BrokersEDGE Newsletter 11/10/17 Morning
Published Nov-10-2017
E-mini S&P (December)
Yesterday’s close: Lost 8 ticks on the session but recovered nearly 1% from lows yesterday to settle at 2584.
Fundamentals: Tax-reform remains front and center to finish out the week and the House Ways and Means Committee advanced a bill that the full House will vote on next week. The Senate is still on their own track with a bill introduced yesterday and is expected to be marked up Monday. For traders, the process is dizzying and ultimately has encouraged profit taking, not to say there are not buying opportunities intraday. Treasury yields have edged up firmly to into this morning and yields in China remain at three-year highs. The Chinese central bank had to again inject liquidity to loosen monetary conditions. Yields in the U.S began climbing after the 30-year bond auction yesterday but have risen well overnight. This could simply be an overreaction/repositioning to the long-side (of prices) following the Fed meeting and an ensuing relief of a potential geopolitical flare-up (Saudi and Trump in Asia). Whatever the reason might be, this is something to watch closely. Michigan Consumer data is due at 9:00 am CT today.
Technicals: Price action traded to a low of 2563.25 yesterday and with each test to this key support, the level itself gains importance. However, we are not ready to make it a major three-star level, but understand that a move below here should open the door to 2539.25-2543. Session highs come in at 2585.75, yesterday’s settle at 2584 and the trend line we have discussed the last two days is now at 2583; major resistance now clearly comes in at 2583-2585.75 and the bulls must achieve a close above here in order to regain the upper-hand. The bears have a slight edge but must keep price action depressed below 2573.50-2574.25 in order to clearly see this. We neutralized our bias yesterday and now that price action could not maintain yesterday’s close among other factors we give a Neutral/Bearish bias.
Bias: Neutral/Bearish
Resistance – 2583-2585.75**. 2594.50-2596**, 2600*, 2616**
Support – 2573.50-2574.25**, 2561.75-2562.25**, 2555*, 2539.25-2543***
Crude (December)
Yesterday’s close: Gained 37 cents on the session to 57.17
Fundamentals: Crude remains constructive heading into the weekend and on the surface we do not see the picture painted this week to change ahead of it. The November 30th OPEC meeting is on everyone’s calendar, but we must not forget that OPEC’s Monthly Oil Market Report is due out Monday morning and the IEA’s is due out Tuesday. Furthermore, Chinese data is not through yet and comes into the picture Monday evening and December option expiration is Wednesday. December is the most active of any contract and large open interest could work to tighten up price ranges barring any fundamental surprises. Oil rigs have dropped 39 since recovering to a peak in August, today’s data is due at noon CT.
Technicals: We remain bullish ahead of the weekend but are becoming more cautious after a strong run and as RSI has remained above 70 for more than a week now. In the near-term, we could now actually make the argument to sell to go short against 58.97, though not before Sunday’s reopen. Key support at 56.51-56.79 is holding tremendously but a move below here would encourage profit taking from the longs. We also long forward to today’s CoT report, especially since price action has been rangebound since Tuesday’s cutoff.
Bias: Bullish/Neutral
Resistance – 58.97***
Support – 56.51-56.79**, 56.18*, 55.02-55.25***, 54.45-54.54**, 53.76-53.90**, 52.86-53.11***
Gold (December)
Session close: Settled at 1287.5, the highest since October 19th.
Fundamentals: The problem with Gold right now is that there is no real catalyst. Don’t get us wrong, the potential for a catalyst is literally right around the next corner. The Dollar has retreated nearly 1% from recent highs and the catalyst that we lean on most, for the long-run, is a weaker Dollar. We may not see the Dollar take out the 92 level again this year, but we anticipate this feat in the first quarter of next. Michigan Consumer data is due at 9:00 am CT and ‘tax-from’ is today’s happy hour drinking work.
Technicals: Key resistance at the 1291.3-1292.9 level has kept price action in check and the bulls must achieve a close out above here in order to begin to squeeze shorts. It will be key to keep the tape above support at the 1280.5-1281.2 level which would leave the door open for strong price action to start next week.
Bias: Bullish
Resistance – 1291.3-1292.9**, 1298.4-1300**, 1308.4-1312.6**
Support – 1280.50-1281.5**, 1262.8-1270***, 1243.6**
Natural Gas (December)
Yesterday’s close: Settled at 3.20
Fundamentals: Yesterday’s inventory report was in line with expectations showing a +15 bcf. This is expected to be peak storage and going forward inventories would be drawn down. Prices might have gotten a little out in front of themselves with this turn expected but a healthy consolidation would be a great appetizer to a colder than expected winter.
Technicals: We remain bullish and yesterday’s close above major three star resistance was important, however, it was not convincing. We would like to see a green day to finish out the week. Resistance at the 3.22 level is working to keep the tape in check. Bulls must be careful because a very healthy consolidation here could lead to a test of 3.08 before bouncing back firmly.
Bias: Bullish
Resistance – 3.179-3.198***, 3.22**, 3.297-3.353***, 3.55**, 3.67**
Support – 3.08**, 3.035-3.051** 2.984-2.998***, 2.847-2.861**, 2.753-2.7565***, 2.486-2.522****
10-Year (December)
Yesterday’s close: Settled at 125’06
Fundamentals: Yields (inverse to price) are mostly higher across the world this morning. The 10 year (price) put in a high yesterday after the 30-year auction and it has continued to bleed into this morning despite a weaker Dollar and equity market. China’s 10-year yield remains at three year highs as monetary conditions have tightened (and countered with liquidity injections). Michigan Consumer data is due at 9:00 am CT today.
Technicals: We moved closer to Neutral yesterday with a Neutral/Bullish and today are outright Neutral. Price action took out first key support at 125’02-125’35 and the bulls must achieve a close back above here to neutralize weakness. First key support comes in at 124’19 and this appears to be in reach early next week.
Bias: Neutral
Resistance –125’19**, 125’255**, 126’01**, 126’15***
Support – 125’02-125’035**, 124’19**, 124’00**, 122’22 – 122’29***
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