Tag: Gold

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.

E-mini S&P (March)

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

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

Bias: Bullish/Neutral

Resistance – 2747.75**, 2759.25***

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

 

Crude Oil (March)

Yesterday’s close: Settled at 61.73

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

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

Bias: Neutral/Bearish

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

Pivot – 61.73-61.79

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

 

Gold (February)

Yesterday’s close: Settled at 1320.4

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

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

Bias: Bullish

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

Pivot – 1317-1317.2

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

 

Natural Gas (February)

Yesterday’s close: Settled at 2.835

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

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

Bias: Neutral/Bearish

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

Pivot – 2.9215

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

 

10-year (March)

Yesterday’s close: Settled at 123’155

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

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

Bias: Neutral/Bullish

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

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

 

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

Disclaimer:

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

BrokersEDGE Futures trading News 1-8-18

E-mini S&P (March)

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

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

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

Bias: Bullish/Neutral

Resistance – 2747.75**, 2759.25***

Pivot – 2740.50

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

 

Crude Oil (February)

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

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

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

Bias: Bearish/Neutral

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

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

 

Gold (February)

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

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

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

Bias: Bullish

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

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

 

Natural Gas (February)

Last week’s close: Settled at 2.795

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

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

Bias: Neutral/Bearish

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

Pivot – 2.795

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

 

10-year (March)

Last week’s settlement: Settled at 123’15

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

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

Bias: Neutral/Bullish

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

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

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

Disclaimer:

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

  1. Fed Speak

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

 

  1. Inflation data

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

  1. China data

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

  1. Earnings season underway

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

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

Disclaimer:

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

E-mini S&P (March)

Yesterday’s close: Settled at 2723.75

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

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

Bias: Bullish

Resistance – 2740.50**, 2747.75**

Pivot – 2728.75***

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

 

Crude Oil (February)

Yesterday’s close: Settled at 62.01

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

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

Bias: Bearish/Neutral

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

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

 

Gold (February)

Yesterday’s close: Settled at 1321.6

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

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

Bias: Bullish

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

Pivot – 1317-1318.5

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

 

Natural Gas (February)

Yesterday’s close: Settled at 2.88

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

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

Bias: Neutral

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

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

 

10-year (March)

Yesterday’s close: Settled at 123’215

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

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

Bias: Neutral

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

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

 

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

Disclaimer:

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

BrokersEDGE Futures news and research 1-3-18

E-mini S&P (March)

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

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

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

Bias: Bullish

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

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

 

Crude Oil (March)

Yesterday’s close: Settled at 60.37

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

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

Bias: Neutral

Resistance – 60.74*, 62.58**

Pivot – 60.32-60.42

Support – 59.96**, 58.97-58.99***

 

Gold (February)

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

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

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

Bias: Bullish

Resistance – 1317**, 1335.8**

Pivot – 1309.3-1309.8

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

 

Natural Gas (February)

Yesterday’s close: Settled at 3.056

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

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

Bias: Bullish

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

Pivot – 3.00-3.01***

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

 

10-year (March)

Yesterday’s close: Settled at 123’22

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

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

Bias: Bullish/Neutral

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

Pivot- 123’27-123’285***

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

 

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

Disclaimer:

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

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.

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.

E-mini S&P (March)

Last week’s close: The March contract is trading about 3 points higher than the December. A new all-time settlement high was achieved on Friday, March at 2654 and December at 2651.

Fundamentals: Strong headline job growth and the anticipation of tax-reform have kept a bid under equity markets. Friday’s jobs report was exactly what we were looking for with better than expected job creation coming in at 228,000 versus expectations at 200,000. However, the weaker than expected Average Hourly Earnings underpins the report coming in at .2% vs .3% expected while October was revised to a contraction at -.1%. The Fed is set to hike interest rates on Wednesday but lagging wage growth and inflation are key concerns; we discussed this in yesterday’s Tradable Events this Week. PPI is due out tomorrow while CPI is due out Wednesday morning and this will give the Fed fresh data to consider. Ultimately, we believe inflation could poke its head out by the middle of next year as it makes a run at the Fed’s 2% target. The downside of this though is, we do not believe wage growth will follow; and that there is the long-term issue. Friday’s data continues to lay the groundwork for higher equity markets as a ‘not too hot, not too cold’ read is not enough to push the Fed’s hand any faster. If inflation data falls short this week, we might see the Fed become more dovish on Wednesday.

Technicals: (March) Friday’s session set a new closing all-time high and is now trading above the 2650.25-2654 level that correlates with 2648.25-2651.25 on the December contract. On Friday’s Midday Market Minute, we said a close out above here will encourage further buying to the all-time high. The bulls are clearly in control and we expect prices to gravitate higher ahead of Wednesday FOMC meeting. Traders can look to buy the first test into 2650.25-2654 if on the 8:30 am CT floor open. Regardless, the market must maintain a close above this level or risks a consolidation lower.

Bias: Bullish

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

Pivot – 2650.25-2654

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

 

Crude Oil (January)

Last week’s close: Settled at 57.36 up more than 1% but pared gains from session highs against key resistance at 57.71-57.92.

Fundamentals: Once again, Crude put in a strong Friday session and at one point gained more than $1 to a high of 57.79. Data from Baker Hughes that showed an increase of two rigs likely encouraged some selling ahead of settlement. We remain bearish and point to rising U.S production as a major factor overshadowing the OPEC production cap deal. U.S Production hit its 5th straight weekly record last Wednesday notching an estimated 9.7 mbpd. Gasoline demand also has traders on edge after a build of 6.78 mb, its fourth weekly build in a row.

Technicals: We were very clear on Thursday that we wanted to book gains against $56 and feared a rise into the weekend. This played out, and now we like repositioning short on a retest and hold against resistance at 57.71-57.92. Support at 57.04 held overnight and prices are rising back to resistance this morning. If prices get out above key resistance the short position should not be entered, or risk must be managed because this could signal a retest to 58.97 at minimum. Prices settled Friday’s session at our 57.35 level and we want to maintain a close below here in order to press shorts. Friday’s Commitment of Traders showed that the net-long position in Crude Oil remains over-extended and near February’s record high at 395,080. Though this is a small reduction from the previous week’s 398,106.

Bias: Bearish

Resistance – 57.71-57.92**, 58.97***, 59.96***, 62.58**

Pivot – 57.35-57.36

Support – 57.04**, 56.80**, 56.57**, 55.82-55.95**, 55.00-55.25***

 

Gold (February)

Last week’s close: Settled at 1248.8, the lowest level since July.

Fundamentals: Price action did notch a new swing low on Friday’s session, trading to 1244.4. Headline job growth and a strong equity market put pressure on the metal, but we are optimistic once again. We have been eyeing this week’s FOMC meeting as a key turning point for Gold and we discussed it on last night’s Tradable Events this Week. Though it might not spike and begin a leg higher Wednesday afternoon, this event is one of two that we must get through in order to bottom out. The second is tax-reform and this week will be key as congress paves the way to put a bill in front of the President before Christmas. JOLTs Job Openings is due at 9:00 am CT and we have a 10-year note auction at noon. Tomorrow will be key with PPI.

Technicals: Last week’s blood bath for Gold was exactly what it needed. The supply/demand technicals and the overextended long side sparked the cleansing that we have been waiting for. The net-long position was reduced by exactly 1/3. Furthermore, longs decreased their holdings to the lowest level since the week of August 8th and the shorts increased their holdings to the largest level since August 1st. Wow! What a difference a week can make. Let us remind you that the first week of August was the beginning of a $100 rally and an ascent of 8% in Gold. we expect Gold to recover to our first upside target of 1304.7 and eventually breakout; we are working to put together an option strategy that is best suited for this.

Bias: Bullish/Neutral

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

Pivot – 1250.2

Support – 1248.8*, 1244.4**, 1214.5-1225***

 

Natural Gas (January)

Last week’s close: Settled at 2.772

Fundamentals: Prices gapped higher on the open last night with cold and snowy weather blanketing much of the United States at one point or another from Friday through Sunday. However, this action is slipping into this morning. There has been no change on expected stock drawdowns through the end of December from Friday. Our bullish outlook contradicts the uncertainty that the market seems to find with the weather in the last week of December and start of January. We still believe that sellers below $3.00 will be caught offsides because of this.

Technicals: Friday was a disappointing session, one that forces traders to manage risk. The bright start to the week will get tested against gap support from the electronic close at 2.79 and settlement at 2.772. This gap sits just in front of what we have had as major three-star support for a while now. Both levels must be watched and closes below here will encourage further selling. The session high comes in at 2.848 and adds strength to what was a minor level at 2.85 last week; we must see a close out above here to secure a neutralization of last week’s weakness.

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)

Last week’s close: Settled at 124’085

Fundamentals: Friday’s Nonfarm Payroll number to us fell short of expectations due to the lagging wage growth. However, headlines showed headline job growth coming in better than expectations and a steady unemployment rate. Due to this, we are not surprised to see price action edge higher into this morning and ahead of JOLTs Job Openings. The FOMC Meeting is Wednesday but we get key reads on inflation ahead of their decision with PPI due tomorrow and CPI on Wednesday morning. We discuss our outlook on the Treasury market and our expectations from the expected Fed hike on our Tradable Events this Week, that goes out each Sunday afternoon. A 10-year Note auction is at noon CT today. As we are in a rate hiking cycle, we would expect to see some selling in this market ahead of Wednesday’s meeting as funds who are long treasuries reposition, or reduce risk on the smallest of probabilities that the Fed surprises with a hawkish outlook or even a half a point hike.

Technicals: Price action spiked to 124’155 on the release of Nonfarm Payroll on Friday and we have taken this level out this morning. Minor resistance comes in at 124’19 with a stronger level just above at 124’23-124’24. We are watching 124’14-124’16 on a closing basis to give an edge to either the bear or bull camp.

Bias: Neutral/Bullish

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

Pivot – 124’14-124’16

Support – 124’095**, 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.

 

E-mini S&P (December)

 

Yesterday’s close: Settled at 2638.25, 1% from the session’s new all-time high.

 

Fundamentals: After a strong open Sunday night that held ground extremely well into the morning, tax-reform driven sector rotation is again weighing on equity markets. As of this morning, the NQ is up nearly 30% on the year while the S&P is up nearly 20%. The NQ last traded to an all-time high one week ago and has lost 3% since, the S&P extended gains by 1% from where it was one week ago though it pared those gains yesterday. This puts into perspective the outperformance that characterizes tech for much of 2017 but also sheds light on the sector rotation that might only pick up steam before the end of the year. Yesterday was not only a rough day for tech but healthcare as well while the XLF (financials) gained 1.5% and XLP (consumer staples) 1%. We discussed this rotation last week and how while the tax-reform boasts a drop on the corporate tax rate to 20%, the average rate for the tech industry is already 18.5%; shareholders will see no benefit from this new bill, while other trailing industries could flourish. Furthermore, in the case of the financials, through in another rate hike and stronger growth than expected growth. Though we are not bullish rates long term, we have made a case for them to edge higher over the next two weeks. European equities are lower this morning as yesterday’s action drags on them as well as poor Services and Retail Sales data this morning. We begin to get into some of the meat of the week today first with Trade Balance at 7:30 am CT and followed by ISM Non-Manufacturing due out at 9:00 am CT; a number we watch very closely. With Nonfarm Payroll Friday, the private ADP survey is due out tomorrow morning.

 

Technicals: Exactly as we discussed yesterday, though our yearend target comes in at 2712, major three-star resistance remains at 2666. Even if you bought the first dip yesterday, you should be taking some or all your profit against major three-star resistance if you were still long from Friday, period. Furthermore, we said first key support comes in at 2654-2658, a level that must hold in order to keep the bulls in the immediate term driver’s seat. Lastly, we added that a move below Friday’s settlement of 2644 will signal a near-term failure. All of this played out, so what now? The charts have some damage yes, so this Neutralizes our outright Bullish stance for now. Still, key support in the S&P remains at 2633.50-2635, and if this level holds through the end of the session and can achieve a close back above 2642-2644, a lot of that damage will be repaired.

 

Bias: Bullish/Neutral

 

Resistance – 2650.75-2651.25**, 2666***, 2679-2685**, 2712****

 

Pivot – 2642-2644

 

Support – 2633.50-2635**, 2628*, 2618-2619.25**, 2605-2607**, 2594.50-2596****

 

 

 

Crude Oil (January)

 

Yesterday’s close: Settled at 57.35 and lost $1

 

Fundamentals: U.S inventories and production is expected to be the key price driver this week and they begin to come into the picture today with estimates throughout the session and API due at 3:30 pm CT. Early estimates on tomorrow’s EIA report are for a drawdown in Crude of 3.5 mb. Remember, last week caught the tail end of a pipeline disruption and Cushing will be transitory. Production will be key as we have seen a record for number for four straight weeks and with prices hovering closer to $60 than $50, an increase in drilling is expected.

 

Technicals: We are bearish, and Crude settled below the 57.56 level we said we wanted to see yesterday in order to give the bears the edge. Price action has bled slightly lower and now faces critical support at 56.75-56.94 as inventory data comes in to the picture. This is also the level that price action held following the OPEC meeting and before reversing $2 back to 58.97. Ultimately, we have a lower high at that 58.97 level and a double top building. This week will be critical, and we discussed yesterday that the net-long position is arguably at a record level, if everyone has bought, who is left to buy.

 

Bias: Bearish

 

Resistance – 57.81-58.06**, 58.36*, 58.97***, 59.96***, 62.58**

 

Pivot – 57.56

 

Support – 56.75-56.94**, 55.00-55.25***

 

 

 

Gold (February)

 

Yesterday’s close: Settled at 1277.7

 

Fundamentals: The fundamental backdrop is beginning to weigh on Gold at the exact time we have been pointing to. Tax-reform is becoming a foregone conclusion and we step into a data-heavy week ahead of next week’s FOMC rate-hike meeting. The good news though, is we have also foreseen a buying opportunity to playout from this fundamental backdrop. What Gold needs is a catalyst and what better catalyst than a sale? Open interest has been dissipating and the short position is at a four-year low. Let’s face the facts, U.S data has been coming in a little better than expected and a stronger ISM Non-Manufacturing read at 9:00 am CT today will put pressure on Gold. Trade Balance data is due at 7:30 am CT. Furthermore, a better than expected Nonfarm Payroll report on Friday will also put pressure on Gold and with the smallest short position in four years, the pendulum is setting up to swing. We have been heavier on the Neutral side since last week’s move back below 1290, but by all means, we remain long term Bullish. Again, lower prices will be a value buy but this market right here, right now, is one to trade.

 

Technicals: Gold continues to hug the 200-day moving average that comes in today at 1277.1, but with an overextended net-long position of 20-1, there is no catalyst down here to encourage fresh buying. Truly, if this level holds, fresh buyers are not pulling the trigger until above the psychological $1300 mark and a breakout above major three-star resistance at 1304.7.

 

Bias: Neutral/Bullish

 

Resistance – 1287.5**, 1292-1292.5**, 1304.7***, 1312.7-1316.4**, 1328-1329.4**

 

Pivot – 1282.3-1283

 

Support – 1273.1-1277.1***, 1268.1**, 1262.8***, 1250.2**, 1214.5-1225***

 

 

 

Natural Gas (January)

 

Yesterday’s close: Settled at 2.985

 

Fundamentals: Prices continue to fall into this morning despite much colder temperatures on the immediate horizon. This two-week cold-front is sandwiched in between the 65-degree weather in Midwest over the weekend and what could potentially be warmer than average temperatures in the back half of December. As we discussed yesterday, stock drawdown expectations picked up over the next two weeks due to the cold front, but again, the back half of December is now in limbo. We remain long-term bullish and January has been our catalyst.

 

Technicals: Yesterday’s price action grappled with but held major three-star support on a closing basis. The decisive move below here today is very worrisome to the bull case and the technical damage signals lower prices. We have now Neutralized our near-term outlook and only a close back above 2.981-2.996 will reinvigorate our long-term thesis.

 

Bias: Neutral

 

Resistance – 3.04-3.053**, 3.113-3.137**, 3.182**, 3.218-3.237**, 3.321-3.358****

 

Pivot – 2.981-2.996***

 

Support –2.929**, 2.847-2.861**, 2.753-2.7565***, 2.486-2.522****

 

 

 

10-year (March)

 

Yesterday’s close: Settled at 124’08

 

Fundamentals: A reversal of Sunday night’s strong open in equity markets supported Treasury prices through much of yesterday’s day-session. Still, even with the gap higher on Sunday night and the S&P trading at a new all-time high, the 10-year held support in a decisive fashion. This will be a critical week jammed packed with data domestically and from around the globe which comes ahead of next week’s FOMC meeting. Tax-reform is a foregone conclusion but progress between the Senate and the House later this week will still be important to watch. Trade Balance data is due at 7:30 am CT and ISM Non-Manufacturing at 9:00.

 

Technicals: Major three-star support at 123’27 has held strong and the bulls must see a continued close out above 124’045-124’065 to keep the bears from trying to regain an edge. Key resistance remains at 124’145-124’155 and unless equity markets see further pressure, it is hard to imagine a move out above here until after Nonfarm Payroll and only if that misses.

 

Bias: Neutral/Bullish

 

Resistance – 124’145-124’155**, 124’22-124’24**, 124’295-125’00***

 

Pivot – 124’045-124’065

 

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.

 

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