Tag: CME Group

E-mini S&P (March)

Yesterday’s close: Settled at 2835.25

Fundamentals: The S&P gained nearly 1% to kickoff the week. We reiterated on Friday and early yesterday while the S&P was still in the red that shorts better watch out. With strong earnings and undeniable momentum, the government shutdown ultimately brought a fear of missing out. What if the shutdown was fixed over the weekend while the market was close? It wasn’t, so the market worked higher through the session on Monday in anticipation of the stopgap deal that was reached late yesterday. The deal will keep the government running through February 8th before it presents another ‘political hurdle’. Equity markets across Asia are all up 1% while the German DAX is up about .5%. Overnight, the Bank of Japan left policy unchanged but was upbeat on inflation signaling they expect to see their 2% target sometime next year. The ECB is up next and this morning we saw strong ZEW Economic Sentiment data out of the region. After trading to a new all-time high overnight of 2842, the S&P is seeing pressure following a 7.9 magnitude earthquake in the Gulf of Alaska that has sparked tsunami warnings down the west coast of Canada and U.S.

Technicals: Previous resistance is support, 2828 is the first level we are eyeing this morning upon the pullback due to the earthquake/tsunami. We are now bringing major three-star support up to 2805.25-2807, this is a level in which we would like to buy into on the week if it presents itself. Support comes in front of it at 2814.25-2815. Our upside target of 2847.75 was not achieved with the overnight high of 2842. As we stated above, momentum is undeniable, only a close below 2805.25-2807 right now would put us on the sidelines.

Bias: Bullish

Resistance – 2842*, 2847.75***, 2869.75**

Support – 2828**, 2814.25-2815**, 2805.25-2807**, 2794.25-2797**, 2786.50**, 2769-2771.75***

 

Crude Oil (March)

Yesterday’s close: Settled at 63.57

Fundamentals: Prices elevated into the close yesterday as traders expect data this week to show a drawdown in U.S inventories for the tenth week in a row. API is due out after the bell today. The U.S Dollar has not done bears any favors; it remains at the lowest level since 2014, boosting commodity prices. However, this will be important to watch this week as the European Central Bank has a policy meeting Thursday and traders get ready for the Federal Reserve next week.

Technicals: Price action has extended above firs resistance which we adjusted to 63.80 though it settled below here yesterday; this will be crucial to watch today as traders position for inventory data. First resistance comes in today at 64.05-64.23; a close above here will encourage further buying. The big takeaway for us yesterday was another test to major three-star support and another hold. Until we see a close below this level, the bulls remain in the driver’s seat.

Bias: Bearish/Neutral

Resistance – 64.05-64.28**, 64.83-64.89**, 66.87***, 68.43**

Pivot – 63.80

Support – 62.78-63.00***, 62.43**, 61.87**, 59.96-60.45***

 

Gold (February)

Yesterday’s close: Settled at 1331.9

Fundamentals: Gold has done absolutely nothing wrong on a fundamental or technical basis for more than a month. A trader cannot fight this. That is why our Bias has remained unequivocally Bullish. However, we do believe that the Dollar is attempting to find some support at a level that can be seen in the Dollar Index at 90. The government will remain open until at least February 8th and dovishness on the Fed’s message has already mounted. As a bull, it is prudent to make sure you capitalize in one way or another with the ECB due out Thursday and the Fed next week sandwiched between key data points. The Bank of Japan left their policy unchanged last night, however, the Yen has firmed up since its low at midnight as the bank’s Outlook Report envisions inflation reaching their 2% target next year. This has been supportive for Gold. Richmond Manufacturing data is due at 9:00 am CT today and Chicago Fed President Evans, the second Fed dissenter speaks at 5:30 pm CT.

Technicals: Gold remains technically strong and pullbacks are extremely shallow. However, this does not change the fact that there is strong overhead resistance from 1350 all the way up to 1365. Support at 1326.6-1328 remains sticky and this is great for buyers. Traders should exude caution through the next week and a half. A close above 1365 will spark the next bull leg.

Bias: Bullish/Neutral

Resistance – 1340.9*, 1345**, 1350***, 1358-1365***

Pivot – 1334.9-1335.8

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

 

Natural Gas (February)

Yesterday’s close: Settled at 3.224

Fundamentals: We will continue to focus more on the February contract as we eye options expiration this week. February pushed through recent highs overnight, trading to the highest level since September 28th. We referenced here yesterday that if you are selling this market, you want to be doing so in the March. The March contract remains much more contained due to cash expectations and demand for the product now, not upon delivery at the end of February. March has not broken out above recent swing highs and in fact remains more than a quarter of a dollar from its September 28th highs. Drawdown expectations for this week’s read are near what would have been a record level before earlier this month. However, drawdowns going forward are much more subdued.

Technicals: Price action has gotten out above major three-star resistance in February which aligns with the 200-day moving average and recent highs. The next level above here is 3.43 and we believe this should keep prices contained. Over roughly the last month, strong starts to the week have dissipated through midweek, we believe this should be the case into tomorrow. However, we are concerned with the firm move out above recent highs and remain Neutral. As we stated above, traders looking to sell should do so in the March contract. In fact, we could make a case for introducing a slight Bearish Bias for the March.

Bias: Neutral

Resistance –3.43-3.446***, 3.568**

Pivot – 3.258-3.288***

Support – 3.185-3.199**, 3.115-3.134**, 3.039** 2.971-2.989***

 

10-year (March)

Yesterday’s close: Settled at 122’03

Fundamentals: We believe that there is a buy the rumor, sell the fact event into and through the three central bank meetings this week and next. Expectations for a more hawkish BoJ and ECB were put in place earlier this month. Though we expect to see a step in the more hawkish direction this year from these central banks, we do not believe they are ready quite yet. Because of this along with the technicals, we believe there to be a buying opportunity in the 10-year. Prices have firmed through the overnight and after the BoJ left policy unchanged. Although their Outlook Report expects to see 2% inflation next year, leaving policy unchanged for now has begun to bring relief in treasury prices. We expect to see more of the same from the ECB Thursday. Chicago Fed President Evans, the second dissenter, speaks today at 5:30 pm CT.

Technicals: As stated above, we like positioning long the 10-year. According to our data, there was a record net-short position in the 10-year two weeks ago. The RSI is signaling oversold and after two of the biggest names in the bond market put out bearish calls, the selling has been exacerbated. Resistance does come in at 122’09-122’125, so you may not want to chase this morning’s bounce and instead buy a slight pull back.

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.

 

CORN (March)

Yesterdays Close: March corn futures finished yesterday’s session up 3 ¾ cents, trading in a range of 5 on the day. Funds were estimated buyers of 17,000 contracts.

Fundamentals: Yesterdays move higher is mostly attributed to short covering funds as there was not much new news across the wires. Weather in South America continues to be watched closely as some weather models conflict each other. Outside of South American weather and crop development, we will continue to keep an eye on the trend of exports. The market needs to start seeing a trend of better than expected numbers to encourage additional short covering and invite new buying into the market. Due to the Martin Luther King holiday on Monday, the weekly exports data has been pushed back to tomorrow at 7:30am cst.

Technicals: The market is officially trading above the 50-day moving average for the first time in over a month. Though that is encouraging for bulls, we will be watching this on a closing basis as we have not seen a conviction close above this indicator since July. If we see a close above, the next resistance pocket comes in at 358 ¼-359 ¼. This pocket represents the 100-day moving average along with a key Fibonacci retracement level. The bears are still in control as we have made lower lows and lower highs over the past several months. If we fail to “breakout” we will likely see prices retreat towards the bottom end of the range which we have defined as 345-346 ½.

Bias: Bearish

Resistance: 358 ¼ -359 ¼***, 367-369 ¼****

Pivot: 352 ¼

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

 

SOYBEANS (March)

Yesterdays Close: March soybeans finished up 2 ½ cents yesterday, trading in a range of 8 cents on the session. Funds were estimated buyers of 2,000 contracts.

Fundamentals: With the USDA report now behind us, market participants will turn their attention back to South American weather and crop development along with weekly export data. There is not much new news to report on the weather front this morning. Due to the shortened trading week, export sales data has been pushed back to tomorrow morning at 7:30am cst. Also on trader’s radar is the soybean complex including soybean meal and soybean oil as both have shown strength recently.

Tehcnicals: March soybean futures filled the gap yesterday that was down at 962 ¾ which was followed up by buying. Bulls need to see a close above 971 ¾ soon to encourage additional short covering and new buying in the market. A close above resistance opens the door to an extension towards 984 ½-986 ½. This pocket contains several technical indicators including the 50 and 100 day moving average, along with the 50% retracement from the June lows to the July highs.

A failure to breakout will lead to pressure on prices, likely down to the bottom end of the range near 950 as technical traders exit longs because they are not getting what they want from the market. We continue to be friendly towards the market but need to see the market work higher into the weekend.

Bias: Bullish

Resistance: 971 ¾ ***, 979**, 984 ½-986 ½***, 999-1004**

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

 

WHEAT (March)

Yesterdays Close: March wheat futures finished yesterday’s session up 5 ¼ cents, trading in a range of 7 ¾ on the day. Funds were estimated buyers of 4,500 contracts.

Fundamentals: Wheat futures worked higher yesterday on the back of what was likely short covering on concerns of cold and dry weather in some key growing areas. It will likely still be a few weeks before we see the true effects of the recent weather on the crop. Export sales that are normally released this morning are pushed back to tomorrow due to the shortened trading week; they will be released at the normal time 7:30am cst.

Technicals: The bulls have been putting up a decent fight over the last month, but the bears remain in control until we see a conviction close above technical resistance. The first line in the sand comes in at 425 ¼. A close above opens the door to a potential run at the recent highs of 437. A failure to see closes above these resistance levels will likely lead to new contract lows below 410 ½.

Bias: Bearish

Resistance: 425 ¼**, 437***, 443-448 ¼ ***

Support: 410 ½**, 399-402 ¾****

 

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

Disclaimer:

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

E-mini S&P (March)

Yesterday’s close: Settled at 2803.75

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

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

Bias: Bullish

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

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

 

Crude Oil (March)

Yesterday’s close: Settled at 63.92

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

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

Bias: Neutral/Bearish

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

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

 

Gold (February)

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

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

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

Bias: Bullish/Neutral

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

Pivot – 1327.3-1330.5**,

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

 

Natural Gas (February)

Yesterday’s close: Settled at 3.232

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

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

Bias: Neutral

Resistance – 3.258-3.288***, 3.43***

Pivot – 3.199

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

 

10-year (March)

Yesterday’s close: Settled at 122’21

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

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

Bias: Neutral

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

Pivot – 122’245-122’29****

Support – 122’125**, 121’25**, 119’20-120****

 

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

Disclaimer:

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

CORN (March)

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

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

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

Bias: Neutral

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

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

 

SOYBEANS (March)

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

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

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

Bias: Neutral

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

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

 

WHEAT (March)

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

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

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

Bias: Bearish

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

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

 

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

 

Disclaimer:

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

E-mini S&P (March)

Yesterday’s close: Settled at 2752.25

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

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

Bias: Neutral

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

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

 

Crude (March)

Yesterday’s close: Settled at 62.96

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

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

Bias: Neutral

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

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

 

Gold (February)

Yesterday’s close: Settled yesterday at 1313.7

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

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

Bias: Bullish

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

Pivot – 1322.3-1323

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

Natural Gas (February)

Yesterday’s close: Settled at 2.923

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

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

Bias: Neutral

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

Pivot – 2.9415-2.963

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

10-year (March)

Yesterday’s close: Settled at 123’015

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

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

Bias: Neutral

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

Support – 122’25-122’29****, 121’25**, 119’20-120****

 

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

Disclaimer:

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

CORN (March)

Yesterdays Close: March corn futures closed 3 ¾ cents lower to start the week, trading in a range of 4 ¾ cents on the day.

Fundamentals: Export inspections yesterday came in at 849,226 metric tons, this was just above the top end of expectations from 500,000-800,000 metric tons and up from 683,000 metric tons in the previous week. There was a sale of 102,100 metric tons sold to Mexico. There is nothing new to report in terms of weather or crop development in South America. Fridays USDA report will be the big-ticket item this week as we get final looks at US production. We will continue to compile estimates and hope to have those for you before Friday.

Technicals: If you had sold the 50-day moving average last week near 354, yesterday’s action gave you an opportunity to reduce or clear the slate. Support has held on the first test which comes we have been defining as 345-346 ½. We continue to feel there is an opportunity to be a trader a nickel on either side of 350 as that has been the trend for front month contracts; 350 was a magnet for December futures too. At the bottom end of the range we are changing our bias from neutral/bearish to neutral. If you want to be long this market, this isn’t a terrible spot; you just need to have your risked managed because a close below contract lows opens the door to another 10 cents lower.

Bias: Neutral

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

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

 

SOYBEANS (March)

Yesterdays Close: March soybean futures closed 2 ¾ cents lower yesterday, trading in a range of 11 cents on the session.

Fundamentals: Yesterdays export inspections came in at 1,183,089 metric tons, this was within the expected range from 1,000,000-1,300,000 metric tons and was identical to the previous weeks 1,139,436 metric tons. There were sales of 132,000 metric tons to unknown and another 120,000 metric tons to Egypt. South American weather and crop development will continue to be monitored, there is nothing new to report this morning. Fridays USDA report will be what traders and other market participants are really looking forward to, this will give us a final look at US production and hopefully more clarity on market direction.

Technicals: The market has not made it easy for short term futures traders as we have been in a whipsaw trade. Trading in wider ranges intraday, only to finish closer to unchanged over the previous three sessions. We feel the market is in a bit of a “no man’s land” here but like the prospects of higher prices. We aren’t’ the most enthused about futures here but think cheap call options are a viable way to play the market here. If the market were to breakdown closer to 950 ahead of the report, that is the spot to consider futures. On the resistance side, we don’t really have an interest in looking short until we see how resistance holds up from 986-989. This pocket represents the 50% retracement from the June lows to the July highs, as well as the 50 and 100 day moving average.

Bias: Neutral

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

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

 

WHEAT (March)

Yesterdays Close: March wheat futures finished the first day of the week down 4 cents, trading in a range of 6 ½ cents on the session.

Fundamentals: Export inspections yesterday morning came in at 234,418 metric tons, this was towards the low end of the expected range from 200,000-400,000 metric tons and was also below the previous weeks 274,000 metric tons. Cold and dry weather helped support the market last week, but that premium is slowly working its way out of the market. This is so far fitting in with the 15-year seasonal trade we mentioned at the start of the year. If you had sold wheat on January 3rd and bought back on January 16th, you would have been profitable for 12 of the last 13 years with the average gain being roughly 17 cents.

Technicals: The market failed to get out above the 50-day moving average last week with conviction which kept the bear camp in control. The evaporation of weather premium has prices coming back near first technical support. 416 ½-420 ¾ is the first pocket we are looking at. If you had sold the seasonal/technical resistance, this is the area you want to look at reducing or flattening. A break and close below could open the door to extended pressure towards 410 ½, a retest of the December 12th contract lows.

Bias: Bearish

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

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

 

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

Disclaimer:

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

E-mini S&P (March)

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

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

Bias: Bullish/Neutral

Resistance – 2747.75**, 2759.25***

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

 

Crude Oil (March)

Yesterday’s close: Settled at 61.73

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

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

Bias: Neutral/Bearish

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

Pivot – 61.73-61.79

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

 

Gold (February)

Yesterday’s close: Settled at 1320.4

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

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

Bias: Bullish

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

Pivot – 1317-1317.2

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

 

Natural Gas (February)

Yesterday’s close: Settled at 2.835

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

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

Bias: Neutral/Bearish

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

Pivot – 2.9215

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

 

10-year (March)

Yesterday’s close: Settled at 123’155

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

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

Bias: Neutral/Bullish

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

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

 

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

Disclaimer:

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

  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.

CORN (March)

Yesterdays Close: March corn futures closed down 2 cents, trading in a range of 3 ¼ cents on the day. Funds were estimated sellers of 5,000 contracts on the session.

Fundamentals: Export sales this morning came in at a dismal 101,200 metric tons, this compares with the expected range form 600,000-900,000 metric tons and last week’s 1,245,500 metric tons. Yesterday’s weekly EIA inventory data showed that ethanol production was down from 1.090 million barrels a day to 1.032 million barrels per day. Ethanol has been a silver lining for the corn market, the overall trend has been stronger so this week’s read is more of an outlier, if weakness becomes a new trend then we will have some issues. Market participants are continuing to watch weather and developments in South America, there is nothing new to report on that front this morning. Next week’s USDA report is arguably the most important fundamental catalyst on the horizon as we will get a good deal of updates. We will start compiling estimates and have them in next week’s reports.

Technicals: We saw a lot of folks get excited about corn earlier in the week while we were waving the caution flag suggesting you trade the market you have not the one you want. The market failed at the 50-day moving average which will continue to be first resistance, we have not seen a conviction close above this technical since July; this comes in at 354 ½ today. We continue to believe a nickel on either side of 350 represents opportunity, until we get a fundamental catalyst to give us a breakout or a breakdown. Volatility has been extremely light which gives a tremendous opportunity in the options market.

Bias: Neutral/Bearish

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

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

 

SOYBEANS (March)

Yesterdays Close: Soybean futures closed 1 ¾ cents lower yesterday, trading in a range of 9 ¾ cents on the day. Funds were estimated sellers of 3,000 contracts on the session.

Fundamentals: Export sales this morning came in at 554,000 metric tons, this compares with the expected range from 600,000-900,000 metric tons; last week’s export sales came in at 974,696 metric tons. Soymeal and soy oil are trading higher this morning which are offering support to futures, we will want to see volume confirm price on the floor open. Weather in South America will continue to be important going forward as they round out planting and get into crop development. There are no new updates this morning on that front. Next week’s USDA report will be a major catalyst for setting the tone to start the year, that is on the 12th and we will start providing estimates towards the middle of next week.

Technicals: Soybeans have been more or less consolidating between 960-970 after a bloodbath in the back half of December. The bulls still have a lot of work to do on the chart to get in good graces. A close above 971 ¾ opens the door to 985 ½-986 ½. This pocket represents the middle of the 100-day moving average and the 50% retracement from the June lows to the July highs. This will be a significant pocket before and after the USDA report. The chart remains bearish, but for those who want to be long into the report we have been recommending shopping for cheap call options over the week as it gives great exposure with limited risk.

Bias: Neutral

Resistance: 985 ¼-986 ½***, 999-1004**

Pivot: 971 ¾

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

 

WHEAT (March)

Yesterdays Close: Wheat futures closed 1 ½ cents lower yesterday, trading in a range of 5 on the day. Funds were estimated to have been sellers of 2,000 contracts for the session.

Fundamentals: Export sales this morning came in at 131,000 metric tons, this compares with the expected range from 225,000-500,000 metric tons and last weeks 487,352 metric tons. Colder and drier weather has been offering some support, but the damage may not be known until winter wheat comes out of dormancy. Keep in mind that we are also in a seasonally weak time of year. If you had sold March Chicago wheat on January 3rd and bought back on the 16th, you would have been profitable for 12 of the last 15 years with the average gain being nearly 18 cents. Some of that seasonality is likely due to weather premium coming in ahead of time and then going out.

Technicals: Wheat futures closed above the 50-day moving average for the first time in a long time earlier in the week, but it is not what we consider a “conviction close” as it more or less lingers right alongside it. If the market can achieve a conviction close above, we could see short covering come into the market to 447 ¼. We still like the bear side of the market but have been more than nimble with our first recommendation in weeks coming in this week to sell from 433-437. We have since reduced and would be looking to step back in on a confirmation of a failure here.

Bias: Bearish

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

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

 

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

Disclaimer:

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

Cattle Commentary: Cattle futures were both sides of unchanged today, starting the morning session with an attempted breakout which led to an ultimate failure by the end of the day. February live cattle futures finished down .85 at 122.10, trading in a range of 1.525 on the session. As mentioned yesterday, funds are starting to roll some and volume is picking up in April, which finished down .725 at 123.65. March feeders finished the day down 1.725 at 145.10, trading in a range of 3.525. spreads are wide with bids at 121 and offers at 126. There was a small reginal that payed 125 in the north today, that is two over the bulk of last week’s trade. As mentioned in yesterday’s report, futures prices are opportunistic for hedgers and speculators. Boxed beef was up again today.

PM Boxed BeefChoiceSelect

Current Cutout Values: – 208.67 – 200.86

Change from prior day: – .05 – 1.70

Choice/Select spread: – 7.81

Cattle Technicals

Live Cattle (February)

February live cattle attempted to break out of our major resistance pocket from 123.35-123.80 for the third session in a row. If you’ve been reading our reports you know that this represents a key Fibonacci retracement from the August lows to November highs, the 50-day moving average, and more importantly a breakout point from October 24th and a breakdown point from December 1st. The inability to breakout led to long liquidation from funds which opens the door to our target of 120.20-120.70. This represents the middle of the range from the August lows to the November highs, as well as the 100-day moving average. If this holds it will set the bulls up in a good spot, marking higher lows with potential higher highs to follow.

Resistance: 123.35-123.80****, 126.65**, 131.95**

Support: 120.20-120.70**, 119.85***, 118.05-118.15**

 

Feeder Cattle (March)

March feeder cattle looked destined to test resistance from 149.10-149.40 but ran out of gas in the afternoon, posting a high of 148.55. The inability to sustain momentum gave funds an excellent opportunity to liquidate some long positions after climbing 9.95 in the last 7 sessions. We think this liquidation could continue to fill the gap from 143.05-143.55. that pocket needs to hold on a closing basis to encourage a firm trade going forward. A failure could lead to a retest of the 200-day moving average which now comes in just shy of 140.

Resistance: 146.45-146.95**, 149.10-149.40***, 153.175-154.05***

Support: 143.05-143.55***, 139.85**, 138.30-138.75****

 

Lean Hog Commentary & Technicals

Lean hog futures traded both sides of unchanged today, with February futures finishing up .45 at 71.50, trading in a range of .975. Prices remain at the top end of the range with first resistance coming in from 72.25-72.45, above that is contract highs at 73.30. We continue to believe that there is limited near term value at these prices and a failure to breakout will lead to long liquidation. A breakdown and close below support from 70.20-70.30 opens the door to accelerated selling, pressing prices back to the bottom end of the range which comes in from 66.70-67.05. This pocket represents the middle of the range from the August lows to the November highs, as well as the 200-day moving average. A hair above that is the 100-day moving average which comes in at 67.40

Resistance: 72.25-72.45***, 73.30****, 74.50-75**

Support: 70.20-70.30**, 68.30-68.475***, 66.70-67.05****

 

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

Disclaimer:

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