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Last Week’s Close: March corn futures finished last week’s trade up ¾ of a cent, trading in a range of 7 ¼ cents.
Fundamentals: Corn futures are near unchanged to start the shortened week. On Friday, the USDA announced a sale of 205,744 metric tons to Unknown for the 2018/2019 marketing year. It is option expiration week, this may play a role in price action through the week. There is not a lot of new news expected this week, so much of our attention will be on money flow and technicals.
Technicals: Not much has changed on the technical landscape, as prices remain in a 2-month range. On the support side, we have defined that as 371-372 ½. A break and close below here will give the bears a clear-cut advantage. On the resistance side of things, bulls need to reclaim ground above 379 on a closing basis.
Resistance: 378 ¾-379 ½***, 382-384 ½**, 388-390 ½****
Support: 371-372 ½***, 367 ¼-368 ½****, 354 ¾****
Last Week’s Close: March soybean futures finished last week’s trade down 8 ¾ cents, trading in a range of 18 ¾ cents.
Fundamentals: Soybeans were softer last week on the lack of bullish headlines regarding any meaningful progress on trade. This will continue to be an area of interest for the foreseeable future. NOPA crush came in at 171.630 million bushels, this makes it in the top 5 for any month on record. Option expiration may be an influencer on price action as we get into the back half of the week, we will keep you posted on the strikes with high open interest.
Technicals: The market tested and managed to hold significant technical support perfectly on Friday, we have defined that as 899 ½-901 ¾. This pocket contains the psychologically significant $9.00 handle, 100-day moving average, previously important price points, and trend line support from the contract lows in September; which was tested and held at least once in the previous 6 months. This is a MUST HOLD level on a closing basis. And frankly, the bulls do not want to see it retested during normal trading hours.
Resistance: 920-922 ½***, 931 ¼**, 941-947****
Support: 899 ½-901 ¾****, 890 ½-891 ¼**, 880 ½**
Last Week’s Close: March wheat futures finished last week’s trade down 14 ¾ cents, trading in a range of 24 ¾ cents.
Fundamentals: A weaker grain complex, poor exports, and a surging U.S. Dollar was too much for wheat to overcome last week, leading to a technical breakdown and a wave of selling on Thursday. In the overnight and early morning trade we have seen prices trade on both sides of unchanged as the market hovers near the psychologically significant $5.00 handle.
Technicals: In our Friday morning report we said: “The break below support yesterday leaves the door open for a test of 499-501 ¼.”. This played out T as prices retreated to our significant support pocket. The bulls must defend this on a closing basis, a failure to do so could lead to a retest of the contract lows of 482 ¼, from December of 2017.
Resistance: 512**, 522 ¼-525***, 531-532**
Support: 499-501 ¼****, 482 ¼-488****
E-mini S&P (March)
Last week’s close: Settled at 2777, up 33.50 on Friday and up 70.75 on the week
Fundamentals: The risk-on chase finished broadly higher on Friday. The S&P settled at the highest level since the first trading day of December and elevated into the last minutes of the electronic close as shorts were squeezed. Sentiment from trade talks in Beijing was upbeat, as expected, but the news of continued talks in Washington this week added an additional tailwind. This created a path of least resistance higher ready to exacerbate the next ounce of positive news. Investors didn’t have to wait long as ECB official Coeure spoke Friday morning and pointed to bringing back the TLTRO at the onset of recessionary conditions in the Eurozone. This news lit a fire under European banks and the DAX led global markets north finishing 2.7% from its session low. Discounting the short-covering in the final minutes, the day and thus the tone was set; investors and portfolio managers do not want to miss this move. President Trump held a press conference in the Rose Garden Friday afternoon to announce a national emergency to fund the border wall and the market barely budged.
This new week gets underway after Monday’s President’s Day holiday with a fresh round of trade talks in Washington. Hopium continues to inflate the market but outside of the expected upbeat comments there still has been zero substance on the structural issues; the stealing of intellectual property and forced technology transfers. Any agreement without these being achieved is a failure.
Political headwinds domestically come from 16 states forming a coalition to challenge President Trump’s move to get border funding by declaring a national emergency. Furthermore, the FBI found it difficult to stay out of the headlines this weekend. Much of this will stay in the news as the week unfolds.
Walmart was the earnings darling of the week and they beat. The stock traded up as much as 4% premarket but has pared gains to +2.5%. There is no major economic data today. Cleveland Fed President Mester speaks at 7:50 am CT and given the ECB’s recent tone, comments from ECB Official Praet at 9:00 am CT will be important. Data from Italy this morning was another mess but ZEW Sentiment data from Germany and the Eurozone was overall not as bad as expected.
Technicals: Technically, it is important to understand that FAANG did not participate in Friday’s rally; all finished in the red. While the S&P beat its highest close on this move by 1%, the NQ could not settle out above major three-star resistance at 7054-7066 which is now adjusted to continue to align with the 200-day moving average that comes in at 7068 today. We do not believe this rally can stick without the participation of FAANG and more broadly the NQ. Ultimately, this brings a bit of an inflection point. Given the over-extension of this rally, we have only major three-star resistance levels in the S&P. The first comes in at Friday’s settlement aligned with the Sunday night high at 2777-2782.50 with the next above aligning multiple indicators at 2790.75-2796. To the downside, first key support comes in at 2758.50-2763.50. The next true pullback should test 2743.50 at minimum. For the NQ, Friday’s swings lower could not chew through key support at 7016.25-7021, a move below here would signal the market is willing to become vulnerable to waves of selling.
Resistance: 2777-2782.50***, 2790.75-2796***, 2814-2819***
Support: 2758.50-2763.50**, 2743.50***, 2729.50-2731.50**, 2719.50-2721.50**
Resistance: 7054-7068***, 7095-7101***, 7139-7169***
Support: 7016.25-7021**, 6972-6982.25***, 6955**, 6928.25*, 6905.50-6914.25***, 6810.50-6837.25***
Crude Oil (April)
Last week’s close: Settled at 55.98, up 1.19 on Friday and up 2.89 on the week
Fundamentals: Crude Oil moved into technical breakout territory on Friday after ignoring a bearish EIA report into Thursday. OPEC and non-OPEC cooperation and jawboning has worked to keep this market elevated into the onset of a seasonally bullish time of year. Reduced Saudi and Venezuelan exports have trickled into U.S inventory data to diminish the bloating numbers from December and through January. Crude points to wanting to go higher, and while we did turn Bullish on Friday in order to ride the aforementioned breakout wave, we are more concerned that the currently healthy risk-environment could flip at any point. For this reason, we will now reduce that Bullish Bias and discuss more technically below.
Technicals: The handcuffs were removed last week at the expiration and roll of the March contract into front-month April. Crude Oil confirmed a breakout above major three-star resistance at 55.55-55.75 on Friday. Price action must continue to close above here in order to maintain a path of least resistance higher; a failure to do so will encourage a wave of profit taking. Friday’s move was a very clear wave higher, however, that move is showing signs of exhaustion and for this reason we will take a more cautious approach. Although the path of least resistance is higher as long as the conditions above are met, given the broader stretch for yield we do not want to get caught if the tables flip. For this reason, we are more Neutral than Bullish.
Resistance: 57.20**, 58.16-58.35**, 59.63***
Support: 54.79-54.90**, 53.51***
Last week’s close: Settled at 1322.1, up 8.2 on Friday and 3.6 on the week
Fundamentals: Gold is breaking out above its previous swing high in what has been an extremely favorable technical and fundamental landscape. We believe there to be significant upside given that we find the Dollar near the high end of its range. Upon weakness in the Dollar, we believe Gold will quickly trek to its 2018 high of 1369.4. Today’s economic calendar is bare but despite comments from Cleveland Fed President Mester that the Fed Funds rate may need to move higher, Treasuries and Gold have pushed north to session highs at the onset of U.S hours.
Technicals: On Friday, we went from Bullish/Neutral to outright Bullish Gold upon a move out above first key resistance at 1321.7-1323.4. We pointed to less of a focus on the recent swing high of 1331.1 and instead major three-star resistance at 1337. Price action is now testing this level and traders should look to capitalize on long Gold positions, especially if they pressed longs upon the breakout at the end of last week. Our narrative with trading Gold has never changed, capitalize on strength so that you can prepare to buy weakness.
Resistance: 1337***, 1350**, 1369.4***
Support: 1321.7-1323.4**, 1312.9-1315.4**, 1306.3-1306.5***, 1300.5**, 1281.5-1284.5***
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