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E-mini S&P (December)
Yesterday’s close: Settled at 2601.75 gaining less than a point.
Fundamentals: The next Fed Chair Powell’s confirmation hearing in front of the Senate Banking Committee comes into focus today and should begin at 8:45 am CT. He did release his prepared remarks yesterday after the close and said that he will follow the path started by his predecessor Yellen; hiking rates gradually while allowing the balance sheet to shrink. Also, today is a key Senate committee vote as they try to get their bill to the full Senate for a vote Thursday. Two Republicans speaking out against the bill bring a hurdle in today’s vote. President Trump addresses Republican Senators today on tax-reform at a luncheon. These two events alone should bring a more volatile session than yesterday, however, we also have Goods Trade Balance and Wholesale Inventories at 7:30 am CT, Case Shiller at 8:00 and Consumer Confidence at 9:00. Fed Presidents Dudley and Harker speak at 8:15 am CT and 9:15. Treasury Secretary Mnuchin speaks at 2:45 pm CT.
Technicals: Price action traded to a new all-time high of 2605 yesterday before backing off through the close. Key support remains at 2594.50-2596 and the market traded to a low of 2597.50 overnight before bouncing back to retest the highs. We maintain that last week’s close above that level signals a bullish breakout with the next leg signaling 2633.50. A close below 2594.50-2596 though will begin to neutralize the tape in the immediate-term.
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)
Yesterday’s close: Settled at 58.11 losing about 1.5%
Fundamentals: Prices were under pressure yesterday as Thursday’s OPEC Meeting nears. This is exactly why we said on Sunday’s Tradable Events as well as yesterday’s Morning Express that we like positioning short heading into this meeting; because it has priced in perfection. With lingering doubt that an extension would last through the rest of 2018, bulls in the largest long position since February have begun to jump ship. Adding to the selling pressure is TransCanada turning back on the 590,000 bpd pipeline two to three days earlier than initially said. Coming into focus today will be the API report after the bell.
Technicals: Price action held support at 58.09-58.14 on settlement but has continued lower into this morning and is now testing the 57.50 level. It is now clear that the key 56.94-57.02 level will come into play today, this level is about as close to a three-star as you could get and a close below here should open the doors to further selling. The only reason it is not a three-star is because we don’t expect it to ultimately hold.
Resistance – 58.97***, 59.96***, 62.58**
Pivot – 58.09-58.14
Support – 57.50*, 56.94-57.02**, 56.54*, 55.00-55.25***
Yesterday’s close: Traded a high of 1303.4 before settling at 1298.9
Fundamentals: Gold has held extremely well given that equity markets continue to make new all-time highs on what seems like a daily basis. The metal backed away once again from the psychological 1300 level, but this also came as the Dollar began to stabilize on promising news for tax-reform. Though tremendous doubt lingers, the ultimate gut feeling for most traders is that they will get something done, as Senator Hatch said yesterday, “by Christmas”. Senators will put the bill to a committee vote today which will open the door for a full vote before the end of the week, however, two Republicans present an immediate hurdle. President Trump speaks with Republican Senators at a luncheon today to discuss the tax bill. The next Fed Chair Powell’s confirmation hearing in front of the Senate Banking Committee comes into focus today as well and should begin at 8:45 am CT. He did release his prepared remarks yesterday after the close and said that he will follow the path started by his predecessor Yellen; hiking rates gradually while allowing the balance sheet to shrink. Both events will bring volatility to the metal, but it doesn’t end here; Goods Trade Balance and Wholesale Inventories are at 7:30 am CT, Case Shiller is at 8:00 and Consumer Confidence is at 9:00. We also have regional manufacturing data from Richmond and Dallas. Fed Presidents Dudley and Harker speak at 8:15 and 9:15 am CT. Treasury Secretary Mnuchin speaks at 2:45 pm CT.
Technicals: Price action in Gold remains extremely constructive despite its failure to get out above major three-star resistance yesterday in the February contract 1304.7. In the December contract this level comes in at 1298.4-1300. After yesterday’s session high, support was then created at 1296.5; it is very often that our levels and bias evolve through the trading day, another reason to stay in touch with our trade desk. This first key support level has held into the morning and sets up the metal for a second attack on major three-star resistance. We have seen a higher low each session for a week now, continuing this trend should set up for a move out above that resistance level.
Resistance – 1304.7***, 1312.7-1316.4**, 1328-1329.4**
Support – 1296.4**, 1289.8-1289.9**, 1268.1-1276***
Natural Gas (January)
Yesterday’s close: Settled at 3.017
Fundamentals: The flop in developing weather patterns combined with exacerbated selling in low volume holiday hours has led to sharp reversal in price action into this morning. Last week’s weather and the early part of this week is already in the books and we are likely to see soft storage draws. However, weather developments that begin a week out has reinvigorated the bull camp and opens the door for higher price action immediately.
Technicals: As we discussed on yesterday’s Midday Market Minute, the 3.05/3.06 area will be a key hurdle that we must close out above in order to encourage further buying from both the bulls and covering from the bears. We are out above here this morning and the next resistance comes in at 3.112-3.12. Today’s session low comes in at 3.017-3.028 and a close below here will signal a near-term failure.
Resistance – 3.059-3.063**, 3.112-3.12**, 3.163**, 3.201-3.245**, 3.321-3.36****
Support – 3.017-3.028**, 2.981***, 2.929**, 2.847-2.861**, 2.753-2.7565***, 2.486-2.522****
Yesterday’s close: Settled at 125’04
Fundamentals: Yesterday was a choppy trade following much better than expected New Home Sales. Prices finished on the high of the range for the session but has yet to breakout above resistance. Traders await today’s hearing with the next Fed Chair Powell, tomorrow’s testimony from Yellen and a crucial day and week for tax-reform in the Senate. Data today will also be crucial see above for the schedule. A 7-year auction today will also be in focus.
Technicals: Price action has nudged above resistance but has not done so convincingly nor has it remained out above. The chart remains very constructive, building higher lows, however, with equity markets making new all-time highs daily and a crucial week just getting under way, the bulls await a true catalyst to take prices higher. A move back below first support at 124’27 will encourage further selling.
Resistance – 125’015-125’03**, 125’07*, 125’19**, 125’255**, 126’01**, 126’15***
Support – 124’27**, 124’16-124’19**, 124’00**, 122’22-122’29***
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