Tag: Euro Dollar

E-mini S&P (March)

Yesterday’s close: Settled at 2752.25

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

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

Bias: Neutral

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

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

 

Crude (March)

Yesterday’s close: Settled at 62.96

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

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

Bias: Neutral

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

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

 

Gold (February)

Yesterday’s close: Settled yesterday at 1313.7

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

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

Bias: Bullish

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

Pivot – 1322.3-1323

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

Natural Gas (February)

Yesterday’s close: Settled at 2.923

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

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

Bias: Neutral

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

Pivot – 2.9415-2.963

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

10-year (March)

Yesterday’s close: Settled at 123’015

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

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

Bias: Neutral

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

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

 

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

Disclaimer:

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

E-mini S&P (March)

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

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

Bias: Bullish/Neutral

Resistance – 2747.75**, 2759.25***

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

 

Crude Oil (March)

Yesterday’s close: Settled at 61.73

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

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

Bias: Neutral/Bearish

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

Pivot – 61.73-61.79

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

 

Gold (February)

Yesterday’s close: Settled at 1320.4

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

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

Bias: Bullish

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

Pivot – 1317-1317.2

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

 

Natural Gas (February)

Yesterday’s close: Settled at 2.835

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

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

Bias: Neutral/Bearish

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

Pivot – 2.9215

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

 

10-year (March)

Yesterday’s close: Settled at 123’155

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

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

Bias: Neutral/Bullish

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

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

 

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

Disclaimer:

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

BrokersEDGE Futures News and Research 1-2-18

E-mini S&P (March)

Last year’s close: Settled at 2676, the lowest level in two weeks

Fundamentals: We finished 2017 on a high note, the S&P not so much. Friday’s close marked the ninth year in a row that the S&P failed to finish the last week of the year in the green. It has averaged a loss of 1% in that time. Price action has stabilized into this morning and we are hesitant to form an immediate bias at this point. Equity markets in Europe have decided to play catch up to the U.S action late in the last session of the year, rather than following China higher. The Shanghai Composite is up 1.25% while the Hang Seng is up 2%. Manufacturing PMI data out of China over the weekend was in line with expectations while last night’s Caixin read came in much stronger. Manufacturing data out of Europe confirmed strong flash reads two weeks ago. There is no data out of the U.S today but we look to ISM Manufacturing tomorrow morning and FOMC Minutes in the afternoon. Of course, Friday brings Nonfarm Payroll.

Technicals: Price action traded above and Pac-Manned the 2698 all-time high early in Friday’s session by a quarter point before paring gains and seeing strong waves of selling in the last hour. With the tape stable since the open last night, we see no value going short down here. Remember we have been very Bullish equites and as of now are waiting to see how the first hour of the intraday session opens before shifting our Bias from Neutral. Price action traded into our third level of support on Friday but is now back above what was first support; it will be important to watch how the 2679.50 level (what was 2679-2680.75) is treated on the open. If price action can regain 2683, the bulls will regain an upper hand through the session and must achieve a close above 2686.50 in order to maintain it into tomorrow. A move below 2674.50 and new lows on the session will open the door to 2651.75-2652.50 major three-star support.

Bias: Neutral

Resistance – 2683**, 2686.50**, 2691*, 2698.25-2700**, 2715.25***

Pivot – 2679.50

Support – 2674.50**, 2667.25-2667.75**, 2651.75-2652.50***, 2641.50**

 

Crude Oil (February)

Last year’s close: Settled at 60.42

Fundamentals: Crude traded to a new swing high of 60.74 to start the year. Protests and clashes with police in Iran have sparked some supply concerns. However, the Forties pipeline is back to normal flows and the Libyan pipeline that exploded last week is also back online. Inventory data will be delayed a day due to the New Year holiday which means API will be out tomorrow late afternoon. In the midst of pipeline outages and now the Iran situation, let’s not forget that China was also a major catalyst in the rise of Crude late in the year. After raising import quotas by 55% for 2018 in November they issued their first batch last week. Also, last night’s read on Caixin Manufacturing was better than expected.

Technicals: Price action remains elevated and our Bias remains Neutral. The bulls will have the clear upper hand as long as price action stays above 59.96. If prices dip back below here and close below here, the door will then open for a move to back and fill at 58.97-58.99. On Sunday’s ‘Tradable Events this Week’ we discussed the expanding net long position and similarities to this current run with price action in November 2016 to January and February 2017. The driving idea here is that if everyone has already bought, who is left to buy.

Bias: Neutral

Resistance – 60.74*, 62.58**

Pivot – 60.32-60.42

Support – 59.96**, 58.97-58.99***

 

Gold (February)

Last year’s close: Settled at 1309.8, the highest since September 25th

Fundamentals: Gold continues its melt up and has reached the highest level since September 26th. After getting squashed ahead of the Fed rate hike and tax-reform, the metal has come back with a vengeance, just as we predicted. The New Year kicks off with a big week, one that could solidify Gold above the $1300 mark for weeks to come. Though there is no data today, tomorrow brings ISM Manufacturing and FOMC Minutes. Thursday begins Fed speak. Nonfarm Payroll is due Friday, ISM Non-Manufacturing and more Fed speak. Though the new Fed dissenter, Chicago’s Evans, is not scheduled this week it will be very interesting to see what many have to say after tax-reform was signed and if their tones change at all. The U.S Dollar has been whacked and started 2018 how it went out in 2017, lower. It is now at the lowest level since September and has lost 2.3% since the day the Fed hiked rates. We believe there is at least another 4% to the downside which would be a key catalyst to sending Gold to $1400 in 2018.

Technicals: The bears have gone into hibernation and no one wants to stand in the way of this rally. We remain very price action finished 2017 out above our rare major four-star resistance and this has sparked the next bull leg higher. We have the next key resistance at 1317 but one thing we like about the potential for higher prices is that the buyers are just coming to the party. Though this data is as of Tuesday December 26th, Gold’s net long position was only at 127,715 contracts, a far cry from the 200,000 mark that can sometimes become a hurdle. However, in rallies similar to September, the long position could double from here. Don’t miss our #1 Tradable Event this Week, Hi-Ho Silver! We believe that Gold and Silver are most bullish when working together, now consider that Silver has not even broken out yet and might be just about ready to take the reins.

Bias: Bullish

Resistance – 1317**, 1335.8**

Pivot – 1312.7

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

 

 

Natural Gas (February)

Last year’s close: Settled at 2.953

Fundamentals: We discussed exactly this on Friday. The pattern of strong starts to the week before price action dissipates. We hope to see this trend begin to change as the market turns bullish. However, this is still the trend and bulls are taking something off table after a heck of a bailout package last week. The Polar Vortex is real and early estimates of the stock report this week are for a draw of over 200 bcf. Next week’s potential record continues to expand with expectations well above -300 bcf (our figures show the current record at -287 for the week ending January 10, 2014).

Technicals: After gaining 11% last week, price action extended above major three-star resistance to start the year and reached a high of 3.097. Resistance comes in at 3.108-3.142 and the tape has peeled off pretty quickly into this morning covering last night’s gap and then some. Friday’s settlement fell short of closing into and trading above the 2.96-3.01 major three-star level that includes a trend line. It will be key for it to hold this level into today’s settlement to avoid further profit taking. More specifically, we are now watching 3.00-3.01 on a closing basis to keep the momentum north. Regardless, it is key to capitalize in some way off this run.

Bias: Bullish

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

Pivot – 2.953

Support – 2.893-2.92**, 2.83**, 2.734-2.7664**, 2.562***, 2.486-2.522****

 

10-year (March)

Last year’s close: Settle at 124’015

Fundamentals: The treasury market stayed bid into the long New Year’s weekend and saw support from equity profit taking ahead of the bell. We believe this bottoming process has begun since the Fed hiked rates and tax-reform legislation was signed. Recent data has been solid, but this week will be key. Though today is quiet, tomorrow brings ISM Manufacturing and FOMC. Fed speak begins with Bullard on Thursday and lasts through Friday. As we discussed above, it will be important to see how their tone might have changed after tax-reform was signed. Friday also brings Nonfarm Payroll which could really set the stage for Q1 expectations as we will be watching wage growth. ISM Non-Manufacturing is also due Friday.

Technicals: Despite the close out above major three-star resistance at 123’27-123’285, the level remains sticky and as does minor resistance at 124’01. We will continue to watch the three-star level and though prices are not accelerating through it, a continued close above will be very constructive in a beat down market. If the shorts start covering ahead of Fed Minutes tomorrow, there is a key trend line that aligns with the 124’125-124’135 level.

Bias: Bullish/Neutral

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

Pivot- 123’27-123’285***

Support – 123’20-123’225**, 123’10-123’135**, 122’29****

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

Disclaimer:

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

E-mini S&P (March)

Yesterday’s close: Settled at 2681.50, down 2.50

Fundamentals: Equity markets around the globe are fairly muted after yesterday’s tax bill was finally passed. Though Washington might want to take a victory lap on tax legislation, they must get to work on passing a budget to avert a shutdown Friday at midnight. Congress heads have said a shutdown will not happen, ultimately, we could see the can kicked down to January 19th. Today we have the final read on Q3 GDP along with Jobless Claims and Philly Fed Manufacturing. We sound like a broken record, but tomorrow is the day we have had circled with PCE Index, Durable Goods and Personal Spending and Income data early and Michigan Consumer data shortly after.

Technicals: Key support at 2681.50-2683.25 has held and this is tremendous for the bull case to finish out the week. Thought the reaction from tax-reform might not be want the bulls want to see, it is likely getting the bears excited and sucking them in. Just look back to what the trend has been for much of this year; sharp decisive moves higher followed by a consolidating but not too sharp of a pull back before making a new all-time high. Yes, there has been the sharper pullback here and there, most recently December 1st. Therefore, traders should manage risk and understand where their line and the sand is. We have been telling clients who call our trade desk that buyers against the first key support should have a stop below the 2675.25 level. You also want to watch the NQ against major three-star support at 6446-6455; this must hold. A close back above 2688.50-2690.25 is needed for the bull camp to begin to regain the immediate term edge with a clear close out above 2694.50, a new closing all-time high, a signal for a melt-up. Keep in mind though that next week, we expect more volatility, the last week of the year has not been so favorable for markets for the last couple.

Bias: Bullish

Resistance – 2694.50**, 2700*, 2715.25***

Pivot – 2688.50-2690.25

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

 

Crude Oil (February)

Yesterday’s close: Settled at 58.09

Fundamentals: Yesterday’s EIA report was near-term bullish; the headline Crude draw was more than API at 6.5 mb and production increased only 9,000 bpd. Momentum since last Thursday has been heading north and yesterday’s report just helped it edge higher. However, this by far is not enough evidence to spark a fresh swing high breakout. In fact, the rally remains extremely contained considering the issue in the North Seas and geopolitical drama in the Middle East. Still, the lower 48 states added an estimated 15,000 bpd last week but the question that remains is how much production is pent up and waiting the turn of the year. January 2015 and 2016 brought a bottoming process for Crude, but supply was also at extremes. OPEC had made tremendous strides in 2016 in working to balance supply, especially late in the year. In fact, last year Crude rallied into the end of the year but notched its high the first session of the year before selling off 8%. This is not an exact science, but we believe we are seeing something similar right now that is keeping Crude elevated for the year end.

Technicals: Price action has remained contained below major trend line resistance that comes in today at 58.30. This level will be critical to watch through the end of the week, a failure to move out above here through the close Friday should open the door for a tremendous sell opportunity to start next week. First minor support comes in at 57.70-57.81 and a close below here is simply needed to neutralize the uptrend in the immediate term. It is important to note that the ascending wedge pattern is continuing to form and mature, a failure against trend line resistance and a move back below 57.40 will be an extremely bearish setup.

Bias: Bearish/Neutral

Resistance –58.30**, 58.97***, 59.96***, 62.58**

Support – 57.70-57.81*, 57.40**, 56.90**, 56.11-56.30**, 55.00-55.25***

 

Gold (February)

Yesterday’s close: Settled at 1269.6

Fundamentals: Gold has held extremely well this week given the beating that other safe have assets such as Treasuries and the Yen have taken this week. Tax reform is in the rear-view mirror and Washington now must focus on a budget to keep it open after Friday at midnight though the can will likely get kicked down to January 19th. Today we have the final read of Q3 GDP, Jobless Claims and Philly Fed Manufacturing. These will be important reads but remember the preliminary and second GDP reads are more volatile. Tomorrow has been the day we have circled with PCE, Durable Goods and Personal Income and Spending followed by a holiday Michigan Consumer Sentiment read. We believe today’s session to be more technical and as a long-term bull, the technicals worry us in the next couple sessions.

Technicals: The seasonal buy is only a session or two away. However, Gold is stalling below major three-star resistance which includes the 200-day moving average. We were Bullish and looking for a bottom the week of the Fed meeting, it happened. We are now cautious against major three-star resistance and ahead of tomorrow’s data. We believe it is prudent to capitalize in some degree despite being very Bullish over the next 45 days. We see a tremendous buying opportunity against support at the 1255 level, however, 1259-1259.7 should suffice for an aggressive re-entry.

Bias: Bullish/Neutral

Resistance – 1273.9-1277.1***, 1289**, 1303.4-1304.7****

Support – 1263.9*, 1259-1259.7**, 1255.1**, 1251.2**, 1237-1241.7**, 1214.5-1225***

 

Natural Gas (February)

Yesterday’s close: Settled at 2.636 in a very disappointing session

Fundamentals: Today will be all about the storage data and official estimates as of yesterday came in at -170 bcf. However, traders and analysts are looking for a number closer to -175 bcf, anything bigger than this should be bullish. Next week’s read, demand coming from this week has been a key driver (that and algos during times of low volume) in the suppressed price action, if we can hold lows through next week we would be very surprised not see this market on the way to $3. If you remember back to the beginning of the month, the last week in December has always been the key worry.

Technicals: Price action is sitting against the recent February low at 2.602 and the January low of 2.581, this is support and a hold against this level and a move off it will be tremendous in turning the tide. Let’s not forget that a rare major four-star level at 2.486-2.522 sits just below here. The momentum is south, but today’s fundamental read will dictate price.

Bias: Bullish/Neutral

Resistance – 2.6795**, 2.745-2.747**, 2.778-2.799*, 2.85-2.88**, 2.96-3.01***

Pivot – 2.634-2.636

Support – 2.581-2.602**, 2.486-2.522****

 

10-year (March)

Yesterday’s close: Settled at 123’145

Fundamentals: Treasuries have been under immense pressure this week with tax-reform getting passed and strong housing data. Existing Home Sales was the best in 11 years yesterday. However, this is not only the U.S as we have discussed all week that we believe this exacerbated move is actually because of Germany. Germany announced two days ago that they will issue more bunds next year than they did this year to capitalize on current conditions. German 10-year bund yields have gained more than 10 basis points this week and were up more than 4 basis points yesterday. We are beginning to see some relief into this morning, but this needs to be watched. As we discussed above, the final read on Q3 GDP is today at 7:30 am CT along with Jobless Claims and Philly Fed Manufacturing. Also, tomorrow’s PCE, Durable Goods and Personal Spending and Income data provides a gauntlet for treasury traders.

Technicals: Price action is seemingly stabilizing this morning and the bulls must achieve a close back above 123’20-123’225. Still the real line in the sand to neutralize recent weakness comes in at major three-star resistance at 123’27-123’285, it is unlikely that price action will get out above here on the first test. We believe a strong buy opportunity is setting up into next week. If tomorrow’s data misses this market will trade higher, however, we do not believe you need to pick a low and instead can ride a rally for two to three weeks to begin the New Year.

Bias: Neutral/Bullish

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

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

 

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

 

 

Disclaimer:

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

E-mini S&P (March)

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

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

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

Bias: Bullish

Resistance – 2700*, 2715.25***

Pivot – 2694.50

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

 

Crude Oil (February)

Yesterday’s close: Settled at 57.22

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

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

Bias: Bearish/Neutral

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

Pivot – 57.33-57.35

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

 

Gold (February)

Yesterday’s close: Settled at 1265.5

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

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

Bias: Bullish/Neutral

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

Pivot – 1262.8-1263.2

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

 

Natural Gas (January)

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

Yesterday’s close: Settled at 2.745

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

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

Bias: Bullish/Neutral

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

Pivot – 2.745-2.747

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

 

10-year (March)

Yesterday’s close: Settled at 124’075

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

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

Bias: Neutral/Bullish

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

Pivot – 124’135-124’15

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

 

 

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

 

 

Disclaimer:

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

Euro (March)

Session close: Settled at 1.18675, up 22.5 ticks

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

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

Bias: Bullish

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

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

 

Yen (March)

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

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

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

Bias: Bullish

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

Pivot – .8928-.89355

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

 

Aussie (March)

Session close: Settled at .7665, up 21 ticks

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

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

Bias: Neutral/Bullish

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

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

 

Canadian (March)

Session close: Settled at .7785, up 5.5 ticks

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

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

Bias: Neutral

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

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

 

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

 

 

Disclaimer:

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

E-mini S&P (March)

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

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

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

Bias: Bullish

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

Pivot – 2681.50-2682

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

 

Crude Oil (February)

Last week’s close: Settled at 57.

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

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

Bias: Bearish

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

Pivot – 57.33-57.35

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

 

Gold (February)

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

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

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

Bias: Bullish/Neutral

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

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

 

Natural Gas (January)

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

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

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

Bias: Bullish/Neutral

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

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

 

10-year (March)

Last week’s close: Settled at 124’135

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

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

Bias: Neutral/Bullish

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

Pivot – 124’135-124’15

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

 

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

Disclaimer:

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

BrokersEDGE 12-15-17 Livestock recap

Cattle Commentary: Last week we had mentioned that February live cattle were coming into a seasonal buy from December 13th to December 28th. Over the last 15 years this has been profitable 14 of those years with the average gain being 2.41. So far that seasonal looks to be holding true as cattle found support after being in free fall mode for the previous two weeks. February live cattle finished Fridays session up 2.05 at 121.70, trading in a range of 2.775 on the day. January feeder cattle finished Friday up 1.70 at 147.95 after trading in a range of 3.175 on the day. For the week, both live cattle and feeder cattle closed higher adding 2.90 and 2.60 respectively. Cash trade was nonexistent through the first ¾ of the week, but bids were creeping higher all-day Friday. There were cash trades at 120.50 after the close in Wyoming, western Nebraska, and Colorado. In Kansas and Texas, we saw trade at 120. This should offer some support to the market to start the week, but how long it stays will be the question.

Technically Speaking: We had been writing about the market making a run back towards 120.70 for the February contract, this was the 50% retracement from the August lows to the November highs. The close above and sturdy fundamentals could encourage additional momentum higher towards the next resistance pocket from 123.355-123.825. This pocket represents another key retracement level and the 50-day moving average. On the chart you can also see that this was the breakout level on October 24th and the breakdown level on December 1st. If you have bought the market or reduced hedges over the last week, this would be your exit target. We know that funds have been reducing their long position over the past several weeks and a failure to break out above resistance will lead to additional long liquidation. Ultimately, we expect the market to consolidate into a “tighter” range as we round out the year

 

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.

What about Gold? 12-12-17

What about Gold?

By: DAW Trading and Blue Line Futures

 

Gold has lost about 7% since September. Bitcoin is the new Gold. The Fed is tightening. Interest rates are going higher. There is no need for Gold anymore. WRONG. Yes, Gold is trading below the 200-day moving average for the first time since July, the Fed is about to hike interest rates and tax-reform legislation is about to be signed but it’s easy to forget that Gold was up as much as 18% this year. Gold is seeing pressure ahead of the December 13th Fed rate decision and tax-reform, but we don’t view it as a bad thing. After violating support this will allow price action to cleanse the overextended net-long ratio. In fact, over the years, weakness in Gold during the month of December is not uncommon and has come for a number of reasons; hawkish Fed language, tax-selling and strong seasonals in the equity market. However, this year we expect a less hawkish or even potentially dovish Fed coupled with overshadowing geopolitical issues to characterize the turn of the calendar year. For us, the icing on the top is Gold’s strong seasonality in the month of January; Gold has finished the month of January positive in nine out of the last twelve years. Out of the three years it failed to do so the first was 2010. That year it traded in the green by more than 6% in the month of January before finishing down about 1%. The second year was 2011, that year it gained as much as 35% when it hit its all-time high in September. The only year since 2005 that it did not give Gold bulls who bought in the days surrounding December 31st a clear-cut opportunity to profit was 2013, a year that Gold bulls truly want to forget about. In summary, we believe that lower price action for Gold in the next three weeks should not be a death sentence for the metal but instead viewed upon as a sale to buy.

Read more here :  http://www.phillipcapital.com/articles/DAW-What-About-Gold

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 a new all-time high of 2664.50

Fundamentals: The S&P pushes higher ahead of tomorrow’s Fed rate hike meeting and why not? The Federal Reserve is expected to raise interest rates, but this is already priced in. Furthermore, the market likes to drift higher ahead of these meetings and we expect them to bubble wrap the hike with a more dovish rhetoric anyway. Also helping price action is tax-reform coming down the pipeline and investors are treating the negotiations between the House and the Senate as a forgone conclusion as they work to put a bill in front of the President before Christmas. The Senate has a little wiggle room, but a bill on taxes is expected nonetheless and should be accompanied by a budget to keep Washington running. Lets also not forget how this is a seasonally bullish time of year for equity markets. PPI data is due out this morning at 7:30 am CT and this along with tomorrow’s CPI read will be considered by the Fed; an in-line number to even a miss by a tenth would keep the ‘not so hot, not so cold’ rhetoric in place. There is a 30-year auction at noon and the Federal Budget Balance is due at 1:00 along. ECB President Mario Draghi is also set to speak at 1:00 pm CT, two days ahead of the ECB meeting Thursday morning.

Technicals: We have been Bullish and we continue to be Bullish. Resistance comes in against our intermediate term upside target and major three-star resistance at 2666-2667.75 and a clear close out above here will spark a move to our yearend target of 2715.25. As we discussed yesterday morning, price action gave bulls a place to buy against support at 2650.25-2654.

Bias: Bullish

Resistance – 2666-2667.25***, 2681.50**, 2688**, 2694.50**, 2715.25***

Support – 2650.25-2654**, 2643.75-2644.75**, 2640.25*, 2630.50-2632.50**, 2622.50**, 2506.25**, 2596-2598****

 

Crude Oil (January)

Yesterday’s close: Settled at 57.99

Fundamentals: Price action began moving sharply higher on news of a pipeline shutdown in the North Sea. This has taken a fairly significant amount of supply from the market in what is already perceived to be tight conditions. WTI is up more than a quarter this morning but it is Brent that is up almost $1. We expect volatility as more clarity comes from this situation over the next 24 hours, but as we have a more intermediate-term bearish outlook, it is good to see WTI trailing Brent in such a significant way. Inventories will come into the picture later today with API due at 3:30 pm CT. Early expectations for tomorrow’s EIA are for a draw of nearly 4 mb of Crude and a build of about 2 mb of Gasoline.

Technicals: We remain Bearish and have a strong bias in the intermediate term. However, yesterday we explicitly advised against picking a top against key resistance at 57.71-57.92 with futures and instead wait for price action to test and begin to come off or secure a close below. With a settlement above here, the path of least resistance is higher in the immediate term. Trend line resistance from the November 24th high comes in today at 58.60 and this is a key level to watch that the market must remained contained below. But again, we find it encouraging that WTI trails Brent in such a significant way. Any down turn in Brent because of pipeline clarification should be multiplied by WTI.

Bias: Bearish

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

Pivot – 57.79-57.99

Support – 57.35-57.36*, 56.91-57.04**, 56.57**, 55.82-55.95**, 55.00-55.25***

 

Gold (February)

Yesterday’s close: Settled at 1246.9

Fundamentals: Gold remains under pressure ahead of tomorrow’s Fed rate hike meeting and as tax-reform is potentially days away. However, we expect the selling into these events to open the door for a tremendous buy opportunity; a ‘sell the rumor, buy the fact’. Gold seasonally bottoms in the second half of December and has finished the month of January positive 9 out of the last 12 years. We have inflation data ahead of the Fed’s 1:00 pm CT decision tomorrow with PPI due this morning at 7:30 am CT and CPI tomorrow at the same time. These will be key data points that will help dictate the Fed’s verbiage. We do not expect to see a robust read for either and without such, it paves the way for a dovish rhetoric from the Fed, something that will give Gold the ability to bottom out over the next week and set up for another strong January.

Technicals: The technicals remain near-term weak but we did reintroduce our Bullish bias for the long-term. Yesterday traded to a low of 1242.4 and prices remain at this level. We believe the best place to buy would be in front of 1225. It may not reach there but we will have a better idea of that over the next 36 hours. Ultimately, we are looking for a bottoming setup to buy Gold and stay long into and through January.

Bias: Bullish/Neutral

Resistance – 1250.2-1253.4**, 1262.8-1263.2**, 1273.9-1276.8***, 1289**, 1303.4-1304.7****

Support – 1242.4**, 1237**, 1214.5-1225***

 

Natural Gas (January)

Yesterday’s close: Settled at 2.828

Fundamentals: Natural Gas is showing signs of stabilizing as weather models give the bull camp hope. Even with expectations coming back in line with a normal winter, we still feel that the bears will be caught offsides and that there is tremendous value below $3. In the UK, Natural Gas prices have surged to the highest level since 2013. Yes, this is a completely different derivative, but it is something important to note. There is not new news on the front and we will begin getting estimates together for Thursday’s storage report.

Technicals: Price action has remained capped below resistance at the 2.85 level but after a pullback later yesterday and into today’s session that held gap support around 2.79, we feel that it is priming for a test through first resistance. Gap support must continue to hold and a failure to do so will allow the bears to regain a firm edge as they attempt again to take it below major three-star support at 2.747-2.7565.

Bias: Bullish/Neutral

Resistance – 2.85**, 2.916-2.928**, 2.9825***, 3.038-3.06**

Support – 2.79**, 2.772*, 2.747-2.7565***, 2.486-2.522****

 

10-year (March)

Yesterday’s close: Settled at 124’085

Fundamentals: With the S&P extended to another record and the Fed set to hike rates tomorrow it is no surprise that the 10-year is under pressure. In fact, this is exactly what we have been expecting as we have been patient with our long-term bullish thesis until we get through this Fed hike as well as tax-reform and get into a time at the end of December in which the Treasury market has favored bottoming. Furthermore, there are hedge funds that are only long treasuries or have substantial long positions and they reduce risk ahead of Fed meetings, we are in a hiking cycle, on the small chance that they hike a half a point or surprise with an overly hawkish rhetoric. PPI is due today at 7:30 am CT and CPI is a bigger read tomorrow at the same time. These give the Fed cornerstone reads on inflation ahead of their decision.

Technicals: Prices seem weak into this morning with a tail on yesterday’s session, one that was left from a spike due to the NYC attempted bombing. However, this paves the way for lower price action in the near term. Major support comes in around the 124 are and this will be a key level to watch.

Bias: Neutral/Bullish

Resistance – 124’17.5-124’19**, 124’23-124’24**, 124’295-125’00***

Pivot – 124’085-124’095

Support – 124’015**, 123’27***

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.