Tag: bitcoin futures

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.

  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.

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.

Euro (March)

Session close: Settled down about 30 ticks

Fundamentals: Today’s Fed Minutes were very neutral and put emphasis on gradual rate hikes due to lagging inflation. They expressed that inflation might stay below the objective for longer than expected. However, growth and consumer spending forecasts were raised due to the change in tax-policy. Despite a new record low in German Unemployment, the Euro began paring gains this morning ahead of today’s Fed Minutes and saw pressure due to stronger than expected ISM Manufacturing. Tomorrow brings Services data throughout the Eurozone but traders truly await a busy Friday that has Eurozone CPI and U.S Nonfarm Payroll.

Technicals: Yesterday’s price action neared major four-star resistance but clearly ran out of gas as long took profits ahead of a busy week. Like we said yesterday, support at 1.20435 is a solid buying opportunity but please understand the fundamental risks between now and the end of the week. Traders can risk a stop below 1.1950-1.1966, however, could also look to exit simply on a failure to hold 1.20435 on a closing basis. Our goal would be to see a breakout above our rare four-star level at 1.2180-1.22135. Support at 1.1950-1.1966 aligns with the trend line from the September highs. Today’s breather is so far, a healthy consolidation from overbought territory.

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 16 ticks on the session

Fundamentals: No major news on the Yen front this week. Manufacturing PMI data is due out tonight at 6:30 pm CT along with an overlooked Chinese Caixin Services read at 7:45 pm. A big miss on the Caixin should wake up some bulls in the Yen. The S&P and NQ had monster sessions, however, Treasury prices in both the U.S and Germany edged higher and helped keep Yen sellers at bay.

Technicals: A solid start to the year for the Yen failed to garner any follow through. Today’s price action mutes our near-term Bullish bias due to data risks and our expectation to see the equity markets edge higher into Friday. Minor support comes in at .8915 while we are watching the pocket at .8889-.8902 now to be a more key level. If the Yen can hold this, it should be able to build a constructive base.

Bias: Neutral/Bullish

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

Pivot – 8930-.8937

Support – .8915*, .8889-.8902**, .8847**, .8782-.8808***

 

Aussie (March)

Session close: Gained a few ticks

Fundamentals: The Aussie squeaked out its 14th green session in 16. Prices have continued higher on Dollar weakness and commodity strength in a quiet week for the news out of Australia. Buyers continue to bet on a more hawkish RBA at their meeting more than a month away and one that could hike in Q1. AIG Services data is due at 4:30 pm CT today and Chinese Caixin Services is tonight at 7:45 pm. Traders await tomorrow night Aussie Trade Balance data.

Technicals: The Aussie has made a higher high for six straight sessions before today “merely” matching yesterday’s high. With the 14-day RSI trading above 70 for four straight sessions, we have completely neutralized our bias. First support aligns with the 100-day moving average, but we believe a pull back to .7712-.7728 would be a tremendous buy opportunity if we can get. Remember a month ago we called for that low at .75 to last at least through the end of Q1.

Bias: Neutral

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

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

 

Canadian (March)

Session close: Lost nearly a quarter on the session

Fundamentals: Price action pared some gains after finishing green in seven out of eight sessions. Tomorrow we look to the Raw Materials Purchasing Index and Crude Oil inventories. The Canadian failed to follow Crude higher as it gained nearly 2.5% on the session. Tomorrow will be an interesting day for the trade as we eye jobs data from both Canada and the U.S on Friday.

Technicals: The tape was subdued through today and ultimately due for a consolidation lower as it neared overbought territory and as traders took profit from this breakout run. We have now completely neutralized our bias and will await further fundamental news. Price action finished just above first support today, however, weakness should take this lower into major three-star support at .7911-.7932 which would ultimately present a buy opportunity.

Bias: Neutral

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.

BrokersEDGE Futures news and research 1-3-18

E-mini S&P (March)

Yesterday’s close: Settled at 2693 gaining .6% to start the year.

Fundamentals: The S&P started the New Year with a bang, reversing all losses from Friday and edging a new all-time high into this morning. The wave of profit taking late on the last session of the year is now confirmed to be a fluke and the bull run is alive and well. After a slow start to the year, Europe is green this morning and Germany’s Unemployment read was better than expected pushing to a new record low. The NQ recovered very well yesterday but the small cap Russell 2000 continues to lag. We believe today will be a critical day for the small caps, they must join the party. Furthermore, how might they react to ISM Manufacturing data at 9:00 am CT and FOMC Minutes at 1:00 pm CT. The S&P is set to extend gains and we are again Bullish, but it will be crucial for the small caps to hop on board. We like to believe that the stock market can continue to grind higher into Friday’s Nonfarm Payroll, however, FOMC Minutes have been known to spark reversals so stay vigilant through today’s close.

Technicals: We took a patient approach yesterday after last week’s trade came to fruition. First, we feared pressing a bear case that we don’t believe in though yes, we do believe the market is overdue for a healthy 3-5% correction. Second, our Bias did become Bullish with sustained price action back above 2686.50 and furthermore 2691. Yesterday’s cash open swung at the 2686 level but ultimately turned higher and never looked back. On a daily chart, the setup is now extremely bullish and though yes there is resistance at the 2698.25-2700 level, risk can be managed with a stop below today’s low while our next major upside target of 2715.25 comes into play. We now have a secondary target of 2728.75 that will become our main target if the NQ can take out its all-time high and if the Russell 2000 joins the party. A failure to close out above a new all-time high and at least hold 2696 at a bare minimum will cast doubt over our immediate term bull setup.

Bias: Bullish

Resistance – 2698.25-2700**, 2715.25***, 2728.75***

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

 

Crude Oil (March)

Yesterday’s close: Settled at 60.37

Fundamentals: Crude Oil is sitting and comfortably holding $60. We believe that the unrest and clashes in Iran have kept a bid under prices not because of any current disruption but the potential of one not only within their borders buy from abroad. The U.S already wants to tighten sanctions on Iran and pull out of that 2015 nuclear deal and this could give them the reason to do so. This is all speculation yes, but it is keeping a bid under prices. Inventory data will come into play later today with AI at 3:30 pm CT and the EIA tomorrow afternoon. Data on Russia’s output was released yesterday showing an average of 10.98 mbpd in 2017. This was actually their highest since the Soviet Union despite the OPEC and Non-OPEC production cap. Remember when they ramped up production ahead of the November 2016 production deal? They only had to reduce production from that level. As the EIA data comes back into the picture tomorrow, remember this U.S estimated production data will be from the last week of the year. Ultimately, we would expect to see production pick back up this week and show on next week’s report.

Technicals: We want to remind everyone out there that our Bias has been Neutral for quite some time now. Do we believe Crude Oil is due for a correction on this run? Absolutely! Are we sitting here selling and recommending selling? Absolutely not! Yes, with longs flocking to the market they have potentially and likely created a record net-long CoT position as of this Friday’s read for the week ending yesterday (1/2/18). We love the CoT and believe if everyone has already bought, who is left to buy. Therefore, we absolutely believe that we could be seeing a very similar setup to last year when Crude failed to press higher through January and February and had multiple corrections of 5-10%. Traders must be smart though and as we discussed yesterday, the bulls have the clear upper hand until a close back below 59.96.

Bias: Neutral

Resistance – 60.74*, 62.58**

Pivot – 60.32-60.42

Support – 59.96**, 58.97-58.99***

 

Gold (February)

Yesterday’s close: Settled at 1316.1 and has traded higher in 12 out of 13 sessions since bottoming the day before the Fed hiked rates.

Fundamentals: We looooove Goold. But let’s be real. Gold has had quite the run since its December 12th bottom and this crucial week is about to unfold. Heck, the Dollar is even seeing some profit taking support today. ISM Manufacturing data is due out at 9:00 am CT and the FOMC Minutes from the December hike meeting later today at 1:00 pm CT. For us, what it boils down to most is the Fed speak Thursday and Friday and wage growth on the Nonfarm Payroll report. Let’s also not forget the ISM Non-Manufacturing read on Friday, a data point we really like to watch and one that retreated from lofty expectations last month (bullish for Gold). However, what we don’t want to see is the Fed to appear to be a little more hawkish now that tax-reform legislation is signed. Remember, at that December 13th Fed meeting there was still some logistical uncertainty if it would get signed before Christmas. Let’s be clear here, we remain long term Bullish Gold and long term Bearish the Dollar (just yesterday we said that we believe the Dollar has at least 4% lower to go in Q1). But, if you have enjoyed this run, it is important to lock in some gains in the near term as the Dollar might make its last stand over the next two to five trading days.

Technicals: Price action is flirting with the 1317 level and hanging tough after peeling back from an overnight high of 1323, the highest since September 20th. Yesterday, the 14-day RSI reached above 70 and remains above there today. Considering that Gold has been trending higher for 12 out of the last 13 sessions we would like to see a pull back to what is now major three-star support at 1302-1303.4. There are ways to manage a long position without exiting the long position. Don’t hesitate to call our trade desk at 312-278-0500 to discuss.

Bias: Bullish

Resistance – 1317**, 1335.8**

Pivot – 1309.3-1309.8

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

 

Natural Gas (February)

Yesterday’s close: Settled at 3.056

Fundamentals: Prices are holding tough and gripping to $3 ahead of tomorrow’s stock read and this weekend’s artic blast up and down the east coast. It was near freezing in Florida last week, and when Floridians have to turn to the thermostat 9 times out of 10 Natural Gas is turning higher. Stock drawdown expectations for this week and next are holding steady at over 200 and 300.

Technicals: Price action is clicking to the major three-star level at 3.00-3.01 and yes we bulls want to see a continued close above here to keep the immediate term momentum north. However, as we have discussed, it has become common to see higher price action dissipate early in the week and ahead of the inventory read. It will be key to hold 2.923-2.945 to remain very constructive. Only a close back below 2.8926 will neutralize recent strength and give the bears a shot once again.

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 123’22

Fundamentals: Treasuries were under immense pressure yesterday with equity markets recovering so strongly from Friday’s late selloff. Prices have now middled out from last week’s high ahead of the beginning of a long week of data. German 10 years have retreated about 3 basis points since the start of the week and this is a good sign for the 10-year prices. ISM Manufacturing is due at 9:00 am CT and FOMC Minutes from the December hike meeting at 1:00 pm CT.

Technicals: Price action breached first support at 123’20-123’225 with a session low of 123’17 yesterday. With the tape stabilizing into today, the bulls can feel some comfort. There is a big wall building overhead and resistance above 124 will consolidate ahead of Nonfarm Payroll Friday and this week’s close will be critical but also at the mercy of this read as it will set the tone for the next two to three weeks. We remain very upbeat in the long-term.

Bias: Bullish/Neutral

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

Pivot- 123’27-123’285***

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.

Happy New Year!

  1. Hi-Ho Silver!

For the third week in a row, Friday’s Commitment of Traders showed a net-short position in Silver (week ending Tuesday 12/26). The last time Silver had a net-short position was the week ending July 18th. In July, Silver bottomed on the 10th and began a rally of $3 or 20%. Since bottoming on December 11th Silver has rallied about $1.50 or 10%. Friday’s session settled at major three-star resistance; a trend line from the September highs and the 200-day moving average. Since the CoT report is as of Tuesday, the short-covering rally likely began on Friday. However, we believe the rally is just getting started and to further support our belief we have a seasonal trade. If you have bought Silver on January 5th and have held through February 14th, you have made money in 13 out of the last 15 years, averaging a gain of just about $1 ($5000 in a regular sized Silver contract). For us, this seasonal trade aligns perfectly with a breakout above major three-star resistance and a run of the same distance as July’s.

  1. Crude Oil

Crude famously reached a high on the first trading day of the 2017 and closed the session nearly $3 from there. Its selloff extended 8% and nearly $4.50 over six sessions. For the next month, the bulls positioned for Crude to make a run at $60. They compiled a record net-long position of 405,328 contracts in February but never took Crude higher. The January 3rd high was finally taken out on November 3rd. The bulls have been in complete control for more than two months, just as they were last year. Furthermore, pipeline outages in the North Sea and Libya have helped send prices higher. The bulls have amassed a near record net-long position through December and Friday’s Commitment of Traders shows it at 404,238, the highest since that February read. When it reached that height in February the market then sold off 14.5%. With both pipelines coming back on line this week we are looking for a similar setup to last year. If everyone has already bought, who is left to buy.

  1. Euro/USD

This is a big week for the currency pair with the Euro finishing at the highest level since September. We have been outspoken Euro bulls and we believe the September 8th high will be taken out in the first quarter. There’s no better way to start the year than with a session like Friday and a week like this ahead. From the U.S we FOMC Minutes from the December rate hike on Wednesday and Nonfarm Payroll on Friday. But there’s much more with ISM Manufacturing on Wednesday and ISM Non-Manufacturing on Friday. Also, Fed officials grab the horn Thursday and last through Friday. From across the pond there is reads on Manufacturing Tuesday morning, German and Spanish Unemployment Wednesday, Services Sector reads Thursday, German Retail Sales early Friday along with Eurozone CPI and PPI. 

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

Disclaimer:

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

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

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

 

E-mini S&P (March)

Last week’s close: Settled at 2686

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

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

Bias: Neutral/Bearish

Resistance – 2694.50-2696**, 2700*, 2715.25***

Pivot – 2688.50-2690.25

Support – 2679-2680.75**, 2675.25-2675.50**, 2667.25-2669.75**, 2651.75-2652.50***

 

Crude Oil (February)

Last week’s close: Settled at 58.47

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

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

Bias: Bearish/Neutral

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

Pivot – 58.47

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

 

Gold (February)

Last week’s close: Settled at 1278.8

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

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

Bias: Bullish

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

Pivot – 1278-1278.8

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

 

Natural Gas (February)

Last week’s close: Settled at 2.658

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

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

Bias: Bullish

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

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

 

10-year (March)

Last week’s close: Settled at 123’15

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

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

Bias: Neutral/Bullish

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

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

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

 

 

Disclaimer:

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

E-mini S&P (March)

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

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

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

Bias: Bullish

Resistance – 2700*, 2715.25***

Pivot – 2694.50

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

 

Crude Oil (February)

Yesterday’s close: Settled at 57.22

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

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

Bias: Bearish/Neutral

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

Pivot – 57.33-57.35

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

 

Gold (February)

Yesterday’s close: Settled at 1265.5

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

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

Bias: Bullish/Neutral

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

Pivot – 1262.8-1263.2

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

 

Natural Gas (January)

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

Yesterday’s close: Settled at 2.745

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

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

Bias: Bullish/Neutral

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

Pivot – 2.745-2.747

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

 

10-year (March)

Yesterday’s close: Settled at 124’075

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

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

Bias: Neutral/Bullish

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

Pivot – 124’135-124’15

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

 

 

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

 

 

Disclaimer:

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

Euro (March)

Session close: Settled at 1.18675, up 22.5 ticks

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

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

Bias: Bullish

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

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

 

Yen (March)

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

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

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

Bias: Bullish

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

Pivot – .8928-.89355

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

 

Aussie (March)

Session close: Settled at .7665, up 21 ticks

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

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

Bias: Neutral/Bullish

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

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

 

Canadian (March)

Session close: Settled at .7785, up 5.5 ticks

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

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

Bias: Neutral

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

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

 

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

 

 

Disclaimer:

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

E-mini S&P (March)

Last week’s close: Settled at 2682, a new all-time high

Fundamentals: Equity markets have picked up right where they left off Friday with the S&P and NQ both trading into uncharted territory. This week will be about passing tax-reform and after a compromise was reached Friday, the House is set to vote on Tuesday while the Senate could vote as early as Tuesday. But tax-reform will not be the only thing on the agenda as Washington must pass a budget by Friday to avert a shutdown. Should we have expected anything less than a last-minute showdown on the hill before Christmas? Absolutely not. Though the S&P and NQ broke out on Friday, the Russell 2000 small-caps are lagging and about 1.5% below the spike high from two weeks ago. This trade will be critical to watch this week as we want to see a confirmation and breakout in the Russell in order to signal that the S&P has legs through our 2715 target that we discussed on last night’s Tradable Events this Week. There, we also discussed Eurozone CPI which was in line with expectations this morning. Today is a quiet on the data front, but get read as Tuesday through Friday will be exciting.

Technicals: What more could a bull ask for than what we got on Friday’s session; a clean breakout weekly close in the S&P while the bull flag breakout was also confirmed in the NQ. Both should continue to stretch gains in their respective melt-up phases. Our upside target in the S&P is 2715.25, resistance comes in this morning at 2694.50 and we want to see price action to hold and close above 2688 in order for momentum to remain strong.

Bias: Bullish

Resistance – 2688**, 2694.50**, 2715.25***

Pivot – 2681.50-2682

Support – 2675.50**, 2667.25**, 2651.75-2652.50***

 

Crude Oil (February)

Last week’s close: Settled at 57.

Fundamentals: Crude Oil traded higher into the weekend as buyers reemerged due to the crack in the Forties Pipeline, a potential Nigerian strike and Baker Hughes announcing that producers cut four rigs, the first drop in six weeks. Midweek there was some optimism that the situation in the North Sea was overexaggerated, however, the market seemed to disagree as prices edged higher into this morning with February reaching 57.81. INEOS said this morning that their time frame is still two to four weeks and the cracks have not spread. Nigerian oil workers did go on strike today bringing another situation that needs to be monitored. It is important to watch the most closely effected contract, Brent. For us, Brent has not accelerated higher in a worrisome fashion. Today is the last day to trade January futures and they settle tomorrow, expiration can be a choppy nonsensical trade, similar to what we have seen over the last week.

Technicals: Price action has stalled against resistance at the 57.65 level; a close above here will turn the tape higher and begin Neutralize our position. To the downside, we want to see a close back below first support at 57.33-57.35 at a minimum while a move and close below 56.99-57.08 will be absolutely critical in turning the tape bearish in the near-term. Ultimately, there is a consolidating wedge pattern between $55 and $59; a move outside of this wedge would ignite a directional move that has legs.

Bias: Bearish

Resistance – 57.65**, 58.45**, 58.97***, 59.96***, 62.58**

Pivot – 57.33-57.35

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

 

Gold (February)

Last week’s close: Settled at 1257.5 down .4

Fundamentals: Gold is capitalizing off a weaker Dollar this morning and the bottoming continues. Media outlets this morning credit the weaker Dollar to doubts on both tax-reform getting pushed through before the end of the week and the potential pro-growth lift. Equity markets would disagree, but ultimately when it comes to the Dollar, this is exactly what we have expected and exactly why we like buying Gold ahead of January. We believe tax-reform will get passed this week and that is why we have advised against chasing Gold at resistance and instead waiting for a slight bump up in the Dollar and consolidation lower in Gold upon the passing as an entry point if you already missed the boat. There is no data today, but we await housing reads through midweek and final Q3 GDP Thursday. Friday will be the big day with PCE, Durable Goods, Personal Spending and Income and Michigan Consumer Sentiment.

Technicals: Resistance is squarely at 1262.8-1263.2, a close above here will push the tape to the 200-day moving average. We are eyeing support at 1247-1250 as a very attractive buy with strong seasonal implications.

Bias: Bullish/Neutral

Resistance – 1262.8-1263.2**, 1273.9-1276.7***, 1289**, 1303.4-1304.7****

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

 

Natural Gas (January)

Last week’s close: Settled at 2.612, the lowest weekly close since August 2016. Notching a close below the November 7th, 2016 weekly close of 2.619.

Fundamentals: After a difficult week last week, there now seems to be a light at the end of the tunnel for the Natural Gas bull camp. Price action is up almost 10 cents this morning as an arctic blast is expected to sweep the country to finish out the new year. Friday’s settlement was a hair below the November 7, 2016 weekly settlement and low, a level in which prices began an ascent of 50% into the last week of the year.

Technicals: Price action bled to a low of 2.581 on Friday but stopped short of testing into long term major four-star support at 2.486-2.522. The reversal higher into this morning has been steady buying since the open last night. First resistance comes in at 2.6945 with the next hurdle being 2.73-2747; a close above here will quickly neutralize the tape in the near term and likely encourage buying back above 2.80. A key goal for the bull camp this week would be a close above 2.85-2.88 which could spark a short covering rally to the $3 mark. A close below 2.65 will begin to disappoint.

Bias: Bullish/Neutral

Resistance – 2.6945**, 2.73-2.747**, 2.799*, 2.85-2.88**, 2.96-3.01***

Support – 2.65**, 2.612**, 2.581*, 2.486-2.522****

 

10-year (March)

Last week’s close: Settled at 124’135

Fundamentals: Treasury prices are under pressure into this morning as tax-reforms is expected to get through congress before the end of the week. Thought the Dollar is slightly lower, equity markets around the world are melting higher and the money is coming out of Treasuries. Not a ton of news out this morning, Eurozone CPI was in line with expectations and reads on U.S housing data begin tomorrow. Friday will be a critical day as the market expects tax-reform to have moved to the President’s desk and the budget is up. We also have a slew of data that includes PCE and Durable Goods on Friday.

Technicals: Though our longer-term outlook is Bullish the 10-year from this area, we have remained cautious as we expect pressure to remain until tax-reform is signed and as equity markets price such in during a seasonally bullish week. The market is testing key support at 124’07 this morning and a close below here will give the bears a clear edge. Only a close back into or above the 124’135-124’15 level will neutralize the tape.

Bias: Neutral/Bullish

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

Pivot – 124’135-124’15

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

 

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

Disclaimer:

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

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