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E-mini S&P (March)
Last week’s close: Settled at 2682, a new all-time high
Fundamentals: Equity markets have picked up right where they left off Friday with the S&P and NQ both trading into uncharted territory. This week will be about passing tax-reform and after a compromise was reached Friday, the House is set to vote on Tuesday while the Senate could vote as early as Tuesday. But tax-reform will not be the only thing on the agenda as Washington must pass a budget by Friday to avert a shutdown. Should we have expected anything less than a last-minute showdown on the hill before Christmas? Absolutely not. Though the S&P and NQ broke out on Friday, the Russell 2000 small-caps are lagging and about 1.5% below the spike high from two weeks ago. This trade will be critical to watch this week as we want to see a confirmation and breakout in the Russell in order to signal that the S&P has legs through our 2715 target that we discussed on last night’s Tradable Events this Week. There, we also discussed Eurozone CPI which was in line with expectations this morning. Today is a quiet on the data front, but get read as Tuesday through Friday will be exciting.
Technicals: What more could a bull ask for than what we got on Friday’s session; a clean breakout weekly close in the S&P while the bull flag breakout was also confirmed in the NQ. Both should continue to stretch gains in their respective melt-up phases. Our upside target in the S&P is 2715.25, resistance comes in this morning at 2694.50 and we want to see price action to hold and close above 2688 in order for momentum to remain strong.
Resistance – 2688**, 2694.50**, 2715.25***
Pivot – 2681.50-2682
Support – 2675.50**, 2667.25**, 2651.75-2652.50***
Crude Oil (February)
Last week’s close: Settled at 57.
Fundamentals: Crude Oil traded higher into the weekend as buyers reemerged due to the crack in the Forties Pipeline, a potential Nigerian strike and Baker Hughes announcing that producers cut four rigs, the first drop in six weeks. Midweek there was some optimism that the situation in the North Sea was overexaggerated, however, the market seemed to disagree as prices edged higher into this morning with February reaching 57.81. INEOS said this morning that their time frame is still two to four weeks and the cracks have not spread. Nigerian oil workers did go on strike today bringing another situation that needs to be monitored. It is important to watch the most closely effected contract, Brent. For us, Brent has not accelerated higher in a worrisome fashion. Today is the last day to trade January futures and they settle tomorrow, expiration can be a choppy nonsensical trade, similar to what we have seen over the last week.
Technicals: Price action has stalled against resistance at the 57.65 level; a close above here will turn the tape higher and begin Neutralize our position. To the downside, we want to see a close back below first support at 57.33-57.35 at a minimum while a move and close below 56.99-57.08 will be absolutely critical in turning the tape bearish in the near-term. Ultimately, there is a consolidating wedge pattern between $55 and $59; a move outside of this wedge would ignite a directional move that has legs.
Resistance – 57.65**, 58.45**, 58.97***, 59.96***, 62.58**
Pivot – 57.33-57.35
Support – 56.99-57.08**, 56.11-56.30**, 55.00-55.25***
Last week’s close: Settled at 1257.5 down .4
Fundamentals: Gold is capitalizing off a weaker Dollar this morning and the bottoming continues. Media outlets this morning credit the weaker Dollar to doubts on both tax-reform getting pushed through before the end of the week and the potential pro-growth lift. Equity markets would disagree, but ultimately when it comes to the Dollar, this is exactly what we have expected and exactly why we like buying Gold ahead of January. We believe tax-reform will get passed this week and that is why we have advised against chasing Gold at resistance and instead waiting for a slight bump up in the Dollar and consolidation lower in Gold upon the passing as an entry point if you already missed the boat. There is no data today, but we await housing reads through midweek and final Q3 GDP Thursday. Friday will be the big day with PCE, Durable Goods, Personal Spending and Income and Michigan Consumer Sentiment.
Technicals: Resistance is squarely at 1262.8-1263.2, a close above here will push the tape to the 200-day moving average. We are eyeing support at 1247-1250 as a very attractive buy with strong seasonal implications.
Resistance – 1262.8-1263.2**, 1273.9-1276.7***, 1289**, 1303.4-1304.7****
Support – 1247-1250**, 1237-1241.7**, 1214.5-1225***
Natural Gas (January)
Last week’s close: Settled at 2.612, the lowest weekly close since August 2016. Notching a close below the November 7th, 2016 weekly close of 2.619.
Fundamentals: After a difficult week last week, there now seems to be a light at the end of the tunnel for the Natural Gas bull camp. Price action is up almost 10 cents this morning as an arctic blast is expected to sweep the country to finish out the new year. Friday’s settlement was a hair below the November 7, 2016 weekly settlement and low, a level in which prices began an ascent of 50% into the last week of the year.
Technicals: Price action bled to a low of 2.581 on Friday but stopped short of testing into long term major four-star support at 2.486-2.522. The reversal higher into this morning has been steady buying since the open last night. First resistance comes in at 2.6945 with the next hurdle being 2.73-2747; a close above here will quickly neutralize the tape in the near term and likely encourage buying back above 2.80. A key goal for the bull camp this week would be a close above 2.85-2.88 which could spark a short covering rally to the $3 mark. A close below 2.65 will begin to disappoint.
Resistance – 2.6945**, 2.73-2.747**, 2.799*, 2.85-2.88**, 2.96-3.01***
Support – 2.65**, 2.612**, 2.581*, 2.486-2.522****
Last week’s close: Settled at 124’135
Fundamentals: Treasury prices are under pressure into this morning as tax-reforms is expected to get through congress before the end of the week. Thought the Dollar is slightly lower, equity markets around the world are melting higher and the money is coming out of Treasuries. Not a ton of news out this morning, Eurozone CPI was in line with expectations and reads on U.S housing data begin tomorrow. Friday will be a critical day as the market expects tax-reform to have moved to the President’s desk and the budget is up. We also have a slew of data that includes PCE and Durable Goods on Friday.
Technicals: Though our longer-term outlook is Bullish the 10-year from this area, we have remained cautious as we expect pressure to remain until tax-reform is signed and as equity markets price such in during a seasonally bullish week. The market is testing key support at 124’07 this morning and a close below here will give the bears a clear edge. Only a close back into or above the 124’135-124’15 level will neutralize the tape.
Resistance – 124’21**, 124’295-125’00***
Pivot – 124’135-124’15
Support – 124’07**, 124’015**, 123’27***, 123’10**, 122’29****
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