|E-mini S&P (March)|
Yesterday’s close: New all-time settle of 2667.75
Fundamentals: The market pulled back nearly 10 ticks last night on tax-reform nerves after Alabama Senator Ray Moore failed to win reelection, losing to Democrat Doug Jones. This cuts an already thin edge by Republicans in the Senate to 51-49 and if not tax-reform it will surely shake things up by next year’s congressional elections. The pullback was short lived, and we are back to unchanged this morning as the Fed drift remains intact and expectations of a ‘not so hot, not so cold’ policy statement is the perfect recipe for this market during a seasonally bullish time of year. Despite the Senate race, Treasury yields are actually higher this morning. Secretary of State Rex Tillerson did issue a statement to North Korea, asking to just meet and backing away from the hardline requirements to sit down; such as, ya know, ending that nuclear program of theirs. We imagine the market finds this favorable for the time being. A big day gets underway and CPI is due at 7:30 am CT and comes on the heels of a strong PPI read yesterday and gives the Fed ammo to use in this afternoon. President Trump speaks this afternoon ahead of the FOMC Meeting that concludes at 1:00 pm CT and of course they are expected to hike rates. Their economic projections and dot plot will be key in that pendulum of perception we always talk about. Janet Yellen will conclude her last meeting with the press conference at 1:30 pm CT.
Technicals: Price action traded to a new all-time high of 2673 yesterday but settled right at major three-star resistance; we want to see a close out above here to provide further fuel to power this move to 2715. The Russell has lagged the most since the Sunday night December 3rd open, today will be crucial and we want to see a close out above the highs this week at 1532 in order to signal that the whole market is on board to go higher. The NQ is building a potentially nice descending wedge pattern, a bullish pattern, a minimally better close above 6427.75 should spark a move to take out the all-time highs at 6446.50. Back to the S&P, minor support does come in at the overnight low, 2659.25, and ultimately traders do not want to see a move back to here this morning. Doing so, could turn the tape heavy into this afternoon, this level must signal a rejection to go lower overnight and the bulls are in the driver seat right now.
Resistance – 2666-2667.75***, 2673*, 2681.50**, 2688**, 2694.50**, 2715.25***
Support – 2659.25*, 2650.25-2654**, 2643.75-2644.75**, 2640.25*, 2630.50-2632.50**, 2622.50**, 2506.25**, 2596-2598****
Yesterday’s close: Settled yesterday at 57.14
Fundamentals: Price action reversed sharply yesterday as it became known that the North Sea pipeline shutdown would not last as long as originally projected. At the same time there was a storm coming through the North Sea that shut down a platform and this went back up early yesterday. Yesterday’s API inventory report after the bell put a damper on the bear parade showing a -7.38 mb of Crude, though +2.33 mb Gasoline and +1.54 mb Distillates. This really sets the table for the EIA report due at 9:30 am CT to come in bearish with expectations coming in at -3.759 mb Crude, +.902 mb Distillates and +2.457 mb Gasoline. An EIA report that is simply in-line with these expectations and shows at least a marginal uptick in production will be very bearish given yesterday’s intraday weakness. Also, OPEC is set to release their monthly report this morning.
Technicals: Yesterdays’ key reversal and failure against trend line resistance is exactly what we bears needed to see. Ultimately, the failure was not a sell signal, as we discussed yesterday, until it moved back below the level created at 57.91-57.99 and the close below 57.51 confirmed this. Price action has now found resistance just below 57.91-57.99 and the market remains a sell unless it closes out above here. We are looking for a continuation move lower.
Resistance – 57.91-57.99*, 58.45-58.60**, 58.97***, 59.96***, 62.58**
Support – 57.14-57.19*, 56.85-56.87**, 56.46*, 55.82-55.95**, 55.00-55.25***
Yesterday’s close: Settled at 1241.7
Fundamentals: Yesterday’s PPI data opened the door for the bears to take Gold lower. Equity markets at all-time highs, rising inflation, the Fed about to hike, tax-reform coming down the pipeline and of course the Bitcoin craze make a tough case to be bullish Gold. We don’t see it like this. Instead we see the lack of a catalyst over the last several months not putting pressure on longs that clung to Gold with no near-term basis. Positioning in Gold was 20:1 net-long and this move lower as swung that pendulum of perception, yes traders are positioning short near what should be the lows, and this is paving the way for a bottom over the next two weeks and into a seasonally strong January. A key read on CPI is due today at 7:30 am CT and will give the Fed ammo in their rate hike and statement at 1:00 pm CT. Janet Yellen is to conduct her last presser at 1:30 pm CT. Also, traders should keep an ear to the ground on tax-reform now that a Democrat has won Alabama.
Technicals: Another red session for Gold yesterday settling at 1241.7. Price action is showing signs of stabilizing ahead of today’s Fed meeting and are looking forward to positioning long between here and 1225. Yesterday’s session low of 1238.3 held support at the 1237 mark and a hold through today’s session will be a very encouraging sign.
Resistance – 1250.2-1253.4**, 1262.8-1263.2**, 1273.9-1276.8***, 1289**, 1303.4-1304.7****
Pivot – 1241.7
Support –1237**, 1214.5-1225***
Natural Gas (January)
Yesterday’s close: Settled at 2.678, the lowest close since February 23rd on front month.
Fundamentals: The forecast two weeks out continues to torment the bull camp. This accompanied with a clear momentum trade for the bears and algos which has also kept buyers on the sidelines. Tomorrow’s stock drawdowns are grinding a little higher, now to 67 bcf, but with no change on the following weeks.
Technicals: The bears appear to have achieved their goal in the near term as this grind higher into the morning is likely short covering ahead of tomorrow’s stock read. In the near term, a close above 2.74 will help neutralize weakness; this is the .382 from the 24 hours swing highs but also aligns with our major three-star support and previous swing lows on the way down. Resistance at 2.85 held tough and this level is now widened to 2.85-2.88 and must be taken out to secure a neutral tape and spark repositioning from the bull camp; in other words, buying.
Resistance – 2.781**, 2.85-2.88**, 2.946**, 2.9825-3.01***
Pivot – 2.74-2.7565***
Support – 2.79**, 2.772*, 2.486-2.522****
Yesterday’s close: Settled at 124’04
Fundamentals: We are in a hiking cycle, so lower price action into a rate hike should be expected. Yesterday’s PPI data added to weakness and today’s CPI read due at 7:30 am CT will be key ahead of the Fed at 1:00 pm CT. Prices jumped slightly last night after Republican Senator Moore’s loss to Democrat Jones in the Alabama race could throw a hurdle in front of tax-reform. However, this does not seem to be a concern into this morning and prices have made a new low. The curve continues to flatten with 2’s trading again to the lowest level since 2008 and 5’s again to the lowest level since 2011. While 10’s are holding last year’s low and 30’s would tell you the Fed is not hiking; we will continue to watch all of this closely with today’s Fed and tomorrow’s ECB.
Technicals: Price action is trading against major three-star support at the 123’27 level and a close below here will open the door to further selling. Still, aside from seeing a half point hike today and/or the dot plot showing four hikes next year we believe the downside is limited and will present a buying opportunity heading into the Christmas holiday.
Resistance – 124’17.5-124’19**, 124’23-124’24**, 124’295-125’00***
Pivot – 124’085-124’095
Support – 124’015**, 123’27***, 123’10**, 122’29****