E-mini S&P (December)
Yesterday’s close: Settled at 2596.25 after trading to an all-time high of 2600.50
Fundamentals: Equity markets accelerated higher yesterday, and momentum carried over from overseas with a strong showing in Asia that centered on Hong Kong. The picture in the U.S remains the rosiest and cash is flooding in after solid earnings and the hope of better growth on the heels of tax-reform. Despite the yield curve giving a different sentiment. Speaking of tax-reform, the front has been a little quieter this week and Senators rolled out a release on Monday night and are expected to vote within 10 days; with this price action it is clear that investors do not doubt something with get done and money managers don’t want to miss out on their bonus. Fed Chair Yellen spoke last night and gave a more dovish rhetoric than of late, being cautious about raising rates too quickly and the potential of halting inflation even further. Today will be a crucial day ahead of the Thanksgiving Holiday with Durable Goods due at 7:30 am CT and the FOMC Minutes from the November 1st meeting due at 1:00 pm CT. Jobless Claims are pushed up and also due at 7:30 while the second and less volatile read on Michigan Consumer data is due at 9:00.
Technicals: Yesterday’s close was at 2596.25 and much of the price action throughout the session was above this resistance which is bullish. We have a minor level at 2600 but ultimately a continued close above 2594.50-2596 should signal the next bull leg to 2633.50. A close below this level will open the door for a consolidation back to 2583-2585.75.
Bias: Bullish
Resistance – 2600*, 2616**, 2633.50***
Pivot – 2594.50-2596
Support – 2583-2585.75**,2576.50**, 2567.75*, 2561.75-2562.25**, 2555*, 2539.25-2543***
Crude Oil (December)
Yesterday’s close: Settled at 56.83
Fundamentals: Oil is surging this morning after yesterday’s API report, which relative to last week’s reverted back to the mean and showed a draw of 6.356 mb. However, this is not the only news driving prices higher as TransCanada announced last night that it will deliver 85% less Oil to the U.S through the end of November. Combine this with the OPEC meeting next week and we have a clear path of least resistance higher. Crude is now at the highest level since July 1st, 2015. Official inventory data from the EIA is due out today at 9:30 am CT and expectations are for -1.545 mb Crude, -1.164 mb Distillates and +.737 mb Gasoline. The headline read will be key today but not against these expectations, we must see a draw in Crude of at least double these expectations to keep the bulls hungry after last night’s huge API read. Baker Hughes data is due out at noon today due to the holiday.
Technicals: This is the melt-up effect to the recent swing highs we discussed on a breakout above key resistance at 56.71-56.94. Price action is now testing the 57.92-58.14 swing highs, but our upside target remains 58.97 and we want to see this before the end of the week. Today would be the sixth session with a higher low since 55 traded in the January contract. Previous resistance is now support at 56.71-56.94 and a close below here on the session will encourage further liquidation in the immediate term.
Bias: Bullish
Resistance – 57.92-58.14**, 58.97***, 59.96***, 62.58**
Support – 56.71-56.94**, 56.32**, 55.74**, 55.00-55.25***, 54.36-54.65**, 53.96**, 53.11-53.27***
Gold (December)
Yesterday’s close: Settled at 1281.7
Fundamentals: The Dollar backed off from Monday’s strength and has settled in quite a bit ahead of today. Gold has done the same, consolidating back into the middle of its range from Friday’s high and Monday’s low ahead of Durable Goods and Jobless Claims due out at 7:30 am CT. The second and less volatile read on Michigan Consumer data is due at 9:00. The FOMC Minutes from the November 1st meeting are due at 1:00 pm CT. Fed Chair Yellen spoke last night with what was somewhat of a dovish rhetoric in advising against raising rates too quick and subduing inflation even further. December’s hike is nearly a forgone conclusion and today’s Minutes will give more of an insight on the rhetoric that will be used at that meeting. Especially on the heels of a more dovish rhetoric not only from Yellen. We like prospects of Gold in the near term.
Technicals: Price action traded into resistance yesterday at 1281.1-1283.2, this level has shifted slightly and now comes in at 1283.8-1285.8. Today’s session high is 1286 and a close above resistance is key, and we now have minor resistance above there at 1288.5. Three-star resistance now comes in at 1298.4-1300.
Bias: Bullish
Resistance – 1281.1-1285.6**, 1288.5*, 1293.7**, 1298.4-1300***, 1308.4-1312.6**
Support –1271.9***, 1267-1268**, 1262.8-1263.8**,1243.6*
Natural Gas (December)
Yesterday’s close: Settled at 3.017
Fundamentals: Storage data is due out today at 11:00 am CT and estimates are for a draw of 51 bcf. Last year at this time there was a build of +2 bcf and today’s estimates double the five-year moving average. Weather has been mild on the east coast with New York City in the 50’s for the most part. This has put pressure on prices in the near term. We maintain that $3 is too cheap and no need to look further than last years sharp turn in higher in December when this week showed a build of 2 bcf.
Technicals: This is go-time and price action testing major three-star support at the gap from two weeks ago. The bulls need to show up to the party today and reverse the losses on the week while the bears look to achieve a close below here to signal a near-term failure. The high of the week comes in at 3.089 while resistance from a swing high last week aligns with the 50 and 100 day moving averages to bring resistance above there.
Bias: Bullish
Resistance – 3.046*, 3.089**, 3.112-3.153**, 3.198-3.22***, 3.279*, 3.353***, 3.55**, 3.67**
Support – 2.984-2.998***, 2.847-2.861**, 2.753-2.7565***, 2.486-2.522****
10-year (December)
Yesterday’s close: Settled at 124’22
Fundamentals: The yield curve got run over by a truck yesterday, as it continues to flatten. Prices of 2s and 5s finished in the red while 30s finished in the green. Fed Chair Yellen advised against raising rates too soon in a speech last night and she does not seem to be the only member who has begun to show signs of concern and/or a dovish rhetoric. Today’s Minutes due at 1:00 pm CT should be interesting, not because of the December hike but because of the rhetoric that we will get with it. Durable Goods and Jobless Claims are due at 7:30 am CT and the second read on Michigan data is due at 9:00.
Technicals: Price action has stayed above key support at 124’16-124’19 as we await data this morning and Minutes this afternoon. By the end of the day we could see the case for stepping into the long side but are awaiting more clarity. Only a close above 124’31-125’15 will turn us outright bullish in the near term.
Bias: Neutral
Resistance – 124’31-125’015**, 125’07*, 125’19**, 125’255**, 126’01**, 126’15***
Support – 124’16-124’19**, 124’00**, 122’22-122’29***
For more information please contact DAW Trading at brokersedge@dawtradingdiv.com or at 877-329-0006 and visit us at https://dawtradingdiv.com/brokers-edge/
Disclaimer:
Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. DAW Trading (“DAW”) uses various outside sources for research material regarding futures and options on futures trading therefore the views and opinions expressed in this letter may not necessarily reflect the view of DAW or its staff. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to DAW.