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E-mini S&P (December)
Yesterday’s close: Settled at 2629.25
Fundamentals: The S&P has edged higher into this morning as traders look to optimism on tax-reform ahead of tomorrow’s Nonfarm Payroll Report and next week’s FOMC policy decision. Yesterday, the Senate voted to begin formal negotiations with the House in what is a positive sign that congress can work together to put a final bill in front of the President before Christmas. The House passed a similar vote this week, but it is the Senate that must be more careful in negotiations as they cannot afford to lose more than two votes. GDP data out of the Eurozone this morning came in better than expected. Challenger Job Cuts (U.S) are due at 6:30 am CT and Jobless Claims at 7:30. Mario Draghi speaks at 10:00. Trader prepare for tomorrow’s Nonfarm Payroll report and we discussed on Sunday’s ‘Tradable Events this Week’ how the more important number for us is Average Hourly Earnings growth. Expectations of which come in at .3% MoM while 200,000 jobs are supposed to have been added.
Technicals: Price action has pared losses off a low of 2620 that came against our key support at 2618-2619.25. This level yesterday came into play for multiple reasons, however, one was a trend line, and this now comes in today at 2626. Yesterday, we also discussed how we like selling the first test against 2637.50 and the overnight high was 2637. This level is now less precise and has widened to 2637.50-2640.75; traders can look to sell the first test into here after the bell this morning. However, traders should consider that while we were more Neutral yesterday and leave our bias the same today, we believe the risk to the upside ahead of tomorrow’s Nonfarm Payroll
Resistance – 2637.50-2640.75**, 2648.25-2651.25**, 2666***, 2679-2685**, 2712****
Pivot – 2629-2631
Support – 2626*, 2618-2619.25**, 2605-2607**, 2594.50-2596****, 2555.50-2565***
Crude Oil (January)
Yesterday’s close: Settled near the session low at 55.96 and lost nearly 3%
Fundamentals: Yesterday’s EIA report was just enough to satisfy the bear camp. As we discussed, with what was potentially such an outlyingly bearish API report on Tuesday evening, it encouraged many bears or worried bulls to sell. We ultimately needed to see something from EIA that was almost as bearish to keep the momentum lower. Looking at the number as a whole is one way to analyze such a report and the API reported a total build of about 8 mb. While expectations were looking for a total draw, the API report skewed that, and we stated yesterday we wanted to see a build of nearly half as much from EIA in order to see continued pressure. They showed a total build of about 2.8 mb and this combined with an addition of 25,000 bpd in production was just enough to satisfy the bear camp, or more so worry the bulls. Remember, on Monday we figured that although we might not see a new record net-long position on this coming Friday’s Commitment of Traders, we suspected that it could have been reached temporarily within the report’s week. ‘If everyone has already bough, who is left to buy.’
Technicals: Price action secured another close below key support at 56.75, a level that we have denoted to give the bears the edge. Today is Thursday and prices have slid more than 3% this week. We are still targeting major three-star support at 55.00-55.25 but traders must be cautious in pressing the trade as we could see a bottom into Sunday night come in the next 24 hours (by Friday morning). With a move this week getting so close to our target, sometimes it is best not to push our analysis to the edge, or in old-fashioned words, ‘don’t push your luck’. We will look to reposition next week. We now have 55.95 aligning with yesterday’s low and strengthening from minor support to a two-star key level. Major resistance is now at 56.75-56.99 and if the bulls achieve a move out above here, we could see further buying into the weekend. We remain intermediate to long term Bearish.
Resistance – 56.75-56.99**, 57.35**, 57.71-57.92**, 58.97***, 59.96***, 62.58**
Support – 55.82-55.95**, 55.00-55.25***
Yesterday’s close: Settled at 1266.1
Fundamentals: Gold is moving lower into this morning and as a reminder, we neutralized our position last week. However, we remain bullish in the long-term and have been clear that we are welcoming this lower price action in order to cleanse the over-extended net-long position as tax-reform, Nonfarm Payroll and next week’s Fed rate hike meeting come into the picture. Challenger Job Cuts is due at 6:30 am CT and Jobless Clams at 7:30.
Technicals: Gold has officially taken out major three-star support at 1262.8 this morning and this opens the door down to 1250.2. Bulls must be very cautious here because strong data over the next 24 hours (Nonfarm Payroll) could open the door to a mass exodus. But what have we been saying? No better opportunity to buy than a sale.
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 2.922
Fundamentals: Did you get the memo? Winter is over. Though it is not a joking matter, that’s what the price of Natural Gas is saying this morning as it is down nearly 10 cents. Let us reiterate, winter is just beginning. As we discussed yesterday, we believe algos are taking advantage of pockets of volume-less trade and jumping on freshly created momentum. We all know that last week was very mild and today’s storage estimates come in at -7 bcf, data at 9:30 am CT.
Technicals: We did reintroduce our Bullish thesis yesterday as risk against the low was tight. Price action held through yesterday’s session but has gotten hammered today and has already gone through S2. Today’s stock read will be key, but it now feels as if this market is targeting major three-star support at 2.753-2.7565.
Resistance – 2.903-2.929**, 2.981-2.996***, 3.04-3.053**
Pivot – 2.847-2.861
Support – 2.753-2.7565***, 2.486-2.522****
Yesterday’s close: Settled at 124’19
Fundamentals: Weakness in global equity markets as well as geopolitical nerves kept a bid under the 10-year through yesterday’s session. However, Asian markets are recovering well into today and the S&P has stabilized. Furthermore, the Senate voted to go to the table on tax-reform yesterday and work with the House in order to get a bill in front of the President by Christmas. U.S data has not been good this week, but traders turn their eyes to Challenger Job Cuts this morning at 6:30 am CT and Jobless Claims at 7:30. Of course the big read this week is Nonfarm Payroll tomorrow. Next week brings the FOMC rate hike meeting and we always discuss how treasuries see selling pressure ahead of these meetings as we are now in a rate hike cycle. However, we have been eyeing this as the beginning of a potential bottoming pattern.
Technicals: Price action ran right into key resistance yesterday with a high of 124’23 before backing off into this morning. The tape is right at the 124’145-124’155 pivot though it feels slightly heavy and the door is open to fish for first support into tomorrow morning.
Resistance –124’22-124’24**, 124’295-125’00***
Pivot – 124’145-124’155
Support – 124’065-124’095**, 124’015**, 123’27***
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