Tag: cattle trading

FX market Recap – BrokersEDGE 2-15-18

Euro (March)

Session close: Settled at 1.2530, up 67.5 ticks

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

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

Bias: Bullish

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

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

 

Yen (March)

Session close: Settled .9427, up 70.5 ticks

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

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

Bias: Bullish

Resistance: .9480-.9491****

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

 

Aussie (March)

Session close: Settled at .7934, up 22 ticks

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

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

Bias: Bullish

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

Pivot – .7901-.7915***

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

 

Canadian (March)

Session close: Settled at .8009, up 19.5 ticks

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

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

Bias: Bullish

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

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

 

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

Disclaimer:

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

 

CORN (March)

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

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

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

Bias: Neutral

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

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

 

SOYBEANS (March)

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

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

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

Bias: Neutral

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

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

 

WHEAT (March)

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

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

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

Bias: Neutral

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

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

 

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

 

 

Disclaimer:

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

E-mini S&P

Yesterday’s close: Settled at 2825.75

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

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

Bias: Neutral

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

Pivot – 2825.50-2828

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

 

Crude (March)

Yesterday’s close: Settled at 64.73

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

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

Bias: Neutral/Bearish

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

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

 

Gold (April)

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

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

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

Bias: Neutral

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

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

 

Natural Gas (March)

Yesterday’s close: Settled at 2.995

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

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

Bias: Bearish/Neutral

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

Pivot – 2.981

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

 

10-year (March)

Yesterday’s settlement: Settled at 121’185

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

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

Bias: Bullish/Neutral

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

Pivot – 121’17-121’18

Support – 121’10*, 119’20-120****

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

Disclaimer:

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

E-mini S&P

Yesterday’s close: Settled at 2824.50

Fundamentals: The fundamental narrative in this market might feel sharply different between Friday’s close and yesterday’s. As much as this week’s volatility seems foreign these days, it is healthy. On Sunday’s Tradable Events this Week, which was written over the weekend and on the heels of Friday’s melt-up we, did discussed the potential height of exuberance this week given the landmark events and reports (State of the Union, Fed meeting, tech earnings and Nonfarm Payroll). However, we have seen something in the last 48 hours that we have not truly seen in quite a while; traders and investors taking something off the table (selling) ahead of an event and not because of such. Yes, strong selling is likely coming from pension funds, insurance companies and other similar asset holders that need to rebalance stock and bond portfolios after such a strong January. But ultimately, what we are getting at is this is as healthy as it comes, and our long-term Bias has not changed; we expect this volatility and lower price action to pave the way for a buy opportunity. Our technicals signal the potential for about 1% more to the downside. We remind you, if you jumped on yesterday’s ship as it sailed through our key support anywhere from 2840 to 2850, it is just as important now as it was yesterday ahead of the State of the Union to lock in some sort of profit; maybe that is a stop or maybe it is trimming a position. Doing so, gives you the flexibility to trade this market and reposition. Also, when trading multiple contracts, you have don’t have to be all in or all out on each trade. Last night’s State of the Union was presidential, and this is no surprise, the market is responding by working higher from yesterday’s close. On the flip side, maybe you used yesterday’s weakness ahead of the State of the Union as a buy opportunity and the same trade management applies. Eurozone CPI data this morning was in line with expectations. Ahead, there is ADP Payrolls at 7:15 am CT, Chicago PMI at 8:45 and Pending Home Sales at 9:00. The key event today is the Fed policy decision at 1:00 pm CT. They are not expected to raise rates, but we could see a little bit of a hawkish tone in Fed Chairwoman Janet Yellen’s last meeting. Boeing among others are reporting earnings before the bell today. Facebook, AT&T and Microsoft among others report after the bell.

Technicals: Our Bias yesterday was Neutral because, as stated above, we believe this selloff paves the way for a buy opportunity. The Morning Express has been adamant about a 1% downside at minimum if key support at the 2850 area were taken out. We discussed here and in the Midday Market Minute that the first target is 2807-2808 and the main target is below there at 2798. The technicals do signal that the downside has not completed its full wave, however, traders must remain nimble. First resistance comes in today at 2841.50; this is a level for bears to sell against and those who went long before the State of the Union to profit against. A move above 2847.75-2848.50 will completely neutralize the tape while a move above 2855.50-2858 is bullish. A continued close below 2825.50-2828 will signal immediate downside risk.

Bias: Neutral

Resistance – 2841.50**, 2847.75-2848**, 2855.502858**, 2878.50**, 2887***, 2920***

Pivot – 2825.50-2828

Support – 2815-2818*, 2807-2808.50**, 2798***, 2770-2777**

Crude Oil (March)

Yesterday’s close: Settled at 64.50

Fundamentals: Crude began weakening yesterday ahead of inventory data and as the Dollar attempted to stabilized. API data after the bell showed a build of +3.229 mb of Crude and this added to downside pressure sending it to an overnight low of 63.67. Expectations were for a smaller build of +1.5 mb. They also reported a build in Gasoline at +2.69 mb and a draw in Distillates at -4.1 mb. Gasoline is something to keep an eye on as it is under the most pressure and retreated sharply yesterday. The EIA expects much more modest numbers across the board of +126,000 barrels Crude, +1.81 mb Gasoline and -1.45 mb Distillates. Ultimately, today’s EIA read must be in the ballpark of what API reported or it risks the same bullish effect we saw last week. Remember, many of those who are willing to sell because of inventory data have already sold, we must see nearly as bearish data in order to incur fresh selling. Also, on our radar is production data. Last week’s increase of 128,000 bpd put estimated production at 9.878 mbpd. Another increase of this magnitude will send U.S production through the 10 mbpd milestone. Lets also not forget about the Dollar. The Fed delivers a policy statement and decision today at 1:00 pm CT a stronger Dollar will put pressure on commodities while a weaker Dollar will help support them.

Technicals: Crude Oil is seeing weakness with a firm move below the 64.72-64.89 level which we denoted will neutralize this recent push higher. Price action extended losses yesterday all the way down 63.67, our minor and third support at 63.70. We maintain that we must see a close below 62.78-63.00 in order to encourage strong waves of selling. Remember, bulls have piled into an overcrowded record net-long position and the lower Crude goes, the more selling this would incur as the bulls jump ship. Major resistance now comes in at 64.74-65.07 and price action must stay below here, or the bulls will quickly regain a clear edge. Gasoline must be on everyone’s radar and yesterday’s weakness broke down below an ascending wedge. This is a bearish chart pattern that could bring it down to major three-star support at 1.8199-1.8291***.

Bias: Neutral/Bearish

Resistance – 64.74-65.07**, 65.80**, 66.87***, 68.43**

Pivot – 64.26

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

Gold (April)

Yesterday’s close: Settled at 1340

Fundamentals: Gold is trading higher this morning on a weaker Dollar ahead of today’s Fed policy decision at 1:00 pm CT. Also, this week is Nonfarm Payroll Friday and we expect volatility to pick up through here. Today is ADP payroll data at 7:15 am CT, Employment Cost Index at 7:30, Chicago PMI at 8:45 and Pending Home Sales at 9:00. Yesterday, solid Case Shiller data along with better than expected Consumer Confidence encouraged much needed selling in Gold. Still, as the Dollar has weakened once again into this morning, we believe the market is not pricing in the potential for a hawkish surprise in verbiage from the Fed and because of this, the near-term risk is to the downside in Gold.

Technicals: Our Bias remains Neutral in the near-term. However, we are unequivocally long-term bullish Gold. We cannot become neat-term bullish Gold until first key support at 1329.1-1331.9 is achieved at minimum.

Bias: Neutral

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

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

Natural Gas (March)

Yesterday’s close: Settled at 3.195

Fundamentals: Natural Gas is sharply lower this morning after prices extended higher early in yesterday’s session on continued repositioning due to the February contract expiration and headline weather risk. Natural Gas usually doesn’t trade relative to weather today and tomorrow but recent volatility in forecasts has done just the same to price action; freezing temperatures yesterday have become much more moderate into today. The question right now is how moderate will this weather stay? Expectations for tomorrow’s storage report sit right about -100 bcf, nearly a third of last week’s near record read.

Technicals: Price action traded out above major three-star resistance at 3.181-3.197 in a short squeeze. However, it stayed below R2 and managed to settle back into the three-star area. First key support remains at 3.035-3.051 and price action has dipped below here, taking out the low from earlier this week. The reversal from yesterday’s highs now extends major three star support a little lower to 2.896-2.902 with support at 2.981 coming in ahead. We remain bearish but want to see a close below first key support to keep the ball rolling.

Bias: Bearish/Neutral

Resistance: 3.181-3.197***, 3.27*, 3.32**

Support: 3.035-3.051**, 2.981**, 2.896-2.902***, 2.786-2.81**

10-year (March)

Yesterday’s close: Settled at 120’205

Fundamentals: The Treasury complex remains under pressure ahead of today’s FOMC Meeting. Last night’s State of the Union brought little volatility and higher equity prices have added some pressure to the complex. However, President Trump used the time to push his infrastructure rebuilding plans. This along with tax-reform will need to be paid for somehow; by printing fresh Treasury debt. Still, we believe a lot of this is already priced in. Furthermore, bond traders are the smartest guys in the room and we believe that they area already pricing in a more hawkish statement from the Fed today. Whereas currency markets likely have not. If the Dollar strengthens today, it does not mean that the Treasury complex must weaken. We continue to believe that this is a time in which traders will benefit from positioning long; a contrarian play.

Technicals: The technicals are undeniably weak, and bounces cannot regain the pivot at 121’31-122’015; a close above here is needed to neutralize this immediate-term weakness. Still, we believe the selling to be exacerbated and this opens the door for a recovery over the next three weeks; the 14-day RSI is below 30 for the third session in a row. Data this week will continue to be a driver as well, so traders must remain nimble.

Bias: Bullish/Neutral

Resistance – 122’15-122’175**, 122’26-122’29***, 123’10**

Pivot – 121’31-122’015

Support –121’25**, 121’17-121’18**, 119’20-120****

 

 

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

 

 

Disclaimer:

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

 

Cattle Commentary: Cattle futures finished the session mostly higher, though well off of the highs for fats and feeders. April live cattle finished the session up .275 at 124.90, trading in a range of 1.325. March feeder cattle finished the session up .225 at 146.95, trading in a range of 3.325. Friday afternoon we got some new news across the wires in the form of cash trade and the Cattle on Feed report. The bulk of cash trade was reported at 127 and 200 dressed, this was up 4 and 5 respectively. Majority of market participants we spoke with were expecting to see 126. Fridays Cattle on Feed report showed the following:

 

Cattle on Feed: 108

Range of Estimates: 107.2-108.1

Average Estimate:107.7

 

Placements: 101

Range of Estimates: 93.3-100.3

Average Estimates: 96.9

 

Marketing’s: 99

Range of Estimate: 97.9-100.3

Average Estimate: 98.6

 

This afternoons boxed beef prices were up slightly.

PM Boxed Beef / Choice / Select

Current Cutout Values: / 206.83 / 201.83

Change from prior day: / .06 / .51

Choice/Select spread: / 5.00

 

Cattle Technicals

Live Cattle (April)

April live cattle futures finished gaped higher to start the week, marking the high print in the opening minutes as price action fizzled out for the remainder of the day. The overall price action for the session was neutral but we continue to believe there is opportunity at the top end of the range to consider selling, whether that be reducing long exposure or legging in on shorts. If the market fails to break out above resistance in the coming sessions, it is likely that we see long liquidation take prices back towards first support which comes in from 122.475-122.75. If the bulls do achieve a breakout, the next resistance pocket comes in from 127.20-127.35.

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

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

 

Feeder Cattle (March)

March feeder cattle saw some volatility on the open, as we saw a “surprise” gap higher with prices testing our “last line of defense” from 149.40-150.00. The market was not able to hold water at those levels and that led to some pressure for the remainder of the day. If that market fails to gain traction here in the first half of the week, we could see selling pressure come back into the market and press us towards first significant support which we have marked as 143.25-143.50. As with the fat cattle, we continue to feel that this is an opportunity to consider the sell side regardless if you are bullish or bearish (reduce longs/initiate shorts).

Resistance: 147.75-148.00***, 149.40-150.00***, 153.95*****

Support:145.80-146.45***, 143.25-143.50****, 142.10-142.60**, 139.85-140.125***

 

Lean Hog Commentary & Technicals (April)

April lean hogs finished today’s session down .50 at 73.30, trading in a range of .90. Supply side fundamentals continue to lend hand to keeping a lid on a significant rally. Technical resistance from 76.225-76.40 held last week and will continue to be the significant pocket to keep an eye on. On the support side, the market is making a run towards the 100-day moving average which comes in at 72.80. A break and conviction close below opens the door to accelerated selling pressure which could press prices towards the bottom end of the range which we see coming in from 70.625-71.15. This pocket represents The November lows and the 200-day moving average.

Resistance: 74.00-74.375**, 76.225-76.40**, 77.25****

Support: 72.80**, 70.625-71.15***, 67.75-68.00****

 

Euro (March)

Session close: Settled at 1.24265, down 33.5 ticks

Fundamentals: The Euro began working lower late Friday afternoon and continued on that path through today’s session. This slow and steady drip eludes to traders taking positions off the table at the beginning of a pivotal week that has the State of the Union Tuesday night, Fed decision Wednesday and Nonfarm Payroll Friday. U.S PCE Index data was in line with expectations today. Tomorrow morning brings Eurozone GDP at 4:00 am CT along German CPI. U.S Case Shiller is due at 8:00 am CT and Consumer Confidence at 9:00. Both fundamentally and technically, the Euro has more upside in the long-term.; we believe pullbacks are buying opportunities However, traders do want to manage risk properly through what is expected to be a volatile week. Do not forget to read out Tradable Events this Week.

Technicals: Price action is attempting to relieve itself from overbought conditions. The 14-day RSI reached 75 last week. The CoT showed traders expanded the already record long position in the Euro by 25% in the week ending January 23rd. The Dollar Index is bouncing from the most oversold on the weekly since November 2007. To the downside we have first key support at 1.2349-1.23685 and today’s session low of 1.2374 was kept in check by this level. Though we remain long-term bullish, we would rather be buyers closer to major three-star support at 1.2209-1.22135.

Bias: Neutral/Bullish

Resistance – 1.2514**, 1.2608***

Pivot – 1.2434-1.2436***

Support – 1.2349-1.23685**, 1.2307*, .2209-1.22135***

 

Yen (March)

Session close: Settled at .92035, down 23 ticks

Fundamentals: The Yen retreated slightly today, but given recent volatility and today’s Dollar strength, this was a solid session for the currency. Still, we are concerned that Wednesday’s Fed meeting can bring a hawkish surprise and near-term pressure for the Yen. Furthermore, the Yen is attempting diverge from falling Treasury prices but if the Treasuries are lower because of the Fed, the Yen is likely to take similar heat. In a week that will center around U.S political and monetary policy, there are some key data points out of Japan to watch. Household Income and jobs data is due tonight at 5:30 pm CT. BoJ Core CPI is due out at 11:00 pm CT. Tomorrow night is going to be a volatile one for reasons more than just the State of the Union with Japanese Industrial Production data along with Chinese Manufacturing.

Technicals: The Yen has finally picked itself up out of the gutter but faces a tremendous hurdle this week in maintaining its recent gains. Price action is showing signs of fatigue just below major three-star resistance. This level will be extremely critical and a close out above here on the week should spark the next bull leg higher. While we see first key support at .9164, we would rather be buyers against major three-star at .9089-.91035.

Bias: Neutral/Bullish

Resistance – .9237-.9255***, .93215**, .9480***

Support – .9164**, .9089-.91035***, .9043*, .8998-.9006**, .8946-.8957**

 

Aussie (March)

Session close: Settled at .8101, down 18 ticks

Fundamentals: The Aussie has gained more than 8% since its December bottom and as the year unfolds there is room for further gains. For now, we believe it should be most vulnerable to a strengthening Dollar and domestic data this week. First, last week’s CPI read out of its neighboring New Zealand missed widely and we will be watching tomorrow nights Aussie CPI read that will be accompanied by Chinese Manufacturing data (China is Australia’s top trade partner). Tonight, there is Business Confidence data at 6:30 pm CT.

Technicals: Price action traded to a high of .8135 on Friday, the highest level since May 2015 before paring gains. Pullbacks in the Aussie over the last two months of been extremely shallow and the trade is overdue for a sharp move. The weekly RSI is testing the level in which it hit last September, when it traded at this price, this is the highest since 2011. We believe that if the Aussie can chew through major three-star support at the .8033-.8037, the door will open for it to trade down to .7874-.7881.

Bias: Bearish/Neutral

Resistance – .8100-.8125***, .8151*

Support – .8033-.8037***, .7998**, .7962**, .7874-7881***

 

Canadian (March)

Session close: Settled at .81195, down 2 ticks.

Fundamentals: The Canadian stayed in a very tight range through the session as NAFTA talks wrapped up with a positive vibe. We look to a busy week of U.S political and monetary policy to be the key catalyst in price action but at the same time traders need to keep an eye on Chinese Manufacturing tomorrow night and major Canadian data points Wednesday; monthly GDP data and Raw Materials Price Index. We are very bullish the Canadian in the long-term and hope to see it about 1% lower this week on the U.S Dollar consolidating higher from oversold territory to present a strong buy opportunity, rather than down on negative news out of Canada.

Technicals: Price action is holding strong against major three-star resistance at .81005-.81195. One concern technically, is trend line resistance from July 2014. However, like the Aussie did against a similar trend line, we believe the Canadian can get out above here in due time and this can ultimately spark a move to .8524. We would like to see price action dip to .7931-.7949 in order to present the aforementioned buying opportunity.

Bias: Neutral

Resistance – .81005-.81195***, .8163**, .8290***, .8524****

Support – .80505-.8057**, .7996**, .7931-.7949***, .7903**, .7752-.7787***

 

 

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

Disclaimer:

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

 

E-mini S&P

Yesterday’s close: Settled at 2853.50

Fundamentals: The 10-year Treasury yield notched above 2.7% yesterday, a level in which many have called for to spark volatility in equity markets. Our biggest concern with rising yields is the velocity in which they move; a slow grind may not be as troublesome to equity markets while fast spikes higher are more likely to cause pressures. This move in yields is coming from all around the globe. The German 10-year bund yield traded to the highest since November 2015 at just about .7%. While the Chinese 10-year has been around 4% since November, it spiked firmly though that benchmark over the last week and a half. Treasury prices are the inverse of yields and last night the 10-year Treasury extended losses early in the session, this was enough to push the S&P through a key support level and encourage further selling ahead of the busiest of weeks. With more than 100 S&P companies reporting earnings this week, the State of the Union tonight, a Fed policy decision tomorrow and Nonfarm Payroll Friday, it only makes sense for investors to take something off the table at these levels. Eurozone GDP data was in line with expectations this morning while minor components that accompanied the read missed the mark. German CPI data is due at 7:00 am CT. U.S Case Shiller is due at 8:00 am CT and Consumer Confidence follows at 9:00. Lets also not forget Chinese Manufacturing this evening during the State of the Union.

Technicals: Price action tested into our key support at 2851.75-2852.50 early yesterday with a low of 2854.50 and bounced firmly to 2868.25; between the 50% and .618 but also a level in which the sell-volume had come in at earlier on the open. After finishing the session back to this support level, it broke below here last night, and we believe this opens the door for selling down to 2807-2808.50 and the major three-star level we now have below there at 2798. Last night’s low of 2831 held the crucial level at 2825.50-2828, one in which we had as three-star support last week. However, now that the trend line is taken out, we view this level as less strong. This is now a trading environment and can be played from both sides, the bears have an edge this morning though sellers are better off positioning closer 2847.75-2849.25; a move above here will neutralize this immediate-term weakness while a close above 2854.50-2854.75 will help the bulls regain an upper-hand. Only a close back above 2858-2860.50 will turn this immediate-term bullish once again.

Bias: Neutral

Resistance – 2847.75-2849.25**, 2854.50-2854.75**, 2858-2860**, 2878.50**, 2887***, 2920***

Support – 2825.50-2828**, 2807-2808.50**, 2798***

 

Crude Oil (March)

Yesterday’s close: Settled at 65.56

Fundamentals: Crude Oil saw pressure early in the overnight with a strengthening Dollar and ahead of inventories coming into the picture. The Dollar move is so far short-lived as it has turned south this morning, bringing support. Early estimates on the EIA inventory read are for a build of 100,000 barrels. However, API is after the bell today and last week’s API came in at +4.755 mb while the EIA read was a draw and more in line with expectations. It would not be surprising to see API give a bullish read this week relative to expectations. This could ultimately set up for a sell opportunity upon the EIA release. The Dollar will remain in play all session and through this evening on the State of the Union, a strengthening Dollar puts pressure on commodities while continued weakness brings support. Chinese Manufacturing is due at 7:00 pm CT.

Technicals: Price action settled at first support yesterday, this will be a key level that the bears must keep the tape suppressed below. We have maintained a slight Bearish Bias and a lower high below 66.66 and our major three-star level at 66.87 has opened the door for the sellers. Ultimately, as we said yesterday, we need to see a close back below previous highs and support at 64.72-64.89 in order to neutralize this recent push higher. Furthermore, to turn truly Bearish we need to see a close below the $63 area; the market is extremely overbought, and we believe the crowded long position will begin to bail at this level.

Bias: Neutral/Bearish

Resistance – 66.87***, 68.43**

Pivot – 65.45-65.61

Support – 64.72-64.89**, 64.26**, 63.70*, 62.78-63.00***

 

Gold (April)

Yesterday’s close: Settled at 1345.1

Fundamentals: This consolidation lower in Gold is less about long-term fundamentals and more about near-term positioning due to data, the Fed and the pendulum effect. First with the data, Case Shiller is due at 8:00 am CT while Consumer Confidence is due at 9:00; this is just the beginning for the week as we have ISM and Nonfarm Payroll. Second, the Fed and the pendulum effect are more intertwined. Gold bottomed after a dovish Fed hike in December that had two dissenters. Since, inflation has been stable but not much higher and they are not expected to hike tomorrow. However, as we have discussed at length in many of our articles, there is a great unwind going in the Dollar and Euro trade as well as the Dollar against many of its other pairs; the Fed is not the only central bank tightening. Additionally, it is firmly believed that the White House does not want a strong Dollar. This pendulum has swung too far, at least in the very near term. Ultimately, the likelihood of a hawkish Fed statement is increased and for that reason we are cautious Gold in the near-term. Lower price action should bring a tremendous buy opportunity.

Technicals: Yesterday we said we could not make the case to buy Gold until support at 1329.1-1331.9 is tested. Last night’s low was 1337.5 before the Dollar began weakening once again. With key data points today and the State of the Union tonight which are both expected to swing markets, we remain cautious and await a more attractive area to reposition.

Bias: Neutral

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

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

 

Natural Gas (March)

Yesterday’s close: Settled at 3.167, 13 cents from its session low

Fundamentals: Natural Gas is surely making it difficult on both the bears and the bulls. The bears are having it a little tougher though. After gapping lower Sunday night, price action worked higher through the second half of yesterday to nearly finish in the green. Storage drawdown expectations from last week, reported this Thursday have increased slightly but are not enough to justify such a reversal. The February contract expired and fell off the board yesterday, for now we chalk this up to repositioning and will be watching today’s settlement closely on a technical basis.

Technical: Price action is above major three-star resistance at 3.181-3.197 and this begins to Neutralize our Bias slightly. Today’s settlement will be key, and we must see it fall back below here. There is minor resistance at the 3.27 level but 3.32 will be in play on a close out above major three-star resistance. Price action could not get below first key support yesterday, but a failure to do so should not have sparked such a strong reversal.

Bias: Bearish/Neutral

Resistance: 3.27*, 3.32**

Pivot: 3.181-3.197***

Support: 3.035-3.054**, 2.943***, 2.865**, 2.786**

 

10-year (March)

Yesterday’s close: Settled at 121’26

Fundamentals: Treasuries around the world have been under pressure. The 10-year achieved 2.7% yesterday and essentially again last night on the Asian open as it traded to a new low before reversing. However, as we discussed in the S&P section, many are calling for this level to put pressure on equity markets; debt will cost more to service and older and more cautious investors will begin to find bonds attractive as yields rise with equity valuations at these levels. The week is just beginning, and volatility will be here to stay through Nonfarm Payroll Friday. Case Shiller is due at 8:00 am CT and Consumer Confidence is at 9:00. German CPI just fell short of expectations and this could work to support Treasuries if we don’t get hot reads from the U.S, especially if equity markets remain weak.

Technicals: Support is thin in this area but building at the 121’17-121’18 area. Price action managed to claw back a close above our 121’25 first support level yesterday. We have maintained a Bullish Bias for now but as a reminder this is a contrarian play as we believe prices and sentiment are exacerbated at this level in the near term. Since early last week, we have said that we like positioning long through last week’s central bank meetings and this week’s Fed.

Bias: Bullish/Neutral

Resistance – 122’15-122’175**, 122’26-122’29***, 123’10**

Pivot – 121’31-122’015

Support –121’25**, 121’17-121’18**, 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)

Last week’s close: Settled at 2874.50 and gained more than 1%

Fundamentals: Equity markets finished last week extremely strong but major U.S indices have struggled to hold these gains into this morning. One headwind is the overnight move in treasuries which are under pressure with the 10-year prices trading to the lowest level since May 2011. The inverse, treasury yields for the 10-year, have jumped to 2.7%, the highest since April 2014. Rising yields can and will be a headwind for equity markets as this makes debt more expensive to service. Though a rise in yields is not a dagger for the S&P, a high velocity move like the one overnight can cause immediate pressures. There is a huge week ahead and this ahead of today’s PCE data. We discussed this inflation read due at 7:30 am CT along with other major events in our Tradable Events this Week; posted each Sunday. This will set the tone for Wednesday’s Fed decision and a better than expected print will likely add to selling in the treasury complex and strengthen the Dollar while paving the way for a hawkish tone from the Fed.

Technicals: Price action accelerated higher on Friday and blew through our 2869.75 level before trading to a new all-time high overnight but has begun paring some of those gains. We will continue to watch this level through today’s close and a settlement above here would keep the bulls in the driver’s seat while encourage a drift higher into Wednesday’s Fed meeting. The first crucial support level we are watching comes in at 2851.75-2852.50 and this aligns multiple levels but most key is a trend line from the last trading day of 2017 that price action has ridden for the last month; a close below here would open the door for another 1%. Ultimately, we would like to use a test into here as a buy opportunity.

Bias: Bullish

Resistance – 2878.50**, 2887***, 2920***

Pivot – 2869.75

Support – 2851.75-2852.50**, 2847.75**, 2825.50-2828**, 2805.25-2807***, 2797.75***

 

Crude Oil (March)

Last week’s close: Settled at 66.14

Fundamentals: Crude is lower this morning as the U.S Dollar is strengthening ahead of a busy week. We saw how closely tied this relationship can be midweek last week on volatility due to comments on the Dollar from Treasury Secretary Mnuchin and President Trump. Adding to pressure this morning is Baker Hughes data from Friday that showed an increase in twelve rigs, bringing the total to 759; the largest weekly jump in nearly a year. Iraqi Oil exports set a record in December at 3.535 mbpd and as of now it could be topped this month. This is to a drop in local consumption and not higher production. However, this was accompanied by the Iraqi Oil Minister stating they have the capacity to export 5 mbpd.

Technicals: Price action is attempting to retreat this morning but first key support at 65.45-65.61 has stood strong. While our first major three-star level since the breakout above $60 has been tested and has held, price action must close back below previous highs and support at 64.72-64.89 in order to neutralize this recent jump. Furthermore, the market will remain in an uptrend until a close below 62.78-63.00. The net-long position decreased by nearly 6,000 contracts for the week ending January 23rd due to a small jump in speculation from shorts. Still, this is above previous record highs and signals extremely overbought conditions.

Bias: Neutral/Bearish

Resistance – 66.87***, 68.43**

Support – 65.45-65.61**, 64.72-64.89**, 64.26**, 63.70*, 62.78-63.00***

 

Gold (April)

Last week’s close: Settled at 1357.2

Fundamentals: Traders should now be using the April contract. We brought our Bias in Gold to Neutral last week after price action tested above 1360. We also did this for the Euro and Yen as we believe the Dollar is oversold and the risk of a more hawkish than expected Fed is not priced in. PCE Index data is due at 7:30 am CT today and we discussed on yesterday’s Tradable Events this Week the type of impact it can have on Wednesday’s policy statement from the Fed. Also, due this morning is Personal Spending and Income data. We remain bullish Gold in the long-run but believe there will be a better place to reposition.

Technicals: Gold is down about $10 this morning as overbought conditions attempt to relieve themselves. The CoT report showed that the net-long position expanded in the week ending January 23rd though it is likely some relief already began late last week. For us, it is tough to make the case to buy Gold until first key support at 1329.1-1331.9 is achieved.

Bias: Neutral

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

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

 

Natural Gas (March)

Last week’s close: Settled at 3.175

Fundamentals: Prices stayed elevated ahead of the weekend as headlines had called for an impending Polar Vortex. With a potential cold front being delayed for another week, price action gapped lower on the open last night by more than 10 cents. We said on Friday “The main catalyst for this recent volatility is the roll out of February which is essentially near a cash contract and according to headlines, the fear of a Polar Vortex in February. We have been fairly adamant this week that the rally is overdone due to these headlines. In fact, again today storage draw expectations over the next four weeks have dissipated.”

Technicals: After gapping to a low of 3.042 last night, price action worked to a session high of 3.128 in an attempt to cover some of the gap. Major three-star resistance at 3.182-3.197 held strong last week. The sellers are in control right now and we must see a close below 3.11 in order for it to stay that way. In December, we discussed how Managed Money went net-short Natural Gas and this should pave the way for a rally. That rally has come. According to the Commitment of Traders, Natural Gas is now at a net-long ratio of 2:1. This is a drastic shift in less than a month and a move like this from Friday’s close should encourage further selling as longs jump ship.

Bias: Bearish

Resistance: 3.182-3.197***, 3.32**

Pivot: 3.11

Support: 3.035-3.042**, 2.943***, 2.865**, 2.786**

 

10-year (March)

Last week’s close: Settled at 122’02

Fundamentals: Treasuries are under tremendous pressure this morning after the 10-year reversed Thursday’s gains to finish poorly on Friday. A critical week is underway and it kicks off with PCE Index data due at 7:30 am CT, we discussed the impact of this read in our Tradable Events this Week. Accompanying this is Personal Spending and Income data. The Fed begins their two-day meeting tomorrow and concludes with a policy decision Wednesday at 1:00 pm CT. The move in the 10-year overnight is pricing in the likeliness of a hawkish surprise from the Fed. However, as we discussed last week, we believe that the selling is being incurred ahead of and through the central bank meetings last week and this week and this should present an opportunity to position long for a rally through the middle and late part of February. Today’s move though has made this a difficult task.

Technicals: It is undeniable that this type of move overnight has worked to Neutralize some of our Bullish Bias. Price action stalled against first resistance late Thursday and the sellers have been in the driver’s seat since. We must see a close at or above 121’25 to stop the bleeding. However, only a close back above 121’31-122’015 will neutralize this weakness.

Bias: Bullish/Neutral

Resistance – 122’15-122’175**, 122’26-122’29***, 123’10**

Pivot – 121’31-122’015

Support –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.

The following is our levels for each of the most highly traded commodities. This includes Agriculture, Currencies, Energies, Indices, Livestock, Metals, Treasuries and Softs.

 

E-mini S&P (March)

Resistance: 2887***, 2920***

Pivot: 2869.75

Support: 2847.75-2850**, 2825.50-2828**, 2805.25-2807***

Bias: Bullish

 

NQ (March)

Resistance: 7062**, 7076**, 7120***, 7192***

Support: 6965-6987**, 6845.75-6888.25**, 6545-6560****

Bias: Bullish

 

Russell 2000 (March)

Resistance: 1623.7***, 1646.4**, 1660.3**, 1683***

Support: 1580***, 1562.2-1564.4***

Bias: Bullish/Neutral

 

Crude Oil (March)

Resistance: 66.87***, 68.43**, 70.00***

Support: 64.72-64.89**, 64.26**, 63.70*, 62.78-63.00***

Bias: Neutral/Bearish

 

RBOB Gasoline (March)

Resistance: 1.9554***, 2.00-2.0072**

Pivot: 1.9263-1.9393

Support: 1.8950-1.90***, 1.8779**, 1.8199-1.8291***

Bias: Bearish/Neutral

 

Heating Oil (March)

Resistance: 2.1674***, 2.1928**, 2.2086** 2.23-2.24****

Support: 2.07-2.08***, 2.0342***, 1.945***

Bias: Neutral

 

Natural Gas (March)

Resistance: 3.182-3.197*** 3.32**

Pivot: 3.11

Support: 3.035**, 2.943***, 2.865**, 2.786**

Bias: Bearish

 

Gold (April)

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

Support: 1349.7**, 1329.1-1331.9**, 1321.7***

Bias: Neutral

 

Silver (March)

Resistance: 17.70***, 18.12-18.18***, 18.825**, 21.095***

Support: 17.00-17.05**, 16.90***, 16.65-16.73**

Bias: Neutral

 

Copper (March)

Resistance: 3.293-3.32****, 3.46**, 3.613***

Support: 3.108-3.1325**, 3.03**, 2.97***

Bias: Neutral

 

10-year (March)

Resistance: 122’15-122’175**, 122’26-122’29***, 123’10**

Support: 121’31-122’015**, 121’25**, 119’20-120****

Bias: Bullish/Neutral

 

30-year (March)

Resistance: 149’22**, 150’19**, 151’10***, 153***

Support: 148’07***, 147’03***, 146***

Bias: Bullish/Neutral

 

Euro (March)

Resistance: 1.2514-1.2531**, 1.2608***. 1.2780***

Pivot: 1.2434-1.2435***

Support: 1.2349-1.23685**, 1.2209-1.22135***, 1.20435***

Bias: Neutral/Bullish

 

Yen (March)

Resistance: 9255-.9279***, .9480***

Support: .9164**, .9089-.91035***, .9043*, .8998-.9006**, .8946-.8957**

Bias: Neutral/Bullish

 

British Pound (March)

Resistance: 1.4370**, 1.4592***

Support: 1.3972-1.40***, 1.3719***

Bias: Neutral

 

Aussie (March)

Resistance: .8100-.8125***, .8151*

Support: .8033-.8037***, .7998**, .7962**, .7874-7881***

Bias: Neutral/Bearish

 

 

Canadian (March)

Resistance: .81005-.81195***, .8163**, .8290***, .8524****

Support: .80505-.8057**, .7996**, .7931-.7949***, .7903**, .7752-.7787***

Bias: Neutral

 

Corn: (March)

Resistance: 358-360 ½ **, 366 ½-369****

Support: 345-346 ½***, 334-335 ¼****

Bias: Neutral/Bearish

 

Soybeans (March)

Resistance: 999-1006***, 1020 ¼-1027****

Support: 979 ¼**, 971 ¾**, 961 ¼-963 ¼****

Bias: Neutral/Bullish

 

Wheat (March)

Resistance: 443-448 ¼****, 456***, 472 ¾***

Support: 428 ½***, 410 ½-413 ¼****

Bias: Neutral

 

Live Cattle (April)

Resistance: 125.175-125.45***, 127.20-127.35***, 130.10****

Support:122.025-122.55***, 120.20-120.625****, 117.90-118.55****

Bias: Neutral/Bearish

 

Feeder Cattle (March)

Resistance: 147.75-147.875****, 149.40-150.00***, 158.925****

Support: 143.15-143.80**, 142.10-142.60**, 139.85-140.125***, 138.30-138.75****

Bias: Neutral/Bearish

 

 

Lean Hogs (April)

Resistance: 76.225-76.40**, 77.25****, 78.50***

Support: 73.275-73.60****, 72.45-72.75**, 70.625-71.10****

Bias: Neutral/Bearish

 

Cotton (March)

Resistance: 84.65-85.10****, 87.18-87.50***, 93.85-94.90****

Support: 79.45-80.35**, 77.30-77.74***, 74.93-75.60****

Bias: Bullish

 

Sugar (March)

Resistance: 15.10-15.80***, 16.70-17.15****, 18.25**

Support: 12.45-12.94***, 10.12-10.51****

Bias: Neutral/Bearish

 

Cocoa (March)

Resistance: 2,000-2,032**, 2,226-2,263***, 2,367**

Support: 1,908-1,932**, 1,804-1,836***, 1,732**, 1299****

Bias: Neutral

 

Coffee (March)

Resistance: 128.50-131.35**, 134-134.55****, 143.75***

Support: 118.30-119.60**, 111.05-113.00***, 100.95****

Bias: Bearish

 

Orange Juice (March)

Resistance: 152.85-153.00**, 158.58**, 165.70****

Support: 144.95-145.35**, 140.05-141.30***, 132.05-132.20****

Bias: Neutral/Bearish

 

Lumber (March)

Resistance: 501.40-505.10***, 547.00-551.30****

Support: 465.20-469.80***, 440.35-44540****, 421.65**

Bias: Bullish

 

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 2839.50

Fundamentals: The Dollar is getting hammered this morning on “trade war” talk. Take a step back from the attention-grabbing headlines; this is exactly what the White House wants. A weaker Dollar on the heels of historical tax-reform has empowered American multinational corporations. They are now bringing back U.S Dollars and essentially getting paid to do it. The idea is truly genius for stock market bulls. Furthermore, the tariffs on solar panels and washing machines are nothing more than a signal of power; a token move, if you will. Indices around the globe are muted as currencies paired against the Dollar are all higher. We expect to hear more on U.S protectionism policies as the World Economic Forum in Davos begins. Manufacturing data in Europe missed the mark while Markit Composite PMI was the highest since June 2006. U.S Manufacturing, Markit Composite and Services PMIs are due out at 8:45 am CT. Existing Home Sales is at 9:00. Remember, tomorrow morning at 6:45 am CT the ECB announces a policy decision. Earnings from United Technologies, Comcast, Ford, GE and others are all due this morning.

Technicals: Another day, another new all-time high. The S&P traded to 2846.75 overnight and for the sake of argument, has achieved our next major three-star target. Yes, the S&P, NQ and Dow have RSIs above 80, but the market is as bullish as it is overbought. We must now watch for support at the 2835.25-2838.25 to hold on a closing basis. Doing so will allow it the trade to build strength for its next push. We continue to watch the Russell closely, it has been a key bullish catalyst since January 11th and our upside target is 1623; traders should be cautious for pullbacks once this level is achieved.

Bias: Bullish

Resistance – 2847.75***, 2869.75**, 2887***

Support – 2835.25-2838.25**, 2828**, 2805.25-2807**, 2794.25-2797**, 2769-2771.75***

 

Crude Oil (March)

Yesterday’s close: Settled at 64.47

Fundamentals: After settlement, Crude pushed to a new swing high in the March contract but stayed contained below February’s front month high a week ago. This high did not hold long as API released their inventory report to show what would be, if confirmed by EIA, the first build in Crude inventories in ten weeks; +4.755 mb Crude, +4.117 mb Gasoline and -1.28 mb Distillates. For two major reasons the bears cannot get excited just yet; this now shifts EIA expectations and the Dollar is getting clobbered. First, as we discuss here regularly, this read on API has now set a high bar for EIA today. With EIA expectations coming in at -1 mb Crude, +2.486 mb Gasoline and -1.471 mb Distillates these are much tempered than what we saw from API. To attract more sellers due to this storage data we must now see something in the same ballpark as API. Furthermore, we would like to see at a bare minimum increase of 30,000-40,000 bpd in production. Secondly, comments from the White House have weakened the Dollar, the Dollar Index is down more than .5% this morning. This will work to directly boost commodities priced in Dollars.

Technicals: Key resistance at 64.83-64.89 held through yesterday’s push but it must hold again today to give the bears any hope. Ultimately, we must see a move below 64.08 support to reinvigorate any bearishness and a close below 63.83 to encourage further selling. As we have stated for two weeks, our major three-star support at 62.78-63.00 is the line in the sand, Crude must close below here in order to truly signal a move to $60. If this occurred, we expect a wave lower that the bears could ride.

Bias: Neutral/Bearish

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

Support – 64.08**, 63.83**, 63.58** 62.78-63.00***, 62.43**, 61.87**, 59.96-60.45***

 

Gold (February)

Session close: Settled at 1336.7

Fundamentals: Treasury Secretary Mnuchin commented early this morning that Dollar weakness is good for the economy. This is the same rhetoric we have been seeing from the White House since the start of the administration but now this reemphasis comes at a vulnerable time for the greenback; it is down more than 0.5% this morning. Gold has again capitalized magnificently off the weaker Dollar and is trading at the highest level since its September top. The week is just getting started and today we have Manufacturing, Markit Composite and Services PMIs at 8:45 am CT. Existing Home Sales is due at 9:00. Tomorrow the ECB makes a policy decision at 6:45 am CT and will be followed by a Draghi press conference at 7:30. We could hear more of the same from the White House as Davos is just getting started, President Trump is due to speak on Friday.

Technicals: In our FX Rundown last night we discussed the breakdown in the Dollar Index, closing at the lowest level since December 2014. Here we gave a strong Bullish Bias on the Euro and the Yen. Both currencies are firmly in the green this morning and this move has had a huge hand in what Gold is doing today. We have not wavered from our Bullish Bias in Gold, though we have emphasized caution against strong resistance from 1350 all the way up to 1365. Price action is testing trend line resistance at 1350 this morning. Silver lost significant ground early yesterday, but has powered back strongly this morning. It is trading around its 200-day moving average and will be critical to watch if it can breakout above 17.50. Doing so will be very bullish for the metal complex as we have always said Silver and Gold work best when working together; maybe Silver can now do some of the heavy lifting to get Gold out above strong overhead resistance.

Bias: Bullish/Neutral

Resistance – 1350***, 1358-1365***

Pivot – 1345

Support – 1340.9*, 1334.9-1335.8**, 1326.6-1328**, 1321.6**, 1307.1-1308.9**, 1302-1303.4***

 

Natural Gas (February & March)

Yesterday’s close: Settled at 3.44 but rallied nearly .20 after settlement

Fundamentals: The fundamental picture has not truly changed over the last 48 hours. Headlines have signaled strong demand in China and raise caution over a polar vortex in February but ultimately, none of this is new. Storage drawdown expectations over the next four to five weeks have not mounted in the last 24 hours, in fact, those two and three weeks out have actually dissipated. Yesterday’s move in the February contract will be one that is not forgotten for a long time to come and for many reasons. Mainly, if this proves to be only a front-month near expiration cash squeeze. With no substantial evidence to justify this move, we see a potential short opportunity in the March contract, where the gains were much more modest yesterday, see technicals below. Our belief is that after February settled at 3.44, a day in which price action was already up more than 6%, there was a large fund or short position that had to get out. Furthermore, open interest in the February contract has been cut in about half from yesterday.

Technicals: Yesterday’s strength was undeniable, but can this continue? We have advised all week, from lower levels, if you are trying to sell Natural Gas you must do so in the March contract. We do not believe this level is sustainable in the February through Friday’s option expiration and should begin to come back in, we would imagine the March contract is a more prudent way to trade (plus all the volume is now in March). The March contract has tested and has not broken out above major three-star resistance at the 3.12, a trend line from the September highs. We want to see price action settle back below 3.058-3.063 in order to encourage further selling. This market will remain highly volatile, so traders must manage risk properly.

Bias: Neutral/Bearish

Resistance – 3.12***, 3.164-3.188*** 3.32**

Support – 3.058-3.063**, 2.90-2.93***

 

10-year (March)

Yesterday’s close: Settled at 122’135

Fundamentals: Treasuries await a big ten day stretch ahead with the ECB tomorrow along with news coming out of Davos and President Trump speak Friday. Next week is the Fed Meeting and a gauntlet of U.S data. First, today we have Manufacturing, Markit Composite and Services PMIs at 8:45 am CT. Existing Home Sales is due at 9:00. Price action is retreating a little this morning after solid Mortgage data. We maintain that it is an attractive to position long over the next week with the anticipation for a rally once this ten day stretch passes.

Technicals: Price action struggled to hold out above resistance at the 122’09-122’125 level and is retreating slightly this morning. Solid support should come in at and above the 122 area and we are looking for this to hold. We must see a close out above first resistance to neutralize recent weakness and attract buying from both fresh longs and shorts covering.

Bias: Bullish

Resistance – 122’09-122’125**, 122’245-122’29***, 123’10-123’135**, 123’215**, 123’27-123’28**

Support – 122’015**, 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.

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.

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