11/1/17
E-mini S&P (December)
Yesterday’s close: Finished the session at 2572.75.
Fundamentals: The S&P is up 10 points this morning and breaking out to new all-time highs ahead of today’s Fed meeting. November has started off with a bang as major indices across the globe are all largely in the green. The Nikkei is up nearly 2% and the German DAX has extended new all-time highs while the Euro STOXX 50 and 600 are both trading at two-year highs and breaking out. Fresh money is pouring in to start the month with strong earnings and a calming of the Catalonian crisis greasing the wheels. The S&P has followed suit despite House Republicans delaying the release of the tax-reform bill by a day. We also have a huge day ahead with ADP Payrolls due at 7:15 am CT, Manufacturing PMI at 8:45 and ISM Manufacturing at 9:00. The Fed will release a policy statement at 1:00 pm CT and is expected to lay the ground work for a December hike which is already priced in by nearly 100%. We also have Facebook earnings after the bell. Equity markets are moving higher this morning with such conviction it is hard to image what could throw them off and we do not see the Fed pitching a curveball. The bigger wild card remains the tax-reform bill which has clearly bought itself time.
Technicals: There is nothing to fight in this market, the S&P is now attempting to breakout above resistance at the 2581.75 level and eyes its next round number. There are hurdles between now and the end of the week, and we must see a close above 2581.75 in order to maintain an immediate term Bullish bias.
Bias: Bullish
Resistance – 2581.75**, 2595-2600**
Support – 2571.75-2572.75**, 2561.25-2563.25**, 2555.50**, 2439.25-2443***, 2507.75***
Crude Oil (December)
Yesterday’s close: Crude settled yesterday at 54.36 but extended gains above 54.45 to a high of 54.86 before the close of the electronic session.
Fundamentals: Yesterday’s API report is about as bullish as you can get; they reported a -5.087 mb of Crude vs -2.1 mb expected, -7.697 mb of Gasoline vs -2 mb exp and -3.1 mb of Distillates vs -2.5 exp. Crude is at the highest level since it opened the year trading to 55.24, price action reached 55.22. Let’s get something clear, this is not just a Crude Oil story, though Crude has its clear catalysts, but this is a global growth story and we can see that with the base metals as well. One of those catalysts from Crude is exports; Brent Crude is trading at a more than $5 premium to WTI and this has allowed for an
arbitrage situation and a higher demand for US Crude abroad. Official numbers from the EIA are due out today at 9:30 am CT and the expectations are for -1.756 mb Crude, -2.128 mb Distillates and -1.506 mb Gasoline. However, it is important to remember the markets true expectations are much higher than this as buyers have already bought because of last night’s API. We must see data from the EIA that is much more in line with last nights in order to break out to new highs on the year.
Technicals: Crude Oil is on a mission to take out this year’s high once it broke out above 53.11 on Friday. We have been calling for this level to be achieved but it is also important to realize how bullish this backdrop is as we now have the Golden Cross with the 50-day moving average above the 200 dma. Furthermore, the market is in backwardation going out to 2022 and this should bring additional support. A close above 55.02-55.25 will encourage the next leg to 58.97. We only remain Bullish/Neutral instead of outright Bullish due to inventory data volatility.
Bias: Bullish/Neutral
Resistance – 55.02-55.25***, 56.51-56.79**, 58.97***
Support – 54.45-54.65**, 53.76-53.90**, 52.86-53.11***, 52.07**
Gold (December)
Yesterday’s close: Settled at 1270.5.
Fundamentals: Gold is higher this morning ahead of today’s Fed meeting and as the entire metal complex is seeing a surge. Gold’s support comes from a combination of fundamental and technical forces, but we must not ignore our key four-star support level when looking at the underlying fundamental backdrop. Buyers are stepping in at a key level ahead of today’s Fed meeting but also as uncertainty looms for tax-reform and what develops from the Mueller investigation. Investors are clearly not ok with cutting long equity positions and adding Gold to a portfolio until the metal is no longer constructive has proven to be a great strategy this year, why not continue. We remain long term bullish and the Dollar Index has soared over the last week, but we do not see the Dollar staying higher for longer and expect this to be a key catalyst for Gold’s next leg higher; whether this comes today, this week or a later remains to be seen. ADP Payrolls are due at 7:15 am CT and expectations are at 200k, Manufacturing PMI is due at 8:45 and ISM Manufacturing at 9:00. These will all play a key role for Gold today ahead of the Fed meeting.
Technicals: Four-star support, four-star support, four-star support. We cannot emphasize this rare level enough. Gold has traded to a new high on the week, sticking its head above resistance at the 1280.3-1280.8 level, we want to see a close above this level in order to neutralize the price action over the last week. It is important to remember that all bets are off on a move and close below 1262.8-1269 and the sellers are due to come in.
Bias: Bullish
Resistance – 1280.3-1280.8**, 1286.1*, 1291.3-1292.9**, 1298.4-1300.7**, 1308.4-1312.6**
Support – 1262.8-1269***, 1243.6**
Natural Gas (December)
Yesterday’s close: Settled yesterday at 2.896
Fundamentals: As many commodity sectors are benefiting from the prospects of better global growth, Natural Gas is one that is not. Weather remains a massive headwind and temperatures here in Chicago are supposed to hit 60 degrees for at least one day over the next three. New York City is expected to be in the 70s with a low of 60 heading into the weekend. Prospects of colder weather are around the corner, but the pendulum has swing back and is pricing in a very mild November.
Technicals: Price action took out the Sunday night low and as we discussed yesterday this opened the door for the sellers. We remain long term bullish but cannot defend this position in the near term until we see more clarity or a test into major three-star support at 2.753-2.765.
Bias: Neutral/Bullish
Resistance – 3.012***, 3.051-3.054**, 3.103**, 3.179-3.198***, 3.22**, 3.323-3.36***
Support – 2.961**, 2.753-2.7565***, 2.486-2.522****
10-Year (December)
Yesterday’s close: Settled yesterday at 124’30
Fundamentals: Today is what Treasury traders have been waiting for as we kick off with Manufacturing data this morning before the Fed later today. Global equity prices are on a tear this morning with fresh money buying anywhere and everywhere, this has put pressure on Treasury prices. The release of the tax-reform bill has been delayed until tomorrow and this along with any further developments from the Mueller investigation could bring the bulls out of the woodwork. This week is truly just getting started and we know no one has forgotten the announcement of the next Fed Chair as well as Nonfarm Payroll Friday and ISM Non-Manufacturing Friday. We remain neutral until we get through the gauntlet this week and if price action is stable, you can expect us to begin to turn bullish.
Technicals: Resistance at the 125’02-125’035 level is working to keep prices in check, but the real heavy lifting is being down by breakouts in equity indices around the globe. First support comes in today at 124’19 and we are watching this level today because a move below here could accelerate the selling.
Bias: Neutral
Resistance – 125’02-125’035**, 125’19**, 125’255**, 126’01**, 126’15***
Support – 124’19**, 124’00**, 122’22 – 122’29***
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