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E-mini S&P (December)
Yesterday’s close: Settled at 2639.50
Note: Today is the last day we will use the December contract, not switching ahead of Friday Nonfarm.
Fundamentals: Equity markets across the globe are broadly higher on a very strong Chinese Trade Balance read and after a key stepping stone on Brexit talks was passed. Both Exports and Imports soared on the read out of China last night and we can see a direct jump higher above resistance at 2640.75 and the day’s high of 2641.25 at the time. The Nikkei, DAX and FTSE are all up more than 1% this morning. In Europe, the Northern Ireland party had held up talks this week between the U.K and the E.U and we noted this as a reason for equity weakness. The discussion moved past phase one in the late hours of the evening and this has also lifted equity markets. Nonfarm Payroll will be front and center this morning and expectations are for 200,000 jobs grained in November with Average Hourly Earnings growth of .3%. We have discussed that as the labor market becomes tighter, the headline read on job growth will have less of an impact once the dust settles. The read on Average Hourly Earnings will be crucial for next week’s FOMC Meeting’s verbiage. Michigan Consumer data is due at 9:00 am CT.
Technicals: Price action remained contained at the 2637.50-2640.75 level through yesterday’s session and after a stubborn afternoon, ultimately led to the retreat to the 2631-2633 level we targeted on the Midday Market Minute. The tape has elevated into this morning and this is exactly what we discussed yesterday with the risk being to the upside ahead of Nonfarm Payroll and ultimately into next week’s Fed rate hike meeting. With the move out above 2637.50-2640.75 we have now become more Bullish and resistance at 2648.25-2651.25 was nearly achieved, but we see a higher high before the session is over. The bears must achieve a close below 2640.75-2643 to encourage further weakness.
Resistance – 2648.25-2651.25**, 2666***, 2679-2685**, 2712****
Pivot – 2640.75-2643.
Support – 2632.25**, 2626*, 2618-2619.25**, 2605-2607**, 2594.50-2596****, 2555.50-2565***
Crude Oil (January)
Yesterday’s close: Settled at 56.69
Fundamentals: Crude Oil is higher this morning and we were clear yesterday that we do not want to push our analysis or in other words, ‘don’t push your luck’. We advised that Crude Oil likes to bottom out by Friday morning and grind higher into the weekend. This is very relevant today with tensions in the Middle East and the threat of a strike in Nigeria that would disrupt production. Furthermore, China released extremely robust Trade Balance data last night and have helped push price action through resistance.
Technicals: We hope that traders out there listened to our call to take profit on the week near the $56 mark early yesterday morning. Price action did remain contained below resistance at 56.75-56.99 through yesterday’s session but we were pretty adamant yesterday morning and in the Midday Market Minute that we expected the tape to extend into the weekend. Resistance does come in at the 57.35 level today and we will evaluate the settlement and as of now plan to reposition short early next week.
Resistance – 57.35**, 57.71-57.92**, 58.97***, 59.96***, 62.58**
Support – 56.54-56.78**, 55.82-55.95**, 55.00-55.25***
Yesterday’s close: Settled at 1253.1
Fundamentals: This move in Gold, as we have been discussing, is more because of the supply/demand technicals. Though the lack of a catalyst for fresh buying was a major part, we have also expected pressure due to the next week’s Fed rate hike meeting and tax-reform coming down the pipeline. Today’s Nonfarm Payroll has also added to pressure and at time of year that we see a lot of seasonal hiring, the risk for today’s job creation is for it to come in above the 200k expectations. Though the headlines on this number, job growth and unemployment rate, might rule the session, for us we will be watching the Average Hourly Earnings growth more closely. This will be key for next week’s Fed rate hike verbiage and a miss against the +.3% MoM expectations should set Gold up for a nice bottoming pattern in the sessions following next Wednesday. Let’s not forget that Michigan Consumer data is due at 9:00 am CT.
Technicals: Gold is below the 1250.2 level this morning and the door is officially open for a move down to the 1214.5-1225 major three-star support level over the next week. However, we maintain that there is no better reason to buy something than when it is on sale and Gold’s time to shine is not too far away.
Resistance – 1272.7-1273.1**, 1277.1-1278.6***, 1283.3**, 1287.5**, 1292-1292.5**, 1304.7***
Pivot – 1266.1-1268.1
Support – 1262.8***, 1250.2**, 1214.5-1225***
Natural Gas (January)
Yesterday’s close: Settled at 2.763
Fundamentals: Yesterday was another bloodbath session for Natural Gas as it slid to the lowest level since February and has lost as much as 10% on the week. The storage number showed a build of 2 bcf when a draw of 7 bcf was expected and this comes at a time of year when we should be seeing draws in the 30 bcf range at least. Though a minor part of this weakness can be attributed to the warm weather one week ago, 65 in Chicago on Monday, we believe this exacerbated weakness is due to low volume ahead of data and overall price uncertainty and algos riding momentum. Yes, there is still uncertainty on weather during the second half of December but at these levels we believe the risk is to the upside and bears will be caught offsides. Overnight snow in Texas is a clear sign of this.
Technicals: Price action clipped major three-star support at 2.753-2.7565 for a brief second trading to a low of 2.747 yesterday. We believe yesterday was overextended and are now reintroducing our Bullish bias as we see great value at this level. We are targeting the 2.916-2.928 level in the near term. A close above here will neutralize weakness and give the bulls a shot to regain an edge back above $3.
Resistance – 2.85*, 2.916-2.928**, 2.9825***, 3.038-3.06**
Support – 2.753-2.7565***, 2.486-2.522****
Yesterday’s close: Settled at 124’09
Fundamentals: We were clear early yesterday morning that the tape felt heavy and we expected to see pressure ahead of today’s Nonfarm Payroll, next week’s Fed rate hike meeting and with tax-reform coming down the pipeline. As we have discussed our longer-term focus on today’s Nonfarm read is Average Hourly Earnings. However, headlines will drive some volatility this morning with expectations coming in at 200,000k jobs created in November. Michigan Consumer data takes a back seat today but remains crucial, especially ahead of the holiday season and is due at 9:00 am CT. Global equity markets are all higher this morning with the Nikkei, DAX and FTSE all gaining more than 1%. Strong Chinese data last night and Brexit talks moving past the first phase have all helped treasury yields and put pressure on prices into this morning.
Technicals: As we noted yesterday, that the tap was heavy, we called for a test into first support at the 124’065-124’095 level which we did get. However, further pressure into this morning on global fundamentals sets up the tape to see further weakness into next week.
Resistance –124’19*, 124’23-124’24**, 124’295-125’00***
Pivot – 124’095-124’11
Support – 124’015**, 123’27***
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