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Yesterday’s Close: July corn futures finished the session down ½ of a cent, this after trading in a range of 3 ¼ cents. Funds were estimated buyers of 2,500 contracts on the day.
Fundamentals: Yesterday afternoon the USDA released their weekly plantings report. Corn planting is said to be 62% complete, this was above expectations and is now just slightly behind the 5-year average pace of 63%. Despite the jump in planting progress, the market has found some legs in the overnight and early morning session. Bulls will want to see volume confirm price on the floor open. Weekly export inspections came in at 1,554,495 metric tons, this was within the range of expectations of 1,400,000-1,800,000 metric tons; last weeks inspections were 1,916,000 metric tons.
Technicals: July corn futures held the 50-day average nearly perfect to start the week which keeps our support pocket from 390 ½-394 ½ intact. Higher lows and higher highs have been the trend for the last two months, so long as support holds, we will mark another higher low. We remain bullish on corn and welcome pullbacks as a buying opportunity. 397 ¼ is the pivot point today, if the bulls can achieve a conviction close above this level, we could see the market make a run back towards the top end of the range which comes in from 407-408 ½.
Resistance: 407-408 ½***, 425 ¾-426 ½**
Pivot: 397 ¼
Support: 390 ½-394 ½***, 379 ½-383 ½****
Yesterday’s Close: July soybean futures finished the session up 15 ¾ cents, this after trading in a range of 24 ¼ cents. Funds were estimated to have been buyers of 6,000 contracts.
Fundamentals: July soybeans erased a large portion of Friday’s losses on hopes that the Chinese Vice Minister and President Trump will make progress in trade negotiations this week in Washington; what comes of this meeting could set the tone for the remainder of the year. The USDA released their weekly planting progress report yesterday afternoon. Soybeans are said to be 35% planted, this was above expectations and above the 5-year average pace of 26%. Weekly export inspections came in at 688,195 metric tons which was above the expectations of 450,000-650,000 metric tons. Last week’s inspections came in at 535,000 metric tons. We continue to keep a close eye on the soybean meal market as it will likely have a strong influence on soybean price action.
Technicals: Yesterday morning we were on RFD-TV discussing a big technical barrier at 1027, that was tested and held yesterday with the high coming in at 1026. The 3-star resistance level from 1026 ½-1028 ¼ remains intact for today’s session. So long as the bears can defend this pocket on a closing basis, they will remain in control. Lower lows and lower highs has been the trend which has kept the bears in control over the past few months. A break and close back below 1013-1016 opens the door for a breakdown below the psychologically significant $10.00 handle. The next significant support pocket comes in from 988 ¾-994 ¾. This pocket represents a key retracement along with the lows from the original “tariff talk” scare on April 4th.
Resistance: 1026 ½-1028 ¼***, 1040-1042 ½**
Support: 1013-1016***, 988 ¾-994 ¾****, 965 ¼-969 ½***
Yesterday’s Close: July wheat futures finished the day down 6 cents, this after trading in a range of 8 ¾ cents. Funds were estimated to have been sellers of 4,000 contracts on the session.
Fundamentals: The market has struggled to find new bullish news to stoke positive momentum; the lack of new news has led to a breakdown over the last week (see technicals below). The USDA released their weekly crop progress report yesterday which showed the spring wheat crop is 58% planted, this was above expectations but still lags the 5-year average of 67%. The winter wheat crop rating came in at 36% good/excellent, this compares to analyst estimates of 34%. Weekly export inspections came in at 404,180 metric tons, this was within the range of expectations from 250,000-500,000 metric tons. Last week’s inspections came in at 332,000 metric tons. We continue to keep a closes eye on the KC contract as it will have an influence on price action.
Technicals: The market has been bleeding lower for the better part of the last two weeks. The breakdown below technical levels have led the selling to feed on itself and we are expecting that to continue in the near term. We see significant support in the market from 477 ½-482 ¾, this represents a key retracement on the years range, along with the 100 and 200 day moving average. At this point, we would not be surprised to see a relief rally. So, if you are short this is where we would encourage you to cover some if not all, and if you are bullish this is an area to look for a short-term bounce.
Resistance: 499-502 ¾***, 523-524**, 543 ½-545***
Support: 477 ½-482 ¾****, 467 ¾**, 458 ¾-463***
E-mini S&P (June)
Yesterday’s close: Settled at 2731, up 1.50
Fundamentals: Equity markets are bit subdued this morning. Price action struggled to hold ground near major three-star resistance into yesterday afternoon and retreated 0.75% from the 2741.25 high. Overseas markets are very mixed this morning but not far from unchanged. The heavy slate of data has left much to be desired; German GDP and Sentiment missed, as did Chinese Fixed Asset Investment, British jobs and Eurozone Industrial Production. However, Eurozone Sentiment and Chinese Industrial Production were positives. The barrage of Retail data began this morning with earnings from Home Depot; the blue chip is down 3% after missing sales. This begs the ever-present questioning of the consumer with U.S Retail Sales numbers to be released at 7:30 am CT. Another important aspect of this read is the effect on the U.S Dollar which has gained more than 0.5% from yesterday’s low, mostly due to weakness in the Euro. This creates a push and pull between the consumer and Dollar strength on the data today. It is no coincidence that the Dollar has bounced back, and the S&P is lower. Lastly, we pointed to U.S and China trade talks on here yesterday as well as the Midday Market Minute. These are expected to begin in Washington today. The market losses memory from week to week and last week’s strength can quickly become a thing of the past. A tweet from President Trump on Sunday gave positive momentum to trade talks that were otherwise not on the imminent radar; this storyline now quickly slips into the driver’s seat as a four-day meeting begins. The important thing to understand here is that there is now a positive vibe around these talks and a poor conclusion will likely hurt the market from this level, despite having nothing to do with last week’s rally.
Technicals: Price action has struggled to hold the 2729.50-2731 pivot. While this leaves a small opening for the bears, first key support at 2716.50-2718.50 is crucial; if this level holds, the tape should find its way back into the green or retesting 2730 before close. Waves of selling came late yesterday morning when the Russell 2000 tested but failed to get above its all-time high. With price action 1% from yesterday’s high and at the psychological 1600 mark, watch the Russell 2000 today as a momentum indicator. Strong support here comes in at 1595.9 and a bounce off this level could get legs.
Resistance: 2744-2749***, 2769.75**, 2796-2807.25****
Support: 2716.50-2718.50***, 2707-2710**, 2696.50**, 2683.75-2688.50***
Crude Oil (June)
Yesterday’s close: Settled at 70.96, up 0.26
Fundamentals: Crude Oil is making its way higher this morning and while the WTI contract we trade most often is merely testing last week’s high of 71.89, Brent has already traded to a new swing high and is up more than 2% on the week. This morning’s rally seems to have been stalled by the strengthening U.S Dollar, the Dollar Index is up about 0.5% after a surge this morning. Inventory data comes into the picture today as analysts release their expectations. API is due after the bell at 3:30 pm CT.
Technicals: Price action is firm this morning and out above minor resistance at 71.36; the longer it can hold above here, the more likely we are to see a push through $72. Still, our upside target and major four-star resistance comes in just above at 72.35 and poses a big barrier. The session low of 70.79 aligns with support at 70.70, a move below here could snowball a bit as longs manage risk ahead of inventories.
Resistance: 71.36*, 72.35****, 76.50***, 80.00****
Support: 70.70-70.79**, 70.26**, 69.76**, 69.26-69.31***
Yesterday’s close: Settled at 1318.2, down 2.5
Fundamentals: Gold has gotten hammered since seeing large selling just after yesterday’s settlement; 27,500 contracts traded in the hour that followed and Gold went from the 1318.2 settlement to an electronic close near 1313. The selling has not stopped as the metal slips further into this morning. What had become an extremely constructive bottoming process over the last two weeks is now out the window. The Euro is partly to blame; after surging early yesterday morning on hawkish comments from one ECB official, another completely negated the argument. Additionally, poor data from Europe this morning has further aided the currency path. We now look to an absolutely critical read on Retail Sales due at 7:30 am CT. NY Empire State Manufacturing is also due at that time. Dallas Fed President Kaplan speaks at 7:00 am CT, Business Inventories are due at 9:00. San Francisco Fed President Williams speaks at noon CT and TIC data is due at 3:00 pm CT.
Technicals: Price action is now well back below the 200-day moving average at 1315.8 and this failure is worrisome. As bullish as we are in the long term, we must exude caution here by beginning to Neutralize our Bias. First key support comes in at 1302.3-1306.6 and the psychological $1300 mark brings major three-star support right below; this pocket of support is very strong, but traders must be cautious as this is the third test. Only a close back above the 200-day moving average will neutralize the weakness for now.
Resistance: 1322.4-1323.9**, 1327.2-1327.9***, 1335.9**, 1343.8**, 1356.7-1359**, 1367.8-1370***
Support: 1302.3-1306.6**, 1300***, 1296.2***
Natural Gas (June)
Yesterday’s close: Settled at 2.842, up 0.036
Fundamentals: The market pushed out above major three-star resistance yesterday and the door is open for further gains to the psychological $3 mark. According to EIA estimates, stocks are 863 bcf less than last year at this time and 520 bcf below the five-year average. This is bullish and price action is beginning to show conviction. We do anticipate higher than average cooling days in the back half of June and through July; if all if this is the case, than we should anticipate seeing $3+ Natural Gas in weeks to come.
Technicals: Price action close out above major three-star resistance at 2.8169-2.837 yesterday and has held gains well into this morning. The path is now paved to 2.93 and then 3.00. However, a close back below the 2.817-2.837 level could snowball as a failure.
Resistance: 2.93**, 3.00***
Support: 2.749-2.751**, 2.66-2.69**, 2.486-2.532****
Fundamentals: The 10-year yield is now back above 3% but can it hold? Aiding gains has been a surge in the German Bund yield by 7.5 basis points. While the start of the week has been characterized by soft data, a miss on Retail Sales almost surely won’t allow yields to hold these gains. In other words, if we see poor U.S data today we imagine seeing the 10-year prices back to unchanged on the week. Retail Sales along with NY Empire State Manufacturing are at 7:30 am CT. Dallas Fed President Kaplan speaks at 7:00 am CT, Business Inventories are due at 9:00. San Francisco Fed President Williams speaks at noon CT and TIC data is due at 3:00 pm CT.
Technicals: This is another test deep into major four-star support, today will be critical in defining if this level can hold or again reject price action. If this does not hold on a closing basis, we will quickly become Neutral. However, a hold could really get the tape going.
Resistance: 119’285-120’01**, 120’09**, 120’15-120’17**, 120’24-120’28***
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