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E-mini S&P (December)
Yesterday’s close: Finished at 2574.75
Fundamentals: The Fed stayed pat yesterday as expected and left the curveballs to the World Series Champs the Houston Astros. The Dodgers played a great season and series as well, but this is also so great for the city of Houston that has been through so much this year. Back to the market. There was no Yellen presser after this one yesterday, but the statement continued to show concerns on inflation and gave a nod to higher gas prices for pulling more than its weight this last quarter. The S&P reached a new all-time high of 2585.50 yesterday before a somewhat disappointing session unfolded. Equity prices pared gains as the Washington postponed the unveiling of the tax-reform bill to today. Whether it gets released today and its reception will play a critical role in this market. Facebook released solid earnings but is under pressure due to the Russia issue. We come into a huge day of earnings and an even bigger back half of the week. Companies from massive to simply $1B are due ahead of the bell; Alibaba, AmerisourceBergen, CIGNA, Exelon and Yum! Brands to name a few. Of course, all eyes will be on Apple after the bell. President Trump is expected to announce Powell for the Fed Chairmanship today. The Bank of England is expected to raise interest rates at 7:00 am CT. We have Jobless Claims at 7:30 am CT along with Nonfarm Productivity. Fed official Dudley is expected to speak at 11:20 am CT. And of course, tomorrow we have Nonfarm Payroll and ISM Non-Manufacturing.
Technicals: Price action is consolidating back into the middle of its range after trading to a low of 2563.50 overnight. Yesterday’s open was disappointing to the momentum players as the market has lost more than 20 points. Strong support is building at the 2561.25-2563.25 and buying the first test into here overnight proved to be a strong setup. The 2571.75-2572.75 level will be crucial to watch on a closing basis, back above here and the bulls can remain in the driver’s seat. Below here though the bulls must continue to defend first support. The bears look to achieve a close below 2561.25-2563.25 in order to encourage increased volume on further selling.
Resistance – 2581.75**, 2595-2600**
Pivot – 2571.75-2572.75
Support – 2561.25-2563.25**, 2555.50**, 2539.25-2543***, 2507.75***
Crude Oil (December)
Yesterday’s close: Settled at 54.30, early a dollar from the high of 55.22 Fundamentals: Yesterday’s EIA report was nowhere near as bullish as Tuesday’s API with an overall draw of Crude and the products coming in at about 8 mb, half of API’s overall draw of about 16 mb. The Import and Export numbers did steal the EIA headlines though with both coming in at record lows and highs respectively. The large divergence not only shows Oil independence here in the U.S but also is the key driver in tightening supply. We have a news heavy schedule to finish out the week and with tension picking up once again in Iraq we can look for Crude to put in its common Thursday night low around midnight.
Technicals: The longer term technicals are pointing onwards and upwards with this week’s Golden Cross, the 50-day moving average moving out above the 200 dma, coming on record volume. This is a strongly bullish technical indicator when combined. However, price action has clearly struggled to get out above the high of the year that came on the first week at 55.24. The good news for the bull camp is a close out above here should encourage similar price action as we saw with a close out above 53.11. This means you do not have to pick a bottom, but look for a low to come in overnight tonight and for momentum to push higher through tomorrow’s session.
Resistance – 55.02-55.25***, 56.51-56.79**, 58.97***
Pivot – 54.30-54.45
Support – 53.76-53.90**, 52.86-53.11***, 52.07**
Yesterday’s close: Finished at 1277.3
Fundamentals: Gold did not perform as well as other metals in the complex yesterday but buying interest remains constructive. The fundamental backdrop remains constructive with the Fed expressing concern over soft inflation and furthermore eluded to transitory factors really helping recent inflation data. President Trump is expected to nominate Powell for the Fed Chair today which is expected and shouldn’t stir things up much. The looming question mark is tax-reform and we are expecting to see a bill today, further delays should put pressure on equities and support safe haven assets. Jobless Claims are due at 7:30 am CT along with Nonfarm Productivity. NY Fed President Bullard is set to speak at 11:20 am CT and new Atlanta Fed President Bostic at 5:15 pm CT. Traders Ultimately, traders are waiting on Nonfarm Payroll tomorrow morning.
Technicals: The tape remains constructive as four-star support continues to stand strong but is struggling to get out above first key resistance at 1280.3-1280.8; a close out above here is really needed to extend away from major four-star support. The bulls look to achieve a close out above 1291.3-1292.9 on the week to encourage further buying while the bears look to close into and below four-star support to signal a failure.
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 down .003 after paring loses from a fresh low of 2.847.
Fundamentals: Today’s storage report expects a build of 60 bcf. Mild temperatures continue to be the primary enemy of the bull camp. But heating season is right around the corner and storage levels at 3.71 tcf remain below last year and the five-year average. Still, this number can be a little off-beat since last year’s injection season ended at a record level. We are getting so close to heating season and the final storage numbers remain crucial, builds lower than expected over the next two to three weeks will be bullish.
Technicals: Price action has perked up a little on short covering ahead of today’s report from the lowest level in the December contract since March 2016. First minor resistance comes in at 2.93. The bulls truly need to close back above major three-star resistance at 3.012-3.0225 in order to neutralize this weakness and step back into the driver’s seat.
Resistance – 2.93*, 2.981**, 3.012-3.0225***, 3.054-3.064**, 3.103**, 3.179-3.198***, 3.22**, 3.323-3.36***
Support – 2.961**, 2.753-2.7565***, 2.486-2.522****
Yesterday’s close: Lost 1 tick at 124’29
Fundamentals: Support was brought to the 10-year as equity markets weakened off all-time highs yesterday morning. The Fed did not bring any surprises yesterday though their concerns on soft inflation can potentially be a great catalyst to higher prices if data between now and the end of the week miss. If the unveiling of the tax-reform bill gets pushed back further this should continue to support prices. Jobless Claims and Nonfarm Productivity is due today at 7:30 am CT. Tomorrow truly brings the heat with the all-expected Nonfarm Payroll Report at 7:30 am CT. ISM Non-Manufacturing is to follow at 9:00 tomorrow.
Technicals: Resistance at 125’02-125’035 is holding strong. Traders need to keep an eye on equities and weakness here into the end of the week should push the 10-year out above resistance. It feels as if price action in the 10-year is attempting a bottom and it no doubt at a critical inflection point. We remain longer term bullish but have begun to lift some near-term caution.
Bias: Neutral/Bullish 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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