E-mini S&P (September)
Yesterday’s close: Settled at 2879, down 9.25
Fundamentals: It has been a rough week for the tech sector as the NQ is more than 3% from Tuesday’s near record-setting session. The larger picture for U.S stocks isn’t so bad; the S&P is down 1% on the week and the Dow is less than 1% off last week’s swing high. Yesterday’s midnight deadline for President Trump to address the $200 billion worth of tariffs on China, the third wave and official start of a trade war, has come and gone. Without any word on implementation, the same uncertainties we had heading into this week persist. This morning though, the focus shifts to jobs and Nonfarm Payroll is due at 7:30 am CT. This is good news for the broader market; we believe the Federal Reserve is in the driver’s seat and if wage growth continues to show only gradual growth, there is no reason for the Fed to tighten policy faster. Average Hourly Earnings are expected to grow at 0.3%, annualized at 2.7%. A hot number above 0.3% combined with the tariff cliffhanger would be cause for real concern. However, if Average Hourly Earnings comes in below 0.3% and job growth remains at what we have called ‘par’, this market is a buy and traders must trust the technical levels discussed below.
Boston Fed President Rosengren speaks at 7:30 am CT, Cleveland Fed President Mester speaks at 8:00 am CT and Dallas Fed President Kaplan is at 11:45 am CT. Traders should keep an ear to the ground for any comments on today’s payroll numbers.
Technicals: We neutralized our near-term Bias last week after we called our target of 2924.50 essentially achieved. We have exuded caution and patience since then calling for a test to our major three-star support at 2860.25-2863.75 as a buy opportunity. Additionally, below is a trend line from the late June lows and that now brings another layer of major three-star support at 2855. This week, we also pointed to a buy the first test at strong support at 2873.75-2876.75. Our point here is that there is a tremendous amount of support in this region for traders to lean on. As long as Nonfarm Payroll does not come in hot, traders should continue to lean on these strong layers of support as an intermediate to longer-term buy opportunity. To the upside, first key resistance comes in at 2887 while the second level at 2892.75-2893 is one in which a move out above would place the bulls back in the near-term driver’s seat. Lastly a move back above 2898.50-2900.50 is bullish.
Bias: Neutral/Bullish
Resistance: 2887**, 2892.75-2893**, 2898.50-2900.50**, 2906.25**, 2912.50*, 2924.50***
Pivot: 2873.75-2876.75
Support: 2860.25-2863.75***, 2855***, 2846.75**
Corn (December)
Yesterday’s Close: December corn futures finished yesterday’s session up 1 ¼ cents, trading in a range of 4 ¼ cents. Funds were estimated buyers of 5,500 contracts.
Fundamentals: Export sales this morning came in at 30,100 metric tons of old crop and 1,032,000 metric tons of new crop. Informa Economics raised their U.S. corn yield 2.8 bushels an acre to 178.8. There is not a lot of significant news expected ahead of next Wednesday’s USDA report, we will continue to compile estimates and have those for you in our Weekend Ag Update. The lack of new news will put a bigger emphasis on technicals and money flow.
Technicals: We wish we had something more exciting to report today, but there has not been a whole lot of change on the technical landscape over the last 24 hours. Our resistance pocket continues to hold from 369 ½-370 ¾, the bears are in total control until the bulls can achieve consecutive closes above this pocket. On the support side of things, the first pocket we see comes in from 359-361, a close below here likely accelerates the selling and takes us back towards 349 352 ¼.
Bias: Bearish/Neutral
Resistance: 369 ½-370 ¾***, 380 ½-382 ½****
Support: 359-361**, 349-352 ¼****
Soybeans (November)
Yesterday’s Close: November soybeans finished yesterday’s session down 1 cent, trading in a range of 8 cents. Funds were estimated buyers of 2,000 contracts on the day.
Fundamentals: Export sales this morning came in at 6,000 metric tons of old crop and 672,600 metric tons of new crop. Informa Economics raised their U.S. bean yield up 2.9 bushels per acre to 52.9, still below the projections the USDA has out. As with corn, there is not a lot of market moving news expected out between here and next Wednesday, when the USDA will release their updated projections. The lack of new news will put a bigger emphasis on technicals and money flow for the next few sessions.
Technicals: Yesterday was a relatively mute session, which leaves the technical landscape little changed from yesterday. Resistance remains intact from 850-853 ½, this held Monday, but the bears do not want to see a retest to this pocket. A retest to this pocket will likely be enough to punch through, which would mark higher highs and higher lows, potentially the beginning of a trend change; at the very least neutralizing the bearish chart. On the support side of things, 825-826 ¼ is the first obvious target. A break and close below leaves the door open for a move below the psychologically significant $8.00 handle.
Bias: Bearish
Resistance: 850-853 ½***, 866**, 872-881½****
Support: 825-828 ¾****, 795-802 ¾****
Wheat (December)
Yesterday’s Close: December wheat futures finished yesterday’s session down 7 ¼ cents, trading in a range of 12 cents. Funds were estimated sellers of 5,000 contracts on the day.
Fundamentals: Export sales this morning came in at 379,800 metric tons. Poor demand has been an ongoing concern for us and is just part of the reason we have been overwhelmingly bearish over the last month. We would not be surprised to see headlines from Russia regarding exports make another appearance, but this will likely only offer another opportunity to sell at higher prices. The only potentially moving news scheduled will be next week’s USDA report, released Wednesday morning. We will continue to compile estimates and have those for you in our Weekend Ag Update.
Technicals: The short side of wheat has been the gift that keeps on giving. The technical breakdown has led to a rush for the exits from funds who had been holding a fairly decent sized net short position. Our previous support pocket from 518 ½-523 ½ will now be first resistance. A close above will not put the bulls in control, only neutralize the chart. On the support side of things, there is not a lot until the psychologically significant $5.00 handle. The more significant line in the sand comes in at 490.
Bias: Bearish
Resistance: 518 ½-523 ½ ***, 549 ½-552 ¼**, 557 ¾***
Support: 499-501 ¼**, 490***, 468 ¼****
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