everyone has bought, who is left to buy. If the selling does not come in today, we will be readily positioned for early next week.

Bias: Bearish/Neutral

Resistance – 62.58**, 63.39**, 66.87***, 68.43**

Support – 61.37**, 61.11**, 60.85**, 59.87-59.96***, 58.97-58.99***

 

Gold (February)

Yesterday’s close: Settled at 1321.6

Fundamentals: Gold has stayed elevated extremely well despite strong data this week and ahead of Nonfarm Payroll. Today’s close will boil down to this Nonfarm read. Regardless, we will remain Bullish in the long run, but this could encourage profit taking and a short-term breather; two to five sessions. Expectations come in at 190k jobs created, however, we believe the number will be more like 220k. For us, the bigger component is Average Hourly Earnings growth which is expected to come in at +.3%. We expect to see a lower number at +.2%. Overall, we think the read can be good but not good enough to encourage the Fed to move at a faster pace than already anticipated. Ultimately, the Dollar might hop up a little for two or three sessions, but a good report does not change our anticipation that the Dollar Index can and should test near 87 before the end of Q1. Also, today is ISM Non-Manufacturing, a read that we like to watch very closely, this is due at 9:00 am CT.

Technicals: This is as constructive tape as one could ask for. Today is also the start of the Silver seasonal buy that lasts into February. We have been eyeing major three-star support at 1302-1303.4 as a strong buy opportunity on a pull back this week but to our surprise we have not gotten it. As discussed, we have been Bullish and remain Bullish.

Bias: Bullish

Resistance – 1323*, 1335.8**, 1358-1365***

Pivot – 1317-1318.5

Support – 1307.1-1309.8*, 1302-1303.4***, 1292.9**, 1279.5***

 

Natural Gas (February)

Yesterday’s close: Settled at 2.88

Fundamentals: Yesterday’s storage read was came in below the range of expectations at -206 bcf and price action sold off hard in a delayed reaction. Though we like to believe this was bulls taking profits, the bear camp has not truly relinquished control of this market. Instead, this was likely the bear camp repositioning ahead of a long weekend on the east coast, one that has already seen a lot of school and factory closings. Remember cold weather is bullish Natural Gas, but extreme storms actually lowers demand due to the closings of high consumption buildings.

Technicals: Price action settled below the support level we were eyeing most closely this week at 2.8926. This has completely Neutralized any bias we have in the market and we are now in a wait and see mode. The bears are in the driver’s seat, but we see no edge to either side. Traders can look to resell the first test back to key resistance at 2.8926-2.9048 and risk a close back above here. However, those who are still bullish can find support at 2.734-2.7664, but a close below here is very bearish.

Bias: Neutral

Resistance – 2.8926-2.9048*, 2.9415**, 3.00-3.01***, 3.108-3.145**, 3.21**, 3.28-3.32***

Support – 2.734-2.7664**, 2.562***, 2.486-2.522****

 

10-year (March)

Yesterday’s close: Settled at 123’215

Fundamentals: Treasury markets remain under pressure due to strong global growth data and breakout record highs in stocks across the globe. The 10-year has not taken out the mid-December low but the 2’s and 5’s have though they also consolidated back off those lows ahead of today’s Nonfarm Payroll data. We believe there to be a buy opportunity around the corner in the 10-year, but it will need some help from the data today to hold this level. Nonfarm Payroll is due at 7:30 am CT, we expect to see strong job growth but ultimately expect lagging earnings growth to keep prices in the longer end of the curve afloat. ISM Non-Manufacturing is due at 9:00 am CT and must not be overlooked.

Technicals: Price action neared the December 21st low of 123’125 with a low of 123’135 against our key support level. However, first support at 123’20-123’225 has kept the market in check on a closing basis, this will be critical to watch after today’s data read. We believe long term support at the lower half of 123 will present that buy opportunity once again very soon. Today is building to be the fourth session in a row with a lower high and a close back above 123’27 is need to neutralize weakness.

Bias: Neutral

Resistance – 123’27**, 124’01*, 124’06-124’07**, 124’125-124’135**, 124’295-125’00***

Support – 123’20-123’225**, 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.

Euro (March)

Session close: Gained about half a penny

Fundamentals: The Dollar continues to freefall despite a much stronger than expected ADP Payroll read and Services PMI. However, Jobless Claims missed for the third week in a row. St. Louis Fed President James Bullard said today that the tax legislation has boosted growth and equity prices but should not encourage the Fed to move faster. Regional PMI data out of Europe was choppy but the Eurozone reads both beat by a tenth, anchored by a strong Germany. This week boils down to Nonfarm Payroll tomorrow at 7:30 am CT but still Eurozone CPI at 4:00 am CT and U.S ISM Non-Manufacturing at 9:00 am CT should not be overlooked. We will be watching the Average Hourly Earnings read most closely and given that job creation will be solid.

Technicals: Price action extended to a high of 1.2155, just shy of our rare major four-star resistance at 1.2180-1.22135. We have been Bullish the Euro for months but last night we got specific with a buy recommendation. If you got aggressive and bought ahead of the 1.20435 level, it would be smart to manage risk and roll the stop up below today’s session low.

Bias: Bullish

Resistance – 1.2180-1.22135****, 1.2434**, 1.2608***

Support – 1.20435***, 1.2006**, 1.1950-1.1966**, 1.1918-1.1926**, 1.1797-1.1799***

 

Yen (March)

Session close: Lost about 17 ticks on the session

Fundamentals: The Yen is the only major currency that has not capitalized off the weaker Dollar. Price action is being suppressed due to rising Treasury yields and strong growth data from around the world. Remember, the Yen is a safe haven currency. However, the Gold phenomena is alive and well. BoJ Kuroda has done a superb job in keeping the Yen bulls at bay. Still, we believe the Yen has tremendous long-term value down here and if the Dollar continues to sell off it will have no choice but to wake up. Of course, tomorrow’s Nonfarm Payroll Report will be key for this trade.

Technicals: A bad day for Yen bulls as the tape extended its two-day losing streak. Price action is testing first key support at .8889-.8902 and a close below here tomorrow which also aligns with a near-term trend line will encourage further selling. Only a move back above today’s session high at .8920 will neutralize the weakness on the week.

Bias: Neutral/Bullish

Resistance – .8920**, .8957**, .8984**, .9060-.9091***, .9164**

Support – .8889-.8902**, .8847**, .8782-.8808***

 

Aussie (March)

Session close: Gained a quarter on the session

Fundamentals: The Aussie continues it surge, 15 positive session out of 17. Data from China has been consistently good this week and this along with higher commodity prices has been a major catalyst for this leg higher. We finally have some significant data out of Australia tonight with a read on Trade Balance at 6:30 pm CT. As we head into tomorrow, the trade will be at the mercy of U.S jobs data and the Dollar.

Technicals: There is no question that the Aussie is overbought, still, it continues its surge higher. We have had major three-star resistance overhead at .7870-.7884 for quite some time and we would expect that this level can slow down the buying and encourage profit taking. The 14-day RSI at 76 is now the highest since 80 on July 20th. The 9-week RSI has a little room to push, though it is essentially signaling overbought as well.

Bias: Neutral

Resistance – .7870-.7884***, .8000**, .8100***

Support – .7770-.7799**, .7712-.7728***, .7671-.7678***, .7623-.7630**, .7498-.7501***

 

Canadian (March)

Session close: Gained about 30 ticks on the session

Fundamentals: The Canadian put in a strong session today after a monster Raw Materials Purchase Index read. With strong energy and metals prices, inflation is starting to poke its head and the commodity currencies, the Aussie and Canadian, are capitalizing in full force. Tomorrow, not only brings key jobs data from the U.S but also Canada at 7:30 am CT. The currency looks to continue a strong run of data on the heels of its bullish breakout last week.

Technicals: Price action pushed higher today and because of lower price action from yesterday’s close and into today it has created a bull flag. Because of this, we are starting to reintroduce a Bullish Bias. However, the Canadian faces off against resistance at the .8022-.8044 level and tomorrows data will ultimately dictate the finish of the week. Pullbacks to .7911-.7932 should be bought.

Bias: Neutral/Bullish

Resistance – .8022-.8044**, .8085

Support – .79675**, .7911-.7932***, .7881**, .7851**, .7730-.7754***

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 finished the day down ¼ of a cent, trading in a range of 2 ½ cents on the day. Funds were estimated sellers of 3,500 contracts.

Fundamentals: Corn futures continue to trade in a tight range thanks to the lack of new news coming across the wires. Export sales to start the week were within expectations at 683,898 metric tons. The bulls in the market will want to see better than expected exports on a consistent basis to get the market headed north. Due to the New Years holiday, we will have export sales out tomorrow morning. Ethanol numbers will be out later this morning, we have been seeing strong numbers in production over the last several weeks.

Technicals: Trade the market you have, not the one you want. March corn futures tested the 50-day moving average yesterday but ran out of gas to get out above which led to some light selling pressure in the back half of the day. This has been a key indicator for us as we have been able to see the market close above since July. If the market does achieve a close above resistance, we could see funds cover to 360 ¾. With that said, we are trusting the technical with tight risk measures and using this as an opportunity to sell. We continue to believe that there is an opportunity to trade a nickel on either side of 350 until we get a fundamental catalyst to give us a directional move other than sideways.

Bias: Bearish

Resistance: 354 ¼-355 ¼***, 360-361 ¾***, 375****

Support: 345-346 ½**, 334-335 ¼***, 323-325 ¼**

SOYBEANS (March)

Yesterdays Close: March soybean futures finished yesterdays session up 3 ½ cents, trading in a range of 6 ½ cents on the day. Funds were estimated buyers of 3,000 contracts.

Fundamentals: The market has managed to stabilize from chatter of weather concerns in South America, particularly in Argentina as the next 7-10 days looks dry. Wet weather is expected to move in after that, but the market is waiting for confirmation as we get closer. Many market participants will be waiting for next weeks USDA report on the 12th for nod on direction for the start of the year.

Technicals: The market has stabilized, but don’t think that the chart has instantly turned friendly. The selloff in December has left a lot of technical damage on the chart. Our first pocket of technical resistance remains intact from 967 ¾-971 ¾. If the bulls can chew through and close above, we could see a run back towards 985 ½-986 ½ before next weeks USDA report on the 12th. A failure to close will likely lead to funds extending their net short position. First technical support comes in from 950-952 ¼, a break and close below opens the door to a more significant 937 ½.

Bias: Neutral/Bearish

Resistance: 967 ¾-971 ¾**, 985 ¼-986 ½***, 999-1004**

Support: 950-952 ¼***, 937 ½***, 922 ¼****

WHEAT (March)

Yesterdays Close: March wheat futures closed up ¾ of a cent yesterday, trading in a range of 5 cents for the session. Funds were estimated buyers of 2,500 contracts.

Fundamentals: Concerns over winter kill have helped revive the wheat bulls, but those expectations should be tempered as we will not see the full affect until the crop comes out of dormancy in the spring. Kansas City wheat will be the contract you will want to keep a close eye on for that. Crop progress conditions showed a big drop in the December good/excellent ratings in Kansas (14%), Oklahoma (15%), Nebraska (13%), Colorado (12%).

Technicals: Wheat managed to close above the 50-day moving average, but failed to close above technical resistance at 437. The lack of conviction and follow through yesterday has some sellers stepping back into the market in the early morning session. We are looking for the market to retreat from here, the first line in the sand is 429, but the more significant support pocket comes in from 416 ½-420 ¾. Keep in mind that yesterday was the start of the seasonal; if you had sold March Chicago wheat on January 3rd and bought back on January 15th, you would have been profitable for 12 out of the last 15 years with the average gain being roughly 17 ¾ cents.

Bias: Bearish

Resistance: 435-437 ½ ***, 443-448 ¼ ***, 459-461 ¼**

Support: 429**, 416 ½-420 ¾**, 410 ½**, 399-402 ¾****

E-mini S&P (March)

Yesterday’s close: Settled at 2711

Fundamentals: Congratulations to all of those who followed us on this bullish breakout, it might not have been easy but as we said yesterday morning and at our trade desk Tuesday afternoon, “on a daily chart, the setup is now extremely bullish”. Equity markets were little changed after the release of the FOMC Minutes yesterday and that was a good thing. Persistently low inflation coupled with improving growth has given equity markets an ideal environment to continue their historic run. Fed members are becoming increasingly hesitant to raise rates without inflation reaching their target, however, they see a boost in consumer and business spending due to tax-reform. The state of these two economic indicators allow the Fed to tighten at a very gradual pace. Though there are some fundamentals behind this stock market run, we all must come to terms with how the bulk of it is engineered by ultra-loose monetary policy. Now that the market is comfortable that this policy isn’t going anywhere in a hurry, what’s to stop it? That is not to say, a correction of 3-5% would be bad, it absolutely would be healthy for this market to rebalance. Challenger Job Cuts is due at 6:30 am CT, ADP Payroll at 7:15 am and weekly Jobless Claims at 7:30. Markit Composite and Services PMIs are due at 8:45 am CT and St. Louis Fed President Bullard speaks later today at 12:30. Of course, tomorrow morning brings Nonfarm Payroll.

Technicals: Price action is testing our first or old major upside target as we officially extended it higher on our Midday Market Minute yesterday morning. Though it never hurts to lock in or take profits at 2715.25, we believe today’s price action should near 2728.75. The NQ officially broke out yesterday and this move is poised to extend another 100 points to our new target of 6708.25. Furthermore, the Russell 2000 has finally awoke and can add fuel to this engine. It is trading at the highest level since the December 4th reversal and the daily chart setup is bullish, a close out above its all-time high of 1564.4 will confirm this.

Bias: Bullish

Resistance – 2715.25***, 2728.75***

Support – 2707.25**, 2698.25-2700***, 2691-2692.25**, 2686.50**, 2674.50*, 2667.25-2667.75**, 2651.75-2652.50***

 

Crude Oil (February)

Yesterday’s close: Settled at 61.63

Fundamentals: Crude Oil put in a monster session yesterday gaining nearly 2.5% and extended gains into this morning to the highest level since the week of May 4, 2015. As we discussed yesterday the unrest and clashes in Iran have kept a bid under the market, not for any current disruptions but the potential of seeing a supply disruption domestically and implemented from abroad. To accompany OPEC’s supply rebalancing, we have seen tremendous growth across the globe; Manufacturing and Services data from all regions have essentially beat expectations this week. API data yesterday had Crude drawing slightly smaller than expected at -4.992 mb vs -5.25 mb and we now look to EIA this afternoon at 10:00 am CT. Expectations are for -5.148 mb Crude, +.477 mb Distillates and +2.182 mb Gasoline. This will be the last read from 2017 and we would not be surprised to see the production number flat or lower, adding to the current bull case.

Technicals: Resistance from the May 2015 highs comes n at 62.58 but let’s not kid ourselves, a combination of near and long-term fundamentals has this market in a complete melt-up. We remain Neutral as we cannot find value buying or selling at this level. Stronger support is now building at the 60.74 level and this will be key to watch on pullbacks.

Bias: Neutral

Resistance – 62.58**, 63.39**, 66.87***, 68.43**

Support – 61.50*, 60.74**, 59.96**, 58.97-58.99***

 

Gold (February)

Yesterday’s close: Settled yesterday at 1318.5

Fundamentals: Gold began to see some of that profit taking we were talking about yesterday and traded to an early session low last night of 1307.1. The metal is holding extremely well as Manufacturing and Services data around the globe this week came in much better than expected. The FOMC Minutes brought no surprises and though it didn’t come off more dovish than anticipated, it was the statement in mid-December, just as we expected that has been a key catalyst in this move in Gold. We got much of the same as members becoming increasingly hesitant to raise rates with inflation below their target. Our major thesis behind buying Gold in December is because w believe that will either not hike three times in 2018 or each of the three hikes will be bubble wrapped with a dovish rhetoric. ADP Payroll data is due at 7:15 am CT with weekly Jobless Claims to follow at 7:30. Markit Composite and Services PMI data is due at 8:45 am CT. Of course, tomorrow’s Nonfarm Payroll report is key, and traders should continue to manage their risk.

Technicals: Gold had a healthy pullback of $15 but did not quite get to where we like buying at 1302-1303.4. Remember, we have never wavered from our Bullish Bias, just have simply said there are ways to manage risk without getting out of long positions. A continued close above 1317 will keep the bulls with a clean upper hand.

Bias: Bullish

Resistance – 1317-1318.5**, 1323*, 1335.8**

Support – 1307.1-1309.8*, 1302-1303.4***, 1292.9**, 1279.5***

 

Natural Gas (February)

Yesterday’s close: Settled at 3.008

Fundamentals: Today’s storage read will be key because we are seeing a wide range of projections from -212 to -221. The steeper end of the draw will help keep the bears in the driver’s seat. Next week’s expected record read will also be massive for the same reason, much of more than -300 is already priced in. The storm hitting the east coast this weekend will be crucial for the bulls and bears for the same but different reason; what are the lasting effects. First, simply, does the bitter cold stay long enough to force the draw two weeks to expand well above the expected -200 ballpark estimate. And secondly, what type of lasting outages will we see; schools, power plants etc. When these are out or closed, demand also falls.

Technicals: Price action continues to hug the critical $3 level and will likely continue to do so into today’s storage read. Our bias is not long-term Bullish anymore, but intermediate-term and will likely stay so for the next 30-45 days. Today’s session high of 3.07 is higher than that of yesterday, but lower than that of the week. So, a failed high but one that also has the potential for an outside bearish reversal. We must see support at the 2.923-2.945 level hold through today’s session. If it dips below 2.8926 this week we could see strong liquidation.

Bias: Bullish

Resistance – 3.108-3.145**, 3.21**, 3.28-3.32***

Pivot – 3.00-3.01***

Support – 2.923-2.945**, 2.8926**, 2.83**, 2.734-2.7664**, 2.562***, 2.486-2.522****

 

10-year (March)

Yesterday’s close: Settled at 123’25

Fundamentals: Prices are depressed as global equity markets continue their historic run. The Nikkei put in its best session in more than a year to trade to the highest level since 1992. The S&P and NQ are both extending new all-time highs and we await the same move from the small cap Russell 2000. German 10-year bund yields have also bounced back strong today up 1.5 basis points or about 3%. For the second session in a row the U.S 2 year trekked to a new low and the 5 year is priming to do so on strong data this week. Nonfarm Payroll will be the key read tomorrow. Still, ADP Payrolls are due this morning and Markit Composite and Services PMI data at 8:45 am CT.

Technicals: Price action is turning depressed and our Bias is now Neutral ahead of big data. We must watch first key support at 123’20-123’225 and a move below there today opens the door for S2 and new lows before Nonfarm Payroll tomorrow. We like to believe that there will be a buy opportunity once the sellers sell and this might be tomorrow afternoon. Only a close back above 123’27 will neutralize this weakness before then.

Bias: Neutral

Resistance – 124’01*, 124’06-124’07**, 124’125-124’135**, 124’295-125’00***

Pivot- 123’27

Support – 123’20-123’225**, 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/

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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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