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E-mini S&P (March)
Yesterday’s close: Settled at 2734
Fundamentals: The 10-year treasury yield hit a high of 2.944 early yesterday and has backed off since. On the flip side we have a rare major four-star support in the 10-year treasury futures at 119’20-120’00 and yesterday’s low was 120’01 before bouncing. The relief in yields has helped equity markets find a path of least resistance higher. Additionally, Asian markets stopped bleeding lower on Wednesday. Earlier in the week we discussed how the Nikkei was down 12% from its high and the delay in BoJ chief Kuroda’s reappointment has encouraged a path of least resistance higher in the Yen; a stronger currency will hold back domestic equities. Overnight, the reappointment was made official and to no surprise the Yen began paring gains. Also to no surprise, the Yen turned around after achieving our rare major four-star resistance. To finish out the week Build Permits and Housing Starts are due at 7:30 am CT and the first look at February’s Michigan Consumer data is due at 9:00 am CT.
Technicals: Yesterday morning we called for a test into major three-star resistance at 2726.75-2733 and that is exactly what we got by the day’s end. We also noted that if you have not been in, don’t force a trade, it is important to protect your capital. After a strong close, the overnight high was 2746.75 and our next key level at 2745 has so far held strong. We would imagine the market is getting a bit tired at this point and we are completely Neutralizing our Bias ahead of the weekend. There is a trend line from the lows that is rising sharply and comes in this morning at 2595.50, we would reconsider a long position upon a test into here.
Resistance: 2745**, 2763***. 2794.50-2796***
Pivot – 2726.75-2733
Support: 2595.50-2701.75**, 2686.50-2688**, 2764**, 2738**, 2712-2719***
Crude Oil (April)
Yesterday’s close: Settled at 61.17
Fundamentals: Another session of Dollar weakness yesterday extended overnight to put the Dollar Index at the lowest level since December 2014. This continues to be a very supportive story for Crude Oil. Another major catalyst this week is not only jawboning from Saudi Arabia but some action. They have stepped up to defend the $60 level by saying they would rather see an undersupplied market while announcing a reduction of 100,000 bpd in production next month coupled with capping exports. Furthermore, it would seem they are working on new acronyms to bring fear to the bear camp.
Technicals: Price action in the April contract traded to a session high of 61.73 before peeling back slightly into this morning. We are watching the 61.14 level on a closing basis and we must see a close below here to keep the bulls from maintaining an edge on yesterday’s reversal. The March contract does not fall off the board until Tuesday, at this point we believe the market could see renewed selling pressure.
Resistance: 61.75*, 62.15**, 62.63-63.15***, 64.39**, 66.00**, 66.66-66.87***
Pivot – 61.14
Support: 59.85**, 58.99-59.03**, 57.26-57.95***
Yesterday’s close: Settled at 1355.3
Fundamentals: Gold’s rise is as much a Dollar story as it is anything else. But let’s not underestimate the power of inflation in this rise. You don’t have to look further back than the summer of 2016 to see the last time Gold truly put the $1400 barrier to the test with a high if 1377.5. Yes, the Brexit was a crucial geopolitical uncertainty driving price action, but it was not coincidence that U.S Core CPI also peaked that summer. Gold’s trend is very healthy, and we maintain that we believe the metal will breakout above $1400 in the next three to six months; just as we said last week when Gold was nearing $1300. As for the Dollar, it is important to note that the Yen, which has been a driving force in Dollar weakness, hit and reversed from our rare major four-star resistance level detailed in our FX recap. In the short-term, U.S data will drive swings, Building Permits and Housing Starts are due at 7:30 am CT and the first look at February Michigan Consumer data is at 9:00.
Technicals: Price action traded to a high of 1364.4 overnight. We have major three-star resistance at 1367.8-1370 and because of this test, we are Neutralizing our Bias slightly. Let us be clear though, we are unequivocally long term bullish on Gold. Traders should use opportunities like this to take advantage of strong weeks..
Resistance: 1367.8-1370***, 1377.8**, 1392.6***, 1432.9**
Support: 1347-1351.4**, 1340.4**, 1328.4**, 1302.3-1309****
Natural Gas (March)
Yesterday’s close: Settled at 2.58
Fundamentals: Yesterday’s storage draw came in higher than expected at -194 bcf. Price action lifted briefly but could not hold ground at 2.60. The bears contain a clear edge and a warmer front has begun to move through the Midwest. This has worked to keep price action depressed and has directly affected storage expectations two weeks out. Though we are more Neutral, remember there is value at this level and the market is not pricing in a wintery surprise.
Technicals: The technicals remain undeniably weak. However, our rare major four-star support sits just below the market and is working to keep price action propped up. It is a solid value play here ahead of the weekend as long as traders can keep risk managed. One way to do it is buying a put to avoid a gap.
Resistance: 2.607*, 2.681-2.693**, 2.8134-2.837***, 2.896-2.902**
Yesterday’s close: Settled at 120’145
Fundamentals: Price action came off overnight session lows into yesterday morning. Let’s not underestimate the technical rejection against our rare major four-star support as price action neared the psychological 3% yield area with a high of 2.944. Data today will be key, but one thing we believe is favorable to higher prices is the slight flattening we are seeing on the yield curve. Building Permits and Housing Starts are due at 7:30 am CT while the first look at February Michigan Consumer data is 9:00.
Technicals: If you blinked early yesterday morning, you missed the test near major four-star support. A level in which we have told clients over the phone we view as a generational support. Price action is testing into the key pivot area at 120’15-120’18 and a close above here will work to neutralize such extreme weakness. Still, the tape is extremely weak, but the selling feels as if it has once again been exacerbated.
Resistance: 120’315-121’05***, 121’15-121’175**, 121’31-122**, 122’25-122’29***
Pivot – 120’15-120’18
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