Tag: yen

CORN (March)

Yesterdays Close: March corn futures finished yesterday’s session down ½ of a cent, trading in a range of 3 ¼ cents. Funds were estimated sellers of 5,000 contracts.

Fundamentals: Recent weather in Argentina has prompted concerns over yield loss, if realized this could be a catalyst to achieve a technical breakout and encourage short covering. We have February option expiration on Friday and 350 looks to be the magnet. As of this morning there are roughly 33,000 open calls between 350 and 355. On the put side, there are roughly 27,000 open between 350 and 345. Strikes with high open interest tend to be a manet into expiration. We had mentioned in yesterday’s report that export inspections would not be released due to the government shutdown, we were then told otherwise shortly after our release, so we apologize for that. Export inspections came in at 668,944 metric tons, this compares to the expected range from 800,000-1,000,000 metric tons; last weeks was 584,389 metric tons.

Technicals: Yesterday morning corn prices were lingering at the top end of the range again, an area where expectations need to be tempered. I would love nothing more than to see corn rally, but you have to trade the market you have, not the one you want. The market rejected the top end of the range and that brings us right back down towards the 350 level which continues to be a magnet. We continue to believe there is an opportunity to trade a few pennies on either side until we get that technical breakout or breakdown.

Bias: Bearish

Resistance: 354-355**, 358-360 ½****, 366 ½-369 ¼****

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

 

SOYBEANS (March)

Yesterdays Close: March soybeans gaped higher on the open, finishing the session up 8 ¼ cents, trading in a range of 7 ¼. Funds were estimated buyers of 7,000 contracts.

Fundamentals: Hot and dry weather in key growing areas in Argentina sparked the gap higher yesterday and the market managed to hold ground on the back of those concerns. If we start to see moisture work into the forecast, you can expect that premium to come out of the market. Export inspections yesterday morning came in at 1,419,430 metric tons, this was above the top end of the expected range from 1,000,000-1,400,000 metric tons. Last week’s number came in at 1,231,037 metric tons. February option expiration is this Friday, it is possible that this could keep a lid on another leg higher but there’s nothing significant to report in terms of significant open interest at a specific strike (like corn).

Technicals: The market has managed to close higher for 6 of the last 6 sessions and it appears we could see number 7 today. Despite the march higher, the RSI (relative strength index) is only at 60. Technical resistance has been tested yesterday and is again being tested in the early morning session. We have defined resistance as 986 ½-987. This pocket represents the 100-day moving average and the 50% retracement (middle of the range) from the June lows to July highs. If we fail to see an extension we would not be surprised to see the market come back to support wit the first line in the sand coming in at 979 ¼, but the more significant level is 971 ¾. If you’ve been wrong for the past week and a half this is where you should consider reducing. We still think there is more upside potential but a consolidation lower would be healthy. There is seasonal buy around the corner, we will keep you posted on that when we get closer.

Bias: Neutral

Resistance: 986 ½-987***, 999-1004**

Support: 979 ¼**, 971 ¾ ***, 961 ¼-963 ¼**, 950-952 ¼***

 

WHEAT (March)

Yesterdays Close: March wheat futures gaped higher yesterday and finished up 4 cents, trading in a range of 4 ¼ cents on the day. Funds were estimated buyers of 2,000 contracts.

Fundamentals: Export inspections yesterday morning came in at 337,980 metric tons, this was within the expected range from 250,000-400,000 metric tons; last weeks was 368.651 metric tons. We know that funds have established a solid net short position, but we do not see any fundamental catalyst at this point that would spook them out just yet. Demand continues to be lackluster which will likely keep a lid on any significant rally. February option expiration is on Friday, there is nothing that sticks out in terms of strikes with significant open interest.

Technicals: The market looks like it is rounding out after trying to recover all of the loses from the most recent USDA report. First technical resistance today comes in at 429 ½, if the market can achieve a conviction close above this level, perhaps we see some short covering from funds push prices towards 443. A failure to breakout will likely lead to a test of the contract lows at 410 ½.

Bias: Bearish

Resistance: 429 ½-430**, 437**, 443-448 ¼ ****

Support: 410 ½-413 ¼***, 399-402 ¾****

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

Disclaimer:

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

CORN (March)

Last Weeks Close: Corn futures finished the first week of the year up ¼ of a cent, trading in a range of 4 ½ cents. Fridays Commitment of Traders report showed funds reduced their net short position by 8,957 contracts, putting their net short at 189,536 futures.

Fundamentals: This week’s focus will be on Fridays USDA report which has the potential to give us new direction. We will continue to compile estimates and have those for you in the coming days. Weather and crop development in South America continues to be a big catalyst for the market. Corn used for ethanol production has been a nice silver lining for the market, but the strong trend took a step back last week. Corn use for ethanol dropped from 112.4 million bushels down to 106.5mb. Weekly exports were also dismal last week with a read of 101,200 metric tons, this compares to the expected range from 600,000-900,000 metric tons and the previous weeks read of 1,245,500 metric tons.

Technicals: On the technical side of things, the market has been in a narrow range for several months. We have been in the camp of playing a nickel on either side of 350 until we get a new fundamental catalyst to give us a breakout or breakdown. First technical resistance for Mondays trade will come in at 354 ½. Until we see consecutive closes above, bullish expectations should be tempered. If the market can achieve a conviction close above, we could see short covering from funds to 359 ¼-360 ½. This pocket represents a key Fibonacci retracement, the December 4th highs, and the 100-day moving average.

Bias: Neutral/Bearish

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

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

 

SOYBEANS (March)

Last Weeks Close: March soybean futures finished the week up 7 ¼ cents, trading in a range of 18 ¼ cents. Fridays Commitment of Traders report showed funds extended their net short position to -87,834, an increase of 16,457 futures from the previous week.

Fundamentals: Soymeal and oil helped offer support to soybeans last week, but this week’s focus will be on the USDA report which will be released on Friday at 11 am cst. We will continue to compile estimates and have those for you in the coming days. Weather and crop development in South America will also continue to be a key catalyst; there is not much new news on that front to report this morning. Weekly export sales last week came in at 554,000 metric tons, this was a hair below the low end of expectations.

Technicals: The market has managed to stabilize well following a dramatic uninterrupted 68 cent meltdown in December. Significant resistance comes in from 985 ½-990. This pocket represents the 50 and 100 day moving average, as well as the 50% retracement from the June lows to July highs. If the market can achieve consecutive closes above this pocket, we expect to see short covering from the funds get us back above the $10 handle.

Bias: Neutral

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

Pivot: 971 ¾

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

 

WHEAT (March)

Last Weeks Close: March wheat futures finished last week up 7 cents, trading in a range of 9 ½ cents. Fridays Commitment of Traders report showed that funds reduced their net short by 16,537 which puts their net short at 135,523.

Fundamentals: Colder and dryer temperatures have offered support to the market, but seasonal weakness continues to reign supreme. If you had sold March wheat on January 3rd and bought in back on the 16th, you would have been profitable for 12 of the last 15 years with the average gain being roughly 17 cents. Fridays USDA report will be the highlight of the week, we would not be surprised to see some position squaring ahead of that.

Technicals: We have been referencing the 50-day moving average for months now as key resistance. The market is lingering right around it as we were not able to see a convincing trade above it yet. If we start to see consecutive closes above, we could see short covering towards 447 ¼. We are tempering the expectations and siding with the seasonal trend and looking at the sell side at these levels. First support comes in from 416 ½-420 ¾. If you were able to sell against resistance last week, this is the area you want to look at reducing.

Bias: Bearish

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

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

 

 

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

Disclaimer:

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

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.

Euro (March)

Session close: Settled down about 30 ticks

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

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

Bias: Bullish

Resistance – 1.2180-1.22135****, 1.2434**, 1.2608***

Support – 1.20435***, 1.2006**, 1.1950-1.1966**, 1.1918-1.1926**, 1.1797-1.1799***

 

Yen (March)

Session close: Lost about 16 ticks on the session

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

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

Bias: Neutral/Bullish

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

Pivot – 8930-.8937

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

 

Aussie (March)

Session close: Gained a few ticks

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

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

Bias: Neutral

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

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

 

Canadian (March)

Session close: Lost nearly a quarter on the session

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

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

Bias: Neutral

Resistance – .8022-.8044**, .8085

Support – .79675**, .7911-.7932***, .7881**, .7851**, .7730-.7754***

 

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

Disclaimer:

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

Happy New Year!

  1. Hi-Ho Silver!

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

  1. Crude Oil

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

  1. Euro/USD

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

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

Disclaimer:

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

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

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

 

E-mini S&P (March)

Last week’s close: Settled at 2686

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

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

Bias: Neutral/Bearish

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

Pivot – 2688.50-2690.25

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

 

Crude Oil (February)

Last week’s close: Settled at 58.47

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

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

Bias: Bearish/Neutral

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

Pivot – 58.47

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

 

Gold (February)

Last week’s close: Settled at 1278.8

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

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

Bias: Bullish

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

Pivot – 1278-1278.8

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

 

Natural Gas (February)

Last week’s close: Settled at 2.658

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

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

Bias: Bullish

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

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

 

10-year (March)

Last week’s close: Settled at 123’15

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

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

Bias: Neutral/Bullish

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

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

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

 

 

Disclaimer:

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

E-mini S&P (March)

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

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

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

Bias: Bullish

Resistance – 2700*, 2715.25***

Pivot – 2694.50

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

 

Crude Oil (February)

Yesterday’s close: Settled at 57.22

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

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

Bias: Bearish/Neutral

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

Pivot – 57.33-57.35

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

 

Gold (February)

Yesterday’s close: Settled at 1265.5

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

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

Bias: Bullish/Neutral

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

Pivot – 1262.8-1263.2

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

 

Natural Gas (January)

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

Yesterday’s close: Settled at 2.745

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

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

Bias: Bullish/Neutral

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

Pivot – 2.745-2.747

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

 

10-year (March)

Yesterday’s close: Settled at 124’075

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

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

Bias: Neutral/Bullish

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

Pivot – 124’135-124’15

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

 

 

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

 

 

Disclaimer:

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

E-mini S&P (December)

Yesterday’s close: Settled at 2639.50

Note: Today is the last day we will use the December contract, not switching ahead of Friday Nonfarm.

Fundamentals: Equity markets across the globe are broadly higher on a very strong Chinese Trade Balance read and after a key stepping stone on Brexit talks was passed. Both Exports and Imports soared on the read out of China last night and we can see a direct jump higher above resistance at 2640.75 and the day’s high of 2641.25 at the time. The Nikkei, DAX and FTSE are all up more than 1% this morning. In Europe, the Northern Ireland party had held up talks this week between the U.K and the E.U and we noted this as a reason for equity weakness. The discussion moved past phase one in the late hours of the evening and this has also lifted equity markets. Nonfarm Payroll will be front and center this morning and expectations are for 200,000 jobs grained in November with Average Hourly Earnings growth of .3%. We have discussed that as the labor market becomes tighter, the headline read on job growth will have less of an impact once the dust settles. The read on Average Hourly Earnings will be crucial for next week’s FOMC Meeting’s verbiage. Michigan Consumer data is due at 9:00 am CT.

Technicals: Price action remained contained at the 2637.50-2640.75 level through yesterday’s session and after a stubborn afternoon, ultimately led to the retreat to the 2631-2633 level we targeted on the Midday Market Minute. The tape has elevated into this morning and this is exactly what we discussed yesterday with the risk being to the upside ahead of Nonfarm Payroll and ultimately into next week’s Fed rate hike meeting. With the move out above 2637.50-2640.75 we have now become more Bullish and resistance at 2648.25-2651.25 was nearly achieved, but we see a higher high before the session is over. The bears must achieve a close below 2640.75-2643 to encourage further weakness.

Bias: Bullish/Neutral

Resistance – 2648.25-2651.25**, 2666***, 2679-2685**, 2712****

Pivot – 2640.75-2643.

Support – 2632.25**, 2626*, 2618-2619.25**, 2605-2607**, 2594.50-2596****, 2555.50-2565***

 

Crude Oil (January)

Yesterday’s close: Settled at 56.69

Fundamentals: Crude Oil is higher this morning and we were clear yesterday that we do not want to push our analysis or in other words, ‘don’t push your luck’. We advised that Crude Oil likes to bottom out by Friday morning and grind higher into the weekend. This is very relevant today with tensions in the Middle East and the threat of a strike in Nigeria that would disrupt production. Furthermore, China released extremely robust Trade Balance data last night and have helped push price action through resistance.

Technicals: We hope that traders out there listened to our call to take profit on the week near the $56 mark early yesterday morning. Price action did remain contained below resistance at 56.75-56.99 through yesterday’s session but we were pretty adamant yesterday morning and in the Midday Market Minute that we expected the tape to extend into the weekend. Resistance does come in at the 57.35 level today and we will evaluate the settlement and as of now plan to reposition short early next week.

Bias: Bearish

Resistance – 57.35**, 57.71-57.92**, 58.97***, 59.96***, 62.58**

Support – 56.54-56.78**, 55.82-55.95**, 55.00-55.25***

 

Gold (February)

Yesterday’s close: Settled at 1253.1

Fundamentals: This move in Gold, as we have been discussing, is more because of the supply/demand technicals. Though the lack of a catalyst for fresh buying was a major part, we have also expected pressure due to the next week’s Fed rate hike meeting and tax-reform coming down the pipeline. Today’s Nonfarm Payroll has also added to pressure and at time of year that we see a lot of seasonal hiring, the risk for today’s job creation is for it to come in above the 200k expectations. Though the headlines on this number, job growth and unemployment rate, might rule the session, for us we will be watching the Average Hourly Earnings growth more closely. This will be key for next week’s Fed rate hike verbiage and a miss against the +.3% MoM expectations should set Gold up for a nice bottoming pattern in the sessions following next Wednesday. Let’s not forget that Michigan Consumer data is due at 9:00 am CT.

Technicals: Gold is below the 1250.2 level this morning and the door is officially open for a move down to the 1214.5-1225 major three-star support level over the next week. However, we maintain that there is no better reason to buy something than when it is on sale and Gold’s time to shine is not too far away.

Bias: Neutral

Resistance – 1272.7-1273.1**, 1277.1-1278.6***, 1283.3**, 1287.5**, 1292-1292.5**, 1304.7***

Pivot – 1266.1-1268.1

Support – 1262.8***, 1250.2**, 1214.5-1225***

 

Natural Gas (January)

Yesterday’s close: Settled at 2.763

Fundamentals: Yesterday was another bloodbath session for Natural Gas as it slid to the lowest level since February and has lost as much as 10% on the week. The storage number showed a build of 2 bcf when a draw of 7 bcf was expected and this comes at a time of year when we should be seeing draws in the 30 bcf range at least. Though a minor part of this weakness can be attributed to the warm weather one week ago, 65 in Chicago on Monday, we believe this exacerbated weakness is due to low volume ahead of data and overall price uncertainty and algos riding momentum. Yes, there is still uncertainty on weather during the second half of December but at these levels we believe the risk is to the upside and bears will be caught offsides. Overnight snow in Texas is a clear sign of this.

Technicals: Price action clipped major three-star support at 2.753-2.7565 for a brief second trading to a low of 2.747 yesterday. We believe yesterday was overextended and are now reintroducing our Bullish bias as we see great value at this level. We are targeting the 2.916-2.928 level in the near term. A close above here will neutralize weakness and give the bulls a shot to regain an edge back above $3.

Bias: Bullish/Neutral

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

Support – 2.753-2.7565***, 2.486-2.522****

 

10-year (March)

Yesterday’s close: Settled at 124’09

Fundamentals: We were clear early yesterday morning that the tape felt heavy and we expected to see pressure ahead of today’s Nonfarm Payroll, next week’s Fed rate hike meeting and with tax-reform coming down the pipeline. As we have discussed our longer-term focus on today’s Nonfarm read is Average Hourly Earnings. However, headlines will drive some volatility this morning with expectations coming in at 200,000k jobs created in November. Michigan Consumer data takes a back seat today but remains crucial, especially ahead of the holiday season and is due at 9:00 am CT. Global equity markets are all higher this morning with the Nikkei, DAX and FTSE all gaining more than 1%. Strong Chinese data last night and Brexit talks moving past the first phase have all helped treasury yields and put pressure on prices into this morning.

Technicals: As we noted yesterday, that the tap was heavy, we called for a test into first support at the 124’065-124’095 level which we did get. However, further pressure into this morning on global fundamentals sets up the tape to see further weakness into next week.

Bias: Neutral

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

Pivot – 124’095-124’11

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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