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E-mini S&P (September)
Yesterday’s close: Settled at 2858.50, up 6.25
Fundamentals: U.S equity benchmarks extended gains overnight and after settling at the highest level since the record close on January 26th, the S&P is trading at the highest level since the day it set the record on January 29th. Fundamental anecdotes continue to add fuel to the rally and it was reported yesterday that President Trump criticized Fed Chair Powell for moving forward with rate hikes and that he has not been the “easy-money” Fed Chair he expected. He also fired shots at China and Europe for weakening their currencies. The one-two combination added downward pressure to a Dollar that had been retreating after reaching the highest level since last June, last week. The Dollar’s flight, which is still at 12-month highs, can begin to weigh on multinationals who receive a bulk of income from overseas; a strong Dollar can make U.S goods more expensive and thus less attractive. Although, it has not appeared to hold back the S&P, a weaker Dollar would certainly be a tailwind. Furthermore, we expect this weakness to continue.
Today’s economic calendar is again bare. However, this encourages a stronger emphasis on headlines. President Trump added yesterday that he did not think the talks with China this week would go anywhere. He continues to play hardball, that’s his game. What is most important to the market though is that the third wave of tariffs, $200 billion on Chinese goods, is delayed from next month’s expected implementation. For now, we understand that there is a road map to resolve this dispute by November and stocks are responding. Tomorrow, we look to Existing Home Sales and the FOMC Minutes from the August 1st meeting.
Technicals: Price action pulled back perfectly to first key support at 2849.50. We reemphasized in yesterday’s Midday Market Minute that pullbacks to and near this level are buying opportunities. Our Bias is outright Bullish and will remain so unless the market closes below this key level. First key resistance at 2864.50 continues to pose a barrier; look for a close above here to open the door for a new record high. Yesterday, we said there is no reason to think this would not happen before the end of the week.
Resistance: 2864.50**, 2878.50**, 2885.25-2889***, 2924.50***
Support: 2849.50**, 2833-2837***, 2827.25**, 2821.75**, 2798.50-2803**, 2789.75-2792***
Crude Oil (October)
Yesterday’s close: Settled at 65.42, up 0.21
Fundamentals: Crude Oil is edging higher this morning. Today, the untradeable September contract falls off the board and this could help encourage a relief rally. Although this is a seasonally vulnerable time of year for price, the market has held in tremendously well. Especially so considering the bearish inventory reports and mountains of Crude Oil being imported by the U.S; but if the last two weeks could not bring the straw that breaks the camel’s back, we just do not see it happening. Ultimately, we believe that this lower price action is opening the door to a longer-term buy opportunity
Technicals: Crude settled above major three-star resistance at 65.09-65.35 yesterday and this opens the door to higher price action. Minor resistance comes in at 65.81 and this held the tape back on Friday, but the bulls are now back in the driver’s seat as long as they can maintain a close above that 65.35 level. While there are headwinds at 66.22-66.33 and again at 66.81-66.83, we envision this leg testing 67.72-68.10. Here, there are multiple technical indicators as well as a trend line that bring a tremendous barrier in the near-term.
Resistance: 65.81*, 66.22-66.33**, 66.81-66.83**, 67.72-68.10***, 68.86-69.19**
Support: 65.09-65.35***, 64.46-64.65**, 63.40-63.45**, 62.60-62.99***
Yesterday’s close: Settled at 1194.6, up 10.4
Fundamentals: Gold started the week off on firm footing and extended gains to an overnight high of 1203.1, but technical resistance (discussed in the ‘Technical’ section below) has held the metal back from further gains. The Dollar has shed about 1.5% against both the Yuan and the Euro and today will find itself at an immediate-term inflection point. In Sunday’s Tradable Events this Week, we broke down what has been driving a safe-haven flight to the Dollar. Yesterday, we further emphasized this narrative on CNBC’s Trading Nation, discussing that the Dollar’s best days of this rally are behind it. Yesterday, President Trump criticized Fed Chair Powell for raising rates and called out China and Europe for weakening their currencies; his proactive stance on keeping the Dollar rally in check is great for Gold’s cause. Headlines will remain critical on this quiet day. Tomorrow, the U.S and China are expected to restart talks in Washington though President Trump added he does not think anything will come of it this week as he continues to play hardball. FOMC Minutes from the August 1st meeting are also tomorrow.
Technicals: Price action extended fell shy of key resistance at 1204; we have said Gold must close above here in order to neutralize last week’s move. However, we must ultimately see a move above major three-star resistance at 1210.7-1212.5 in order to only begin squeezing the shorts. A constructive session today would simply be achieving a close above 1198.9, but a continued failure to hold 1194.5 on a closing basis will leave Gold susceptible to near-term waves of selling back down to major three-star support.
Resistance: 1204**, 1210.7-1212.5***, 1227-1228.5**, 1235.6**, 1244.6-1251.6***
Support: 1179.7-1182***, 1167.1**, 1123.9***
Yesterday’s Close: December corn futures finished yesterday’s session down 1 ½ cents, trading in a range of 6 ¾ cents. Funds were estimated sellers of 5,500 contracts.
Fundamentals: The market softened up to start the week on spillover pressure from wheat and beans. Friendly weather through the Midwest has also kept a lid on some concerns which has been preventing the market from breaking out above technical resistance. Weekly export inspections came in at 1,096,000 metric tons, within the range of expectations. Crop progress showed good/excellent conditions dropping 2% to 68%, a bigger drop than analysts were looking for but not enough to spark a rally. Several crop tours, including Pro Farmer’s are beginning this week which will undoubtedly draw a lot of attention this week as they make their way through the Midwest.
Technicals: The market failed to take out our key technical resistance pocket which we had defined as 380 ½-382 ½, this gives the bears the advantage in the near term. This pocket represents a key retracement from the May highs to the July lows, along with the original breakdown point from the August 10th USDA report. If the bulls can chew through this pocket, it would likely encourage additional short covering from the funds. The next objective would be 388 ½-389 ¾. On the support side, the market tested, held, and is testing our first support again this morning at 374. A break and close below here likely accelerates the selling, the next pocket of support comes in 366 ¼-369 which is a make or break pocket in our opinion.
Resistance: 380 ½-382 ½***, 388 ½-389 ¾****, 393-395 ¼ **
Support: 374**, 366¼-369***, 349-352 ¼****
Yesterday’s Close: November soybeans finished yesterday’s session down 4 cents, trading in a range of 15 ¼ cents. Funds were estimated to have been near flat on the day.
Fundamentals: In yesterday’s report we talked about the recent headlines saying that the U.S. and China would resume talks and how that helped support the market. We followed that up by saying: ”We would not be surprised to see nothing come of the meeting this week, the market retreat, and sometime in the near future see more headlines of another meeting. This is shaping up to be a classic buy the rumor sell the news market in our minds.”. Yesterday afternoon President Trump said he did not anticipate much coming for the trade talks this week (shocker). Expect the headlines (good/bad) to continue for the foreseeable future. Due to the day to day headlines we are trying to be nimbler and are avoiding getting married to a particular bias. Export inspections yesterday came in at 638,000 metric tons, this was within expectations. Good/excellent ratings in the weekly crop progress report were left unchanged at 66%.
Technicals: On the technical side of things, not much has changed over the past 24 hours. These back and forth headlines have shaken up the technicals drastically, traders should remain nimble with the understanding that you cannot change the headlines. We expect volatility to continue, which will present a lot of great near-term opportunities for those not married to a specific direction. First support this morning comes in from 880 ¾-882, this pocket represents previously important price points and a key retracement from the May highs to the July lows. On the resistance side of things, 914-915 ¾ is the pocket to keep an eye on, this represents recent resistance along with a key retracement from the May highs to the July lows. Just above that is 922 ¼, a close above here will likely spark a bigger move.
Resistance: 914 ¼-915 ¾***, 922 ¼***, 943 ½****
Pivot Point: 900
Support: 880 ¾- 882***, 860 ¼-866****
Yesterday’s Close: December wheat futures finished yesterday’s session down 16 ¾ cents, trading in a range of 22 ½ cents. M Funds were estimated sellers of 8,500 contracts on the day.
Fundamentals: Wheat futures rolled over yesterday, erasing nearly all of Friday’s gains. That weakness has carried over into the overnight and early morning session. Weekly export inspections came in at 345,000 metric tons, this was within the range of expectations but still pretty pathetic. Yesterday’s weekly crop progress report showed spring wheat harvest is now 60% complete.
Technicals: The technical picture is starting to become much more bearish as we retest the recent bottom end of the range from 549 ½-555. A breakdown below here takes us to 539 ½-540 ½, this pocket represents the 50 and 100 day moving average, along with the 50% retracement (middle of the range) over the last year. This was also the original breakout point from July 25th. If that gives way, we expect to see accelerated selling via long liquidation from the funds take us back below 522 ¼-523 ½.
Resistance: 578 ¾-582 ¾****, 595 ½-600***, 613-615****
Support: 549 ½-555***, 539 ½-540 ½****, 522 ¼-523 ½***
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