E-mini S&P (December)
Last week’s close: Settled at 2644, down 4 ticks in a wild session.
Fundamentals: The Senate approved their tax-bill in the early hours of Saturday morning and the S&P gapped higher on the open last night. Prices quickly traded to a new all-time high and have held ground into this morning. Supporting the market is pent-up buying after a roller coaster of a Friday session. Former national security advisor Michael Flynn plead guilty to lying to the FBI and agreed to testify against President Trump. Simply put, an ugly reporting job took this out of context and the S&P sold off as much as 1.5% in the biggest drop of the year. The pent-up buying comes from those who either got stopped out, missed the boat as markets neared unchanged before the end of the day or were awaiting more clarity. Still, developments here must be watched. Jobs week gets underway with Nonfarm Payroll due out Friday. Before then we will get developments on tax-reform as the House and the Senate must get together and markets expect them to put a bill in front of the President before Christmas. Though it sounds easy right now, the budget deadline is also Friday. Today we have ISM NY Business Conditions due at 8:45 am CT and Factory Orders at 9:00. ISM Non-Manufacturing is due tomorrow.
Technicals: In Friday’s Midday Market Minute video that we put out during the selloff, we pounded the table about buying the dip. In yesterday’s Tradable Events this Week we put out a target of 2666 on the week. Well, that has essentially been achieved before Monday’s open with an overnight high of 2663.25. We will maintain three-star resistance at the 2666, this will also represent a 2000-point move from the March 2009 low. However, with the seasonally bullish month of December just getting underway we now have a yearend target of 2712. Fundamental developments must be watched, and we want to see a continued close first support that now comes in at 2654-2658 in order to keep the bulls in the immediate-term driver’s seat. A close below Friday’s settlement of 2644 will signal a failure.
Bias: Bullish
Resistance – 2666***, 2679-2685**, 2712****
Pivot – 2658.50
Support – 2654-2658**, 2644***, 2633.50-2634.25**, 2619.25-2619.75**, 2607**, 2594.50-2596****
Crude Oil (January)
Last week’s close: Settled at 58.36 and failed to get out above major three-star resistance at 58.97
Fundamentals: With the OPEC production cap announcement in the rear-view mirror our focus shifts to rising U.S Production and this week’s inventory report that will show the tail end of a pipeline stoppage. Baker Hughes said two Oil rigs were added last week. We had another Friday session that gravitated higher, but weakness into this morning shows concern over the potential fifth estimated U.S production record in a row. The bull case has played out and now that we are in a time of year with slightly weaker demand, the door is open for the bears.
Technicals: We discussed the Commitment of Traders in yesterday’s Tradable Events this Week and how the buyers continued to step in ahead of OPEC with the net-long position coming ever-close to the record set in February, falling just shy by about 7,000 contracts. The net-long position, created by longs adding and shorts reducing, added 58,614 contracts in the week ending November 28th. Given that price action held key support after the OPEC meeting on Thursday and finished higher into the weekend we might have a record net-long position on our hands at the moment. If everyone has already bought, who is left to buy. Key support comes in this morning at 57.56 and we truly want to see a close below 57.81-58.06 at a minimum. A close back in the green on the session will neutralize the bears heading into inventories.
Bias: Bearish
Resistance – 58.36*, 58.97***, 59.96***, 62.58**
Pivot – 57.81-58.06
Support – 57.56**, 56.75-56.94**, 55.00-55.25***
Gold (February)
Last week’s close: Settled up about $6 on the session at 1282.3 but $10 from the high
Fundamentals: On Friday Gold quickly spiked to a high of 1292.5 on the Michael Flynn testifying against President Trump news but as the session unfolded the headline grabbing jargon dissipated and the focus became the Senate tax-bill. On Saturday morning the Senate official passed their bill and now they will begin working with the House to get a bill in front of the President before Christmas but with one hurdle, a budget to set by Friday. This week sure brings the heat with Nonfarm Payroll also due Friday. Ahead of that we get the ISM Non-Manufacturing read tomorrow, and if you follow our commentary, this is a number we like to watch very closely. Today is ISM NY Business Conditions due at 8:45 am CT and Factory Orders at 9:00. We remain long term bullish Gold but began neutralizing our stance in the near-term last week as we see hurdles ahead with tax-reform and the Fed hike, but expect the door to open once we get these out of the way.
Technicals: Gold continues to battle against major three-star support, a wide range, that we have at 1268.1-1276.9. The bears look to achieve a close below here to encourage further selling. The 1262.8 level will attempt to slow down the selling, but ultimately a move of this sorts would open the door to 1250.2. Considering the weakness from Friday’s high, the bulls would achieve a ‘win’ by edging the metal back to green on the session.
Bias: Neutral/Bullish
Resistance – 1287.5**, 1292-1292.5**, 1304.7***, 1312.7-1316.4**, 1328-1329.4**
Pivot – 1282.3
Support – 1268.1-1276.9***, 1262.8**, 1250.2**
Natural Gas (January)
Last week’s close: Settled at 3.061
Fundamentals: Natural Gas gapped higher on the open last night despite warm weekend temperatures across much of the country. Driving price action is still the cold front that is expected to come in about a week. Expected inventory drawdown for the second half of December have continued to increase since the middle of last week.
Technicals: We remain Bullish and last night’s gap higher has traded constructively, covering and holding the gap. Resistance at the 3.113-3.137 level has kept price action in check and a close out above here will give the bulls an edge as the week develops. Support at 3.05-3.06 has been perfect with last week’s settlement and the session low covering the gap aligning here. It will be critical for this level to hold.
Bias: Bullish/Neutral
Resistance – 3.113-3.137**, 3.182**, 3.218-3.237**, 3.321-3.358****
Support – 3.05-3.06**, 2.971-2.981***, 2.929**, 2.847-2.861**, 2.753-2.7565***, 2.486-2.522****
10-year (March)
Last week’s close: Settled at 124’135, with nearly a one-point range on the session
Fundamentals: Friday was a roller coaster of a session on the Michel Flynn news but ultimately by the end of the day the focus was tax-reform. With the Senate passing their bill early Saturday morning Treasuries gapped lower on the open last night. Still, price action has been constructive, and some losses have been pared heading into the morning. This is a big week and the House and Senate start grinding out a compromising bill that can be in front of the President by Christmas. Nonfarm Payroll is due Friday and as we discussed in yesterday’s Tradable Events this Week, Average Hourly earnings will be key in laying the ground work for the Fed’s verbiage. ISM Non-Manufacturing is due out tomorrow and is a key data point we watch.
Technicals: We are long term Bullish on Treasuries but see pressure sticking though the next two weeks on anticipation of tax-reform and the Fed hike. Major three-star support at 123’27, previous lows, has held tremendously on three tests. Prices are attempting to work higher this morning and resistance at 124’135-124’15 that now aligns with Friday’s settlement will be a key level that the bulls must achieve a close out above in order to neutralize weakness.
Bias: Neutral/Bullish
Resistance – 124’145-124’155**, 124’22-124’24**, 124’295-125’00***
Pivot – 124’045-124’065
Support – 124’015**, 123’27***
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