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E-mini S&P (June)
Yesterday’s close: Settled at 2575, down 68
Fundamentals: U.S equity markets are holding their ground this morning while Europe plays catch up after being closed yesterday; the DAX is working to pare 1.5% in losses. Yesterday’s bludgeoning was much more than tech, only 13 of the S&P 500 companies finished in the green. There are a few things we tend to focus most on at the moment. The S&P took out the 200-day moving average yesterday and the world did not fall apart. So, first and foremost, we have said this before and we will say this again, each plunge for the last three weeks has been fairly orderly considering the overall 9% drop since the March 13th high. This is because the market is used to volatility; we are not coming out of a long period of low volatility that blows out adverse positions and exacerbates a move, this has already happened. Second, as these market beatings mount, so does the list of bearish pundits. If you google search “stocks” all you will find is a list of the fresh ‘bearish’ and ‘correction coming’ arguments. Next, earnings are right around the corner and these have consistently been a positive for the market. Yes, trade war fears are real and pose a risk, however, there are two ways to look at it. Either this is a hardliner negotiating tactic by the White House and things won’t be as bad as the market is pricing in or growth does slow, and the Federal Reserve also slows the path of tightening (will they comment on trade headlines this week?); both of which are bullish for the market. While there are many more arguments to look at here, this feels more like a violent whiplash as the market is trying to find new leadership rather than the beginning of something more. Lastly, we have not been advocating to sit here and buy each day. In fact, if you have spoken with our trade desk, there are days we have gone short. What we are saying though is this washout will present a tremendous buy opportunity and maybe it already has.
Technicals: Last Thursday we were Bullish, yesterday we were more Neutral. Our point, in these market conditions it is important to stay nimble; while being long-term Bullish, there are swing trade opportunities to go short. With the S&P below the 200-day moving average and more than 1% from yesterday’s low, we have no choice but to be outright Neutral today. Major three-star resistance aligns with that 200-day moving average and comes in at 2589.75-2593 today; the S&P must close back above here in order to begin negating yesterday’s bloodbath. Many do not discuss the smoothed 200 day moving average, but we have, and this level comes in at 2545.50 today and has held. While tech has led the way lower, it is important to note that yesterday’s low in the NQ came within 30 points of the 200-day moving average, it is now 100 points off the low. Furthermore, it held a trend line dating back to the Brexit low in June 2016.
Resistance: 2589.75-2593***, 2605.75**, 2615.75-2618.50**, 2635-2643***
Support: 2573**, 2559.75*, 2529-2545.50***, 2467-2488****
Crude Oil (May)
Yesterday’s close: Settled at 63.01, down 1.93
Fundamentals: Risk-off swept through markets yesterday and Crude Oil was a significant casualty. While we have been Bullish, there is still a significant net-long position of 463,000 contracts according to the CFTC and as major three-star support was taken out, those longs tapped out. Despite holding ground Sunday night in a low volume trade due to the holiday in Europe, when equity markets rolled over so did Crude Oil. At the same time, the U.S Dollar began paring overnight losses and news that Russian production ticked up from 10.95 to 10.97 in February hit the tape. While the S&P has traded more than 1% from yesterday’s low, Crude has struggled to achieve the same feat. Inventories will come into the picture today; analysts’ expectations will hit the airwaves and API is due at 3:30 pm CT.
Technicals: We have no choice to be more Neutral now that price action close below major three-star support at 64.01-64.10. However, we remain very upbeat and essentially intermediate and long-term bullish. Still, we must see price actin regain resistance at 64.01-64.23 in order to neutralize this weakness and reestablish an immediate-term uptrend. The pivot at 63.13-63.23 and price action must hold this area to avoid further waves of selling.
Resistance: 63.68*, 64.01-64.23**, 65.47**, 66.02**, 66.66-66.87***, 70.00***
Support: 62.80*, 61.70-62.07***
Yesterday’s close: Settled at 1346.9, up 19.6
Fundamentals: Yesterday was exactly what Gold bulls needed to start this crucial week off. Though the Dollar pared much of its Sunday night losses, Gold continued to grind higher on the session in the wake of a reinvigorated trade war with U.S and China and equity market weakness; the safe haven bid was alive and well. The economic calendar is light today but Minneapolis Fed President and dove, Kashkari speaks today at 8:30 am CT. Fed Governor and voting member Brainard speaks at 3:30 pm CT and will garner a bit more attention. Gold is holding ground as the intraday session gets underway and as equity markets continue to rebound; this is a good sign.
Technicals: Yesterday’s high was 1349.2 and the settlement held 1344-1345 level. It has not been uncommon to see a little profit taking as price action nears the dreaded 1360-1370 area, however, if the tape can continue to be constructive there is without doubt enough fundamental firepower to create a breakout this week. We want Gold to hold the 1339.6 level on a closing basis to remain immediate-term constructive.
Resistance: 1353.8*, 1360**, 1367.8-1370***, 1375.5**, 1392.6**, 1427.2***
Support: 1339.6**, 1327.3-1331.8**, 1312.4-1316.6***, 1304.6***
Natural Gas (May)
Yesterday’s close: Settled at 2.683, down 0.05
Fundamentals: Despite colder temperatures and snow to start April, storage expectations have remained steady. Given this, price action made its way lower yesterday and likely saw additional pressure as the energy sector took a hit in the risk-off environment. This market continues to consolidate.
Technicals: We remain Neutral, however, now that price action is below the 2.6944-2.72 pivot, the bears do have a slight edge. Still, strong support sits just below the market and there will be long term value in this range.
Support: 2.60**, 2.486-2.532****
Yesterday’s close: Settled at 121’085, up 0’04
Fundamentals: The S&P took out the 200-day moving average yesterday and the world did not fall apart. The S&P is rebounding and back to this level this morning. The 10-year did see a bid amidst the selling yesterday, but it did not accelerate from what has already been a grind higher. The recent rally in the 10-year remains orderly and this should be signaling a longer-term bottoming and failure for the yield to take out 3%. Geopolitical tensions remain in the forefront in this busy week of Fed speak and jobs data. The economic calendar is light today but Minneapolis Fed President and dove, Kashkari speaks today at 8:30 am CT. Fed Governor and voting member Brainard speaks at 3:30 pm CT and will garner a bit more attention.
Technicals: Yesterday did trade to a new swing high of 121’12, however, it remained contained below major three-star resistance at 121’19. We have kept 120’24-120’28 as a pivot as the market has only stayed marginally above here, this level holds the near-term uptrend and close below here will likely encourage further waves of selling. We remain upbeat as the chart has been very constructive.
Resistance: 121’19***, 122’02*, 122’14-122’25****
Support: 120’15**, 120’09**, 120’045 119’305**, 119’265**, 119’00-119’14****
Yesterday’s Close: May corn futures finished yesterday’s session down ¼ of a cent, trading in a range of 5 ½ cents. Funds were estimated buyers of 3,500 contracts.
Fundamentals: Weekly export inspections yesterday morning came in at 1,348,992 metric tons. This was towards the top end of the expected range from 1,000,000-1,400,000 metric tons and a notch above last week’s 1,330,000 metric tons. China has imposed a 15% tariff on ethanol imports from the United States but many analysts believe this will be relatively short lived as China needs the US imports to meet fuel standards. With the USDA report behind us, market participants will start to focus on weather in the states as producers get ready to plant. Any significant changes in price or weather could swing some acres so expect to hear a lot of jawboning in the coming months. This should keep the volatility elevated and present a lot of great trading and marketing opportunities.
Technicals: Corn futures failed at the open yesterday which is why we often take the overnight trade with a grain of salt; we believe that volume confirms price. The inability to get out above 393 ¾-395 ¼ led to some profit taking and likely encouraged producers who missed out on these prices last time around to be a little more proactive. We started reducing some long exposure for clients yesterday but remain friendly the market. 387 is the area we talked about on RFD-TV yesterday morning as being first support, but the more significant pocket comes in from 380 ¾-383. If you recall, this was previously resistance. A stair step chart is a lot more constructive than a moon shot in our mind, so we welcome these small pull backs as an opportunity to put exposure back on.
Resistance: 393 ¾-395 ¼***, 400 ¾**, 405 ¾-407 ¾**
Support: 387 ¾**, 380 ¾-383***, 376 ¼-377 ½****
Yesterday’s Close: May soybean futures finished the day down 7 ½ cents, trading in a range of 25 ¼ cents. Funds were estimated sellers of 8,000 contracts on the day.
Fundamentals: Yesterdays export inspections came in at 542,434 metric tons, this was within the expected range from 300,000-700,000 and below last week’s print of 710,000 metric tons. Fears that China will slap a tariff on US Soybeans continues to linger over the market, but we are not putting too much weight into that headline. There might be some jawboning to work prices lower, but we think there is are other forces at work that caused yesterday’s reversal. February crush came in at 164.959 million bushels, this was just above the trade expectations of 163.5 million bushels. As with corn, attention will start to turn towards weather in the states as producers start ramping up for planting season. Any significant changes in price or weather could swing some acres so expect to hear a lot of jawboning in the coming months. This should keep the volatility elevated and present a lot of great trading and marketing opportunities.
Technicals: Soybeans are finding some strength in the early morning session, but the bulls will want to see confirmation from increased volume on the floor open. 1049 gave way yesterday which opened the door to our next support pocket from 1034 ½-1038 ¼ which heled beautifully. The first test is an opportunity for shorts to lighten up some exposure in hopes of adding at better prices. A retest of this pocket will likely give way and open the door to additional long liquidation from the funds. There is minor support at 1028, but the more significant pocket comes in from 1011-1018 ¼.
Resistance: 1050 ¾-1052 ¾***, 1063-1066 ½**, 1082 ½****, 1091 ½-1098**,
Support: 1034 ½-1038 ¼**, 1027 ¼**, 1011-1018 ¼****
Yesterday’s Close: May wheat futures finished the session down 5 cents, trading in a range of 11 ½ cents. Funds were estimated sellers of 3,500 contracts.
Fundamentals: Export inspections yesterday morning came in at 361,723 metric tons, this was with the range of expectations from 275,000-425,000 metric tons; last week’s read came in at 344,000 metric tons. Yesterday’s crop progress report showed that winter wheat is at 32% good/excellent. It will be interesting to keep an eye on this going forward as some areas have been struggling with the lack of moisture. We will continue to keep a close eye on the Kansas City futures contract as it will likely be the leader in the market.
Technicals: The market is continuing to consolidate as the market is likely setting up for another move. Looking at the chart, we would believe that the chances of a breakdown are better than a break out. If the market breaks down below 440, we would expect to see a run at our support pocket from 423 ¾-426 ¾. On the flip side, the bulls have a lot of work to do before feeling comfortable. The significant pocket we are keeping an eye on comes in from 463 ¾-467 ¾. This pocket represents recent highs, a gap, the 50-day moving average, and a key Fibonacci retracement; only a close above here will start to turn the tide.
Resistance: 463 ¾ -467 ¾****, 478 ¾***, 494-495**
Support: 440**, 423 ¾-426 ¾****
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