BrokersEDGE Futures trading news / research 12-20-17 E mini, Crude Oil, Gold, Natural Gas, 10 Year note

E-mini S&P (March)

Yesterday’s close: Settled at 2684

Fundamentals: The Senate passed historic tax-reform shortly after midnight and today the House will vote once again. Equity prices have recovered from what seemed like profit taking on nerves ahead of the razor thin Senate vote. Though the House passed the bill yesterday, a Senate rule was breached on several provisions. The House will vote again today in what seems like a formality. If all goes well, we should see a press conference with the President around noon CT. Washington isn’t out of the woods just yet as the government is on a path to shut down at the end of the week if a budget is not passed. The House could also vote today on an extension through January 19th. Equity markets in Europe are slightly lower this morning after a miss on German PPI data and as they take yesterday’s U.S weakness in stride. Existing Home Sales are due at 9:00 am CT and the Bank of Japan has a policy meeting late tonight.

Technicals: Yesterday’s pullback held first key support perfectly at 2681.50-2683.25 with a low of 2682.50. The hold and rise into this morning sets the market up for one final push before the end of the week. We do expect more volatility in the last week of the year. Resistance comes in a 2688.50-2690.25 and the market simply must close above here in order to negate yesterday’s weakness. The previous all-time high close at our 2694.50 level must also be watched. The NQ did not get to the major three-star support and tremendous buying opportunity we discussed on yesterday’s Midday Market Minute. However, its recovery is very firm, and we are watching for it to take the lead today, doing so will also signal legs through the end of the week. As we have discussed all week, the Russell 2000 does remain a concern of ours and its lagging below its all-time high from two weeks ago by about 1%; this level must be taken out before the end of the week or it will open the door for profit taking in the last week of the year.

Bias: Bullish

Resistance – 2694.50**, 2700*, 2715.25***

Pivot – 2688.50-2690.25

Support – 2688*, 2681.50-2683.25**, 2675.50**, 2667.25**, 2651.75-2652.50***


Crude Oil (February)

Yesterday’s close: Settled at 57.56, the highest in more than a week

Fundamentals: Prices have edged higher into this morning after API inventory data last night showed more of a draw than expected at 5.22 mb vs 3.5 mb. Gasoline did build at 2 mb but was only in line with expectations. Distillates were down 2.85 mb, a little more than expected. Inventory reports, outside of the increase in production estimates, have not helped the bear case. Today’s EIA estimate comes in at -3.769 mb. This would be the fifth draw in a row. The previous four draws have all come in higher than expected. Expectations for Gasoline is +1.895 mb and Distillates are -.87 mb. We expect the headline Crude number to be the key driver and something less than yesterday’s draw will give the bears some ammo. Gasoline’s trending build should also be watched along with production estimates. Outside of drawing down inventories, the bullish case has been the Forties pipeline and geopolitical tension. However, Brent Crude has seemingly traded more contained from last week’s reversal than WTI. This signals a tremendous emphasis on immediate-term action from today’s data.

Technicals: Yesterday we began to Neutralize our Bearish thesis as price action has simply refused to go lower. Fundamental hurdles have been presented and the trade has been stubborn. On the bright side, the slow, slow grind higher has begun to create an ascending wedge. This is a bearish pattern and today’s price action will be critical in maturing the wedge into a failure. The market has not accelerated higher but today’s high of 57.88 is the highest since last Tuesday. Resistance comes in the tune of a trend line from the November 24th highs at 58.35, this is also where strong sell volume came in last Tuesday; this becomes a level that we must see Crude stay contained below but also a very attractive level to sell against.

Bias: Bearish/Neutral

Resistance – 57.65-57.81**, 58.35**, 58.97***, 59.96***, 62.58**

Pivot – 57.33-57.35

Support – 56.99-57.08**, 56.11-56.30**, 55.00-55.25***


Gold (February)

Yesterday’s close: Settled at 1264.2

Fundamentals: Gold has shunned price action in other safe havens; Treasuries lost significant ground yesterday with the 10-year trading to the lowest level since March while the Yen is also under pressure. Bitcoin lost about 20% yesterday. But Gold folks, Gold remains extremely constructive. This is all about positioning; imagine that Gold bottomed the week that the Fed hiked rates, the Senate passed their version of the tax bill and we had a killer Retail Sales read. This is because the week before, Gold’s extreme net-long position of about 200,000 contracts tapped out. As of the Commitment of Traders this last Friday (data through Tuesday the 12th) the net-long position has been reduced to only roughly 80,000 contracts. Those longs want back in! The Senate passed the official tax bill around midnight and the House will revote today in what is ultimately a formality. Though we believe the President will hold his news conference at noon CT, the only thing we know about Washington is that we don’t know. Housing data yesterday crushed expectations, but Gold held. Existing Home Sales at 9:00 am CT is the only read today. We look to the final read on Q3 GDP tomorrow, but Friday is circled on our calendar with PCE (inflation), Durable Goods and Personal Spending and Income.

Technicals: We have pounded the table on the bullish seasonality that Gold is about to enter but we remain slightly cautious over the next 24 hours or so. Don’t get us wrong, we are Bullish here, however, if you missed the boat you must remember that there is major three-star resistance overhead. We would love to see a consolidation back to 1250-1253 as a tremendous buy opportunity ahead of the weekend but that may not happen. If you bought Gold on December 23rd and held through January 11th, you have made money in 13 out of the last 15 years and that gain has averaged $27. Furthermore, the month of January has been very kind to Gold, trading positive in 9 out of the last 12 years.

Bias: Bullish/Neutral

Resistance – 1273.9-1277.1***, 1289**, 1303.4-1304.7****

Pivot – 1262.8-1263.2

Support – 1250-1253**, 1237-1241.7**, 1214.5-1225***


Natural Gas (February)

Yesterday’s close: Settled at 2.697

Fundamentals: Natural Gas saw some selling pressure into the close yesterday, but it bounced back firmly since. However, the sellers are trying to take it once again from the overnight high of 2.758 after stock drawdown estimates for this week’s report and next have dissipated slightly. We remain cautiously optimist and believe that the bears will be caught off sides over the coming weeks as cold weather persists.

Technicals: For the purposes of argument, yesterday’s price action and settlement held first support at 2.703. It began rising as soon as the settlement bell rang. Still, the 2.745-2.747 level has been a tough one to maintain and this has kept us cautious. Right now, today’s session would be the second lower high against Monday’s 2.789; if price action can out above here the chart will turn immediate-term bullish in an instance, this is the major hurdle we must cross today. A move below support at 2.6795 will scare the bulls and encourage selling ahead of tomorrow’s inventory read.

Bias: Bullish/Neutral

Resistance – 2.778-2.799*, 2.85-2.88**, 2.96-3.01***

Pivot – 2.745-2.747

Support – 2.703**, 2.6795**, 2.634-2.656**,2.581*, 2.486-2.522****


10-year (March)

Yesterday’s close: Settled at 123’22

Fundamentals: Treasuries from all ends of the curve got crushed yesterday. Housing data was much better than expected at 7:30 am CT, but the weakness really began overnight as we discussed the German bund in yesterday’s report. The announcement out of Germany that they will issue more bunds than last year weighed tremendously on prices. Now combine that with the new issues in the U.S on the heels of tax reform and we have the 10-year at the lowest level since March. The 2’s at the lowest level since October 2008 and the 5’s hanging by a thread at the lowest level since April 2011 (below here is 2010). The long end even got crushed with a range of two points and is at the lowest level in nearly two months. Bulls must be cautious through the end of the week. The Senate, which was the biggest hurdle, passed the tax bill around midnight. The House will have to vote again this morning and the President could hold a news conference as early as noon CT. Existing Home Sales is due at 9:00 am CT. However, the reason for caution is Friday’s gauntlet of data. At the same time, we have been waiting for all of this fundamentally bearish treasury news to pass in order to present a strong buy opportunity that correlates with seasons. If data misses Friday, we could see a capitulation of sorts.

Technicals: We have remained more Neutral, reminding traders of the potential downside this week as tax reform and next year’s budget gets through. Price action has remained below the 123’27 major three-star support level since breaking it. In fact, today’s session high is 123’265 and this means the bears are clearly in the driver’s seat. Yesterday’s low was 123’20 and the next key support level is 123’10. Only a close back above 123’27 will begin to neutralize the immediate term weakness.

Bias: Neutral/Bullish

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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