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E-mini S&P (March)
Yesterday’s close: Settled at 2795, up 3.50
Fundamentals: U.S benchmarks are down slightly for the third morning in a row. Manufacturing PMI from China last night posted a larger contraction than expected and this helped soften the tape. Adding a bit of global uncertainty are reports that President Trump walked from his meeting with North Korean dictator Kim Jong Un in Vietnam after the rogue country’s request for removing sanctions were too outlandish. From yesterday’s trio of Congressional testimonies, the two largest developments were of course from U.S Trade Representative Lighthizer and Fed Chair Powell. Despite the tariff deadline being extended past March 1st and significant ‘progress’ being lauded, Lighthizer said it is too early to tell if a deal was obtainable and he knows not all of the issues are going to be resolved in one negotiation. While his comments began to pour cold water over the tape and the S&P traded to a low of 2775, Fed Chair Powell fueled the bulls by giving the firmest confirmation yet the Federal Reserve plans to end its balance sheet unwind at the end of this year. All in all, the market has held tightly to last week’s late gains and the true effects of the weaker Chinese Manufacturing PMI remain to be seen. This ups the ante on today’s U.S Q4 GDP data due at 7:30 am CT. Expectations are for slower Q4 growth to come in at 2.6% but some estimates point to the low 2’s. At this point and especially after Powell’s comments yesterday, the market has priced in a patient Fed. We imagine that a large deviation from either side of expectations could weigh on the market; with much slower growth bringing fear or much strong growth a reason for the Fed to rethink cooling their engine. Fed Vice Chair Clarida speaks at 8:00 am CT and weekly Initial Jobless Claims are due at 7:30 am CT. There is a deluge of Fed speak into the evening; Atlanta Fed President Bostic at 7:50 am CT, Philadelphia Fed President Harker at 10:00 am CT, Dallas Fed President Kaplan at noon CT, Cleveland Fed President Mester at 6:00 pm CT. We look forward to the fresh diagnosis of growth after the GDP figures are published. Lastly, Fed Chair Powell is back in the mix, speaking at 7:15 pm CT.
Technicals: Today’s landscape is very similar to yesterday’s with the only difference being the already trekked path to support at 2771.50-2774.25 and 7043.25 that yesterday gave us. These levels are not truly significant and for both the S&P and NQ we have major three-star levels below such. We have also reduced the significance of the first levels. For the S&P 2791.25 is now a minor level but still one that we feel the market is vulnerable below. For the NQ, first support that aligns with the continuous 200-day moving average is now not a major three-star level; today’s low has not cracked through here. Both remain significant on a closing basis. The true vulnerability given the Sunday night boost into Monday remains when price action is below our pivot levels. While the NQ climbed back above yesterday, the S&P remained suppressed; these levels will hold a technical significance and above 2794.75-2798 today will give the bulls an opportunity to push the tape higher to 2807.75. We continue to hold a slight Bearish Bias as we find this market irrational, over-extended and trading at technical resistance. We are targeting a move down to 2763.50 this week; stay nimble.
Resistance: 2807.75**, 2814-2819***, 2424.25**, 2431.50-2431.75***
Support: 2791.25*, 2782.50**, 2771.50-2774.25**, 2763.50***, 2747.25-2750***
Resistance: 7139-7169***, 7218.50-7231***
Support: 7076.25-7088.25**, 7043.25**, 7004.75-7005***, 6966-6972***
Crude Oil (April)
Yesterday’s close: Settled at 56.94, up 1.44
Fundamentals: An already stronger tape surged yesterday morning after the EIA posted the largest inventory draw since July at -8.647 mb. Despite yesterday’s strength, the follow through has been unenthusiastic as resistance at last week’s high has brought a barrier. Despite the bullish headlines, estimated production extended its record run adding another 100,000 bpd in the lower 48 states. Estimated U.S production now sits at 12.1 mbpd. While this does bring a detriment to the bullish sentiment, there are certainly some fears that President Trump will follow up his tweet from earlier this week with another shot at OPEC. However, Saudi Arabia quietly put out an obliging statement. Price action has trickled lower since yesterday’s early high and weaker than expected Chinese Manufacturing has also weighed on the tape. We now look to today’s U.S Q4 GDP and the deluge of Fed speak to impact risk-sentiment.
Technicals: While we continue to hold a slight Bullish Bias given that Crude Oil had a very constructive pullback and held major three-star support, however, the lack of follow through is concerning on a broader scale and traders must remain nimble. For now, previous resistance at 56.50-56.76 is our pivot and we find the tape immediate-term bullish while holding this level. The overnight low is 56.43 and a move below here will likely encourage a wave of selling.
Resistance: 57.05-57.35***, 57.69**, 58.16-58.35**, 59.63***
Support: 55.44-55.75***, 54.71-54.76***, 53.51-53.98***
Yesterday’s close: Settled at 1321.2, down 7.3
Fundamentals: Despite yesterday’s weakness, Gold responded in the overnight, consolidating higher ahead of today’s big Q4 GDP read at 7:30 am CT. Treasury markets took a swift kick to the gut yesterday and this complex dragged down safe-haven assets altogether. We could point to strength in German Bund yields after stable Confidence data, the rolling of March quarterly contracts into June or a hangover from the 5-year and 7-year auctions earlier in the week. Whatever the cause may be, neither the Dollar Index nor the Chinese Yuan had any drastic shifts in the prior 24 hours. Today’s data and deluge of Fed speak into the evening will be absolutely crucial for Gold, but traders must not underestimate the constructive technical landscape.
Fed Vice Chair Clarida speaks at 7:00 am CT. Atlanta Fed President Bostic at 7:50 am CT, Philadelphia Fed President Harker at 10:00 am CT, Dallas Fed President Kaplan at noon CT, Cleveland Fed President Mester at 6:00 pm CT. Fed Chair Powell wraps things up speaking at 8:15 pm CT.
Technicals: Gold’s very bullish technical landscape remains largely intact after battling yesterday’s pullback to a low of 1318.4. Additionally, last night’s low of 1318.6 was higher and more importantly much of the price action has clung to the 1321.7-1323.4 level. Our levels have shifted slightly, now major three-star support comes in at 1318.4 which aligns closely with the trend line from November; Gold remains in a near, intermediate and long-term bull trend above here. The session’s tape favors the bulls as long as it stays above our pivot. However, we must see a close back above 1330.4-1332 in order to reinvigorate the urgency on the bull camp.
Resistance: 1330.4-1332**, 1337.8-1340.1*, 1350**, 1369.4***
Support: 1318.4***, 1304.7-1306.5****
Yesterday’s Close: May corn futures finished yesterday’s session down 2 ½ cents, trading in a range of 5 ¼ cents.
Fundamentals: Corn futures continued to drift lower as longs continued to exit positions ahead of First Notice Day, today. Long positions in March futures now risk delivery. Export sales this morning came in at 1,239,000 metric tons for 2018/2019 and 120,500 metric tons for 2019/2020, this was above the top end of expectations.
Technicals: The last three sessions have led to the biggest directional move of the year, bringing the RSI down to 35. Not technical in oversold conditions but certainly towards the low end of the range. We think there is a near term trading opportunity but need to see prices firm up on the floor open to confirm our short-term bias. If the market closes below 369 ¼, we could see a flush towards the contract lows of 363 ¼ that we saw back in September.
Resistance:380 ½-381 ¾***, 385 ½-387 ¾****
Support: 369 ¼**, 363 ¼****
Yesterday’s Close: May soybean futures finished yesterday’s session down 1 cent, trading in a range of 9 ¾ cents.
Fundamentals: The market has been soft this week but has held well relative to corn and wheat futures. The slim possibility of a deal with China in the near future continues to keep some support under the market. Export sales this morning came in at 2,196,000 metric tons for 2018/2019, well above expectations.
Technicals: Yesterday’s price action was fairly choppy but did little to change the technical landscape by the end of the day. The market is treading on the 100-day moving average and a key retracement this morning, a breakdown below here opens the door for a run at 900-904 ¾. This pocket represents the lows on the year (Jan 16th), they psychologically significant 900 handle, and the middle of the range from the contract lows to the highs in December.
Resistance: 923 ¾-924**, 934 ½-939 ¾****, 953-955***
Pivot: 914 ¾-917
Support: 900-904 ¾***, 893 ½****
Yesterday’s Close: May wheat futures finished yesterday’s session down ¾ of a cent, trading in a range of 10 ¼ cents.
Fundamentals: Now that March futures are in first notice day, we are hopeful we can start to form a near term bottom. Export sales this morning came in at 476,400 metric tons, towards the top end of the range of expectations. Bulls need to see this number firm up in the coming weeks.
Technicals: The market was little changed yesterday, leaving many of the technicals intact from yesterday’s report. We like giving the buy side a shot here but need to see prices firm up early on for confirmation, a failure to do so will neutralize our bias. First resistance today comes in at 479 ½, this was previous contract lows/support and now becomes resistance. This was also a breakdown point from earlier in the week. Consecutive closes above this area could encourage short covering from funds who have taken nearly 70 cents out of the market this month.
Resistance: 479 ¾***, 495-497 ½***, 512**
Support: 463 ¾-466 ½**
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