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E-mini S&P (June)
Yesterday’s close: Settled at 2772.25, unchanged
Fundamentals: Equity markets around the globe are seeing a bit of pressure heading into the morning. Most major benchmarks, including the DAX and Nikkei, have lost about 0.5%. The Hang Seng is down 1.7% and emerging markets continue to weigh on global sentiment. Last night Trade Balance data from China showed solid global demand but investors fear a widening of their surplus with the U.S will encourage a harder-lined attitude from Washington. Domestically, the NQ is again leading the way to the downside, trading as much as 2% from its newly set record high yesterday. Apple has shed more than 1% this morning on news they asked suppliers to manufacture fewer components, eluding to lower demand of their iPhone. The G7 Summit begins today and will be a major focus for traders and investors alike. Tensions are running high after the White House imposed tariffs on the EU, Canada and Mexico one week ago. President Trump has already announced an early departure on Saturday in order to prepare for the North Korea Summit in Singapore. Despite not backing down from his tough stance on trade, President Trump will hold one-on-one meetings with many of the leaders. We must keep an ear to the ground as the day develops. The economic calendar is light with only Wholesale Inventories and ECRI Weekly due at 9:00 and 9:30 am CT. Next week, we look to the North Korea meeting being held during Monday U.S hours and the trio of major central banks with the FOMC delivering a policy statement on Wednesday.
Technicals: The overnight low in the S&P was 2752 and the tape is recovering into this morning. Major three-star support comes in at 2755.50-2756 and this level remains very crucial on a weekly closing basis; a close below here will leave a large failing tail. Considering the fundamental landscape, sentiment that was too bullish early in the week and a 14-day RSI that extended to 65, we are going to take a very cautious approach ahead of the weekend. We believe there are trading opportunities on both sides and what becomes most important is staying nimble. Minor resistance comes in at 2765.75, this is the 50% retracement from yesterday’s high and the overnight low, we would not be surprised to see the market come back to here multiple times before picking a direction. The key level to the upside to watch is 2769.25-2772.25; with sustained price action above here, the bulls gain an edge and will look to take it higher. To the downside we are watching 2762.50, below here the door is open for the bears. As a reminder though, major three-star support comes in below. If selling picks up, major three-star support in the NQ comes in at 7000-7013.
Resistance: 2769.25-2772.25**, 2807.25-2808.50****
Support: 2762.50*, 2755.50-2756***, 2739-2741.75**, 2728.75-2731.75***
Crude Oil (July)
Yesterday’s close: Settled at 65.95, up 1.22
Fundamentals: Yesterday was a solid recovery session for a beat-up market. However, strong technical resistance has kept price action in check. Fundamentals overnight were also not so favorable; data from China showed that Crude Oil imports fell from a record one month ago and emerging market sentiment has weighed on global demand growth prospects in the near-term. Additionally, surging U.S output during this recent down move has made buyers more cautious on Friday’s ahead of Baker Hughes rig count data at noon CT. Lastly, China’s Trade Balance data showed a widening surplus with the U.S and there are fears that this will encourage a more hard-lining stance in Washington. We remain upbeat at this level in Crude Oil. Our belief is that the risk is to the upside ahead of OPEC, shale production is priced in and other geopolitical factors such as Venezuela will help keep a bid on weakness.
Technicals: Despite an encouraging tape through the second half of the week, major three-star resistance at 65.80-66.08 remains a serious hurdle and price action again struggled to hold above there overnight. We are not technically discouraged, there has been a lot of damage to this chart and it is being repaired. However, traders must keep an eye out for a potentially developing bear flag pattern given the recent series of marginal higher highs and marginal higher lows; a close below strong key support at 64.73-64.97 which aligns the 100-day moving average, the lowest close and other technical indicators, will be very bearish. First key support comes in at 65.43 and holding this level will keep the tape constructive.
Resistance: 65.80-66.08***, 67.53-67.63***, 68.51-68.67**, 69.35-69.58**, 70.18-70.55***
Support: 65.43**, 65.20*, 64.73-64.97**, 63.73-64.22***, 61.11***
Fundamentals: The global landscape is helping Gold keep a bid despite the Dollar Index gaining about 0.5% overnight on a weaker Euro. Dragging the Euro is weak data out of German. However, the technicals cannot be overlooked and our immediate term upside target from the FX Rundown was achieved in the Euro while strong support in the Dollar Index has also held. Weakness in the emerging markets has kept a bid on safe haven assets, Treasuries and the Yen performed well off session lows yesterday. Although Gold has not extended gains, it has held ground. There is no major data from the U.S today other than Wholesale Inventories at 9:00 am CT. The G7 Summit gets underway and trade tensions will be the hot topic to close out the week; outside of a stronger Dollar, that overall global landscape is supportive to Gold.
Technicals: Gold is holding ground at the psychological $1300 mark and above the pivot which is great. However, yesterday’s high of 1307.8 was the latest in a series of failed attempts to get out above and close out above major three-star resistance at 1308.7-1309.6. Gold must do this in order to put the bulls back into the driver’s seat and open the door for another 2%.
Resistance: 1308.7-1309.6***, 1315**, 1321**, 1332.4***
Support: 1293.1*, 1286.8**, 1277.5-1278.3***, 1247.2-1250****
Natural Gas (July)
Yesterday’s close: Settled at 2.93, up 0.034
Fundamentals: Natural Gas spiked early in yesterday’s session ahead of inventories partly due to a pipeline explosion in West Virginia; Trans Canada declared a force majeure. Yesterday’s storage data came right in the middle of expectations but given recently cooler weather and rain in the forecast, buyers are staying on the sidelines and waiting for better value.
Technicals: Price action failed once again to get out above the $3 mark. We remain very Neutral at this level but believe there is value well below the market. Major three-star support comes in at 2.85-2.864 and a hold here would be pretty bullish. However, a move below this level opens the door for a quick path to 2.70.
Support: 2.85-2.864***, 2.78-2.804**, 2.688-2.722***
Yesterday’s close: Settled at 119’19, up 0’10
Fundamentals: Yesterday, around noon CT, the 10-year ripped to a high of 120’005. Technicals likely helped encourage a low early against first key support. The tape was grinding higher into the afternoon before a surge in volume. A combination of geopolitical trade risk and emerging market fears were a strong catalyst for this move. Price action has ping-ponged around since but has been technically constructive for much the week. These geopolitical trade fears are front and center with the G7 getting underway today. Next week begs to be a choppy one with the North Korea Summit on Monday U.S hours and a trio of central bank meetings in the second half including the Fed on Wednesday. We would not be surprised to see a premium build ahead of the weekend.
Technicals: Price action is holding out above our crucial pivot level of 119’17-119’205, and we believe this gives the bulls an edge. We remain Bullish in Bias but exude caution due to next week’s FOMC Meeting. As we mentioned yesterday there is a potential bullish wedge developing. Yesterday’s sharp spike has helped this play out, we continue to like being cautiously long.
Resistance: 119’30*, 120’16*, 121’035***
Support: 119’05**, 118’22**
Yesterday’s Close: December corn futures finished yesterday’s session down 3 cents, trading in a range of 8 ¼ cents.
Corn futures finished lower yesterday on the back of favorable weather conditions for key areas of the corn belt. Funds and producers alike have been tightening up risk in what has looked like a rush for the exits over the past two weeks. That rush for the exits has brought the RSI (Relative strength index) down to its lowest level since we started bottoming at the end last year.
On the technical side of things, the bulls need to reclaim ground above 397 ½-398 ½. This pocket represents the 200-day moving average and a key retracement on the year. We were expecting the market to hold support better, but the sellers have been resilient. The pressure over the last two weeks has certainly change the technical landscape for the near term. If the bulls cannot gain traction through next week, we could see this market continue to bleed lower.
Resistance: 397 ½-398 ½***, 404 ½-405 ½***
Support: 391 ½**, 379-379 ½***
Yesterday’s Close: November soybean futures finished yesterday’s session down 19 ¼ cents, trading in a range of 24 ¼ cents.
Long liquidation from funds mixed with producer selling has taken nearly 75 cents off o f prices in just 9 sessions. Favorable forecasts, poor exports, and trade concerns continue to keep a pressure on this market as we inch closer to next weeks USDA report (we will have those estimates for you early next week).
We have been bearish the soybean market for a while now, but the recent plunge has exceeded our expectations and leaves the chart looking like a technical graveyard. Previous support now becomes first resistance, that comes in from 1002-1007. The bears are in clear control until the market can stabilize back above this level.
Resistance: 1002-1007****1024 ¾-1025 ½**, 1034-1034 ¾**
Support: 965-967 ¾****, 939 ½-945**
Yesterday’s Close: July wheat futures finished yesterday’s session up 5 ½ cents, trading in a range of 17 ¾ cents.
Hot and dry weather in Russia, Ukraine, and Australia have been offering support to wheat recently with concerns that it could have an impact on final production numbers. We expect the volatility to continue through today’s session and into next week where we will likely get a gap open on Sunday night.
Wheat futures have been fairly constructive in the past two weeks in the face of the “blood bath” in corn and beans. We have been seeing higher highs and higher lows for several months now, so we would not be surprised to see the market run towards the recent highs of 554. On the support side of things, there is not a lot until 502 ¾-504.
Resistance: 534 ¾-538***, 543 ½-545**
Support: 502 ¾-504***, 491**, 477 ½-481 ½****
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