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E-mini S&P (December)
Last week’s close: Traded to 2603 and settled at a new all-time high of 2601 on Friday.
Fundamentals: The market legged fresh all-time highs to finish last week on strong Black Friday sales with Amazon gaining 2.5% and adding another .5% in today’s pre-market. Price action brushed off weakness in China, trading to a low of 2596.50 early in the session before turning higher. New Home Sales data is due at 9:00 am CT and today could be on the quieter side as traders gear up for a big day tomorrow. President Trump is scheduled to address Senate Republicans on tax-reform at their luncheon tomorrow, this could lay the groundwork for a vote in the Senate this week. The next Fed Chair Powell speaks in front of the Senate Banking Committee as his confirmation hearing begins; we will get a glimpse on his plans for the Fed. Goods Trade Balance and Wholesale Inventories are due out at 7:30 am CT tomorrow, Case Shiller at 8:00 am CT and Consumer Confidence at 9:00. Treasury Secretary Mnuchin speaks along with the Fed’s Dudley and Harker.
Technicals: Price action has extended gains this morning and last week’s breakout above 2594.50-2596 signals the next bull leg higher to 2633.50. The overnight pullback to 2596 held support beautifully and gives the bulls a clear edge to start the week. We expect price action to drift higher into tomorrow.
Resistance –2616**, 2633.50***
Pivot – 2600
Support – 2594.50-2596**, 2585.75-2589.50**, 2576.50**, 2567.75*, 2561.75-2562.25**, 2555*, 2539.25-2543***
Crude Oil (January)
Last week’s close: Traded to a high of 59.05 and settled at 58.95
Fundamentals: This week is all about OPEC with Thursday’s meeting in the crosshairs. Russian Energy Minister Novak has implied that Russia is on board with extending cuts, but this will be a key talking point throughout the week. Given the recent rally and the positioning from the bull camp, the market is pricing in perfection from this deal; lauded support for nine months to finish out 2018. Anything less could cause a mass exodus from the growing long position. We have been very bullish and vocally such. With our upside target being achieved we have come out of the weekend Neutral.
Technicals: Price action has softened up a little this morning and first support comes in at 58.09-58.14; if the market stays above here the bulls will remain in the driver’s seat, however, a settle below here will begin to neutralize the tape. The key level this week to watch will be 56.94-57.02 and a move below here could easily spark further selling down to the line in the sand $55 mark.
Resistance – 58.97***, 59.96***, 62.58**
Support – 58.09-58.14**, 57.50**, 56.94-57.02**, 56.54*, 55.00-55.25***
Last week’s close: Settled at 1287.3
Note: Traders want to begin using February Gold by tomorrow.
Fundamentals: Gold has continued to capitalize off a weaker Dollar, however, the gains have been subdued. The Dollar has lost 2.5% since its peak earlier this month and is now at the lowest level since September 26th. Gold on the other hand is about 1% lower from September 26th but ultimately range bound between 1270 and 1300. Prospects of stronger global growth, daily all-time highs in equity markets and a more hawkish ECB has worked to keep rallies in check. What it comes down to is the need for a catalyst. Do not get us wrong, Gold has traded in a very constructive manner, and we remain bullish. This will be a very interesting week with New Homes Sales due today at 9:00 am CT. However, tomorrow is jammed packed with speak from President Trump and next Fed Chair Powell as well as data that includes Consumer Confidence.
Technicals: Price action turned north this morning after holding first support and has now edged out first resistance at 1293.7. Strong three-star resistance comes in at 1298.4-1300 and this will be the key level that the metal must close out above in order to squeeze shorts and attract fresh buying. The chart remains extremely constructive and we have strong expectations for Gold in the first quarter, please contact us to see how we are positioning with options.
Resistance – 1293.7**, 1298.4-1300***, 1308.4-1312.6**
Support –1285.1-1286.2**, 1272.4***, 1267-1268**, 1262.8-1263.8**,1243.6*
Natural Gas (January)
Last week’s close: Lost more than 4% on Friday settling at 2.916
Fundamentals: Friday was a bloodbath for Natural Gas and the selling pressure was exacerbated ahead of the weekend. Sunday’s reopen brought a much-needed relief as the gap higher regained critical three-star support. With warmer and more moderate temperatures on the horizon, the bears were in the driver’s seat, but as we said they have essentially begun to price-out an actual winter. Our bet is that they will get caught offsides and last night was a sneak peak of what can potentially happen as weather models shifted once again and colder fronts are on their way.
Technicals: Lighter volume (see December) and the contract roll added to an already heavy week. Price action has regained the major three-star level at 2.981 and this will be critical to watch through the end of today’s session. Gap support now comes in at 2.929 and a close below here will add fuel to the downtrend. Resistance now comes in at 3.036-3.059 and the bulls must achieve a close out above here in order to neutralize weakness.
Resistance – 3.036-3.059**, 3.10-3.12**, 3.21-3.25**, 3.321-3.36****
Support – 2.981***, 2.929**, 2.847-2.861**, 2.753-2.7565***, 2.486-2.522****
Last week’s close: Settled at 124’31
Fundamentals: The 10-year treasury is holding well and battling a tug of war between equity bulls and what appears to be a more dovish Fed. Last week was a very interesting trade as the curve flattened significantly which has ultimately opened the door for a reversal higher. This is going to be a very interesting week and we have an auction for 2’s and 5’s today and one for 7’s tomorrow. New Home Sales is due at 9:00 am CT today and tomorrow brings the heat as tax-reform comes back into the picture with President Trump addressing Senate Republicans and the beginning of confirmation hearings for the next Fed Chair Powell.
Technicals: Resistance at the 125’015-125’03 level has kept price action in check and this will continue to be a critical level on a closing basis; a close above here will likely gravitate price action higher. To the downside we are watching minor support at 124’275 as the level could become stronger through the end of today’s session.
Resistance – 125’015-125’03**, 125’07*, 125’19**, 125’255**, 126’01**, 126’15***
Support – 124’275*, 124’16-124’19**, 124’00**, 122’22-122’29***
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