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E-mini S&P (June)
Last week’s close: Settled at 2671.50, down 21.50 on Friday and up 14.25 on the week
Fundamentals: Major U.S equity benchmarks opened higher Sunday night after a poor Friday session. Calming geopolitical tensions boosted the open; North Korea halted nuclear missile tests ahead of North and South Korea talks later this week and Treasury Secretary Mnuchin plans a trip to China to discuss trade. Positive price action has dissipated back to unchanged this morning as Treasury yields continue to surge, last week’s rise was a major driver of stock market weakness. The 10-year is at the highest level since 2014 and knocking on the door of 3% after reaching 2.98% overnight. We have said it here many times before, 3% is not the real landmine, it is the pace in which it rallies; the 10-year has gained 15 basis points since midweek last week. This was its largest weekly rip since January 28th and we all know what happened then. Chicago Fed National Activity is due at 7:30 am CT. Manufacturing, Markit Composite and Services PMIs are due at 8:45 am CT today and Existing Home Sales data follows at 9:00 am CT. As for earnings, we look to Halliburton among others in a short docket ahead of the bell. Alphabet after the bell today will take center stage.
Technicals: We said it Friday and we’ll say it again; we remain Neutral and this market can be traded from both sides. The tape is as technical as ever; once price action slipped through major three-star support at 2679.75 on Friday, the bears had the edge. Buyers did step in front of our next major level at 2654.75 and a low of 2659.75 held. The tape gapped higher on the open last night but covered that gap within the first 90 minutes; selling down to the gap or buying the cover both would have yielded positive trades. Price action has struggled to hold above 2679.75 which now aligns with several indicators to create major three-star resistance at 2679.75-2682.50; a close back above here will neutralize the recent weakness. However, a continued close below here will leave the bears in the near-term driver’s seat. A close below major three-star support at 2754.75 will neutralize the two-week uptrend and open the door to further weakness. One thing we want to point out is the potential development of a cup and handle formation; this would happen if Friday’s low holds and the groundwork for such would look strong upon a move out above second and third resistance levels.
Resistance: 2679.75-2682.50***, 2692-2696**, 2707.25-2709.75**, 2718.25***, 2740***
Support: 2654.75-2659.75***, 2635.25***, 2612.25-2615.50***
Last week’s close: Settled at 68.40, up 0.07 on Friday and up 1.07 on the week
Fundamentals: On Friday we covered the details of President Trump’s tweet that immediately sparked waves of selling down to a crucial technical support level. Still, Crude Oil managed to notch a constructive week in trading a dollar from Friday’s session low. OPEC’s plans to keep the production cap in effect will continue to buoy the market. Other bullish factors are ongoing geopolitical tensions and supply disruptions in the Middle East. However, bearish factors continue to be rising U.S shale production (Baker Hughes data showed 5 rigs added on Friday), an over-extended net-long position and the Dollar. The Dollar is a much bigger catalyst in this market than traders realize and though Crude has held very well despite the Dollar’s recent ascent; a close out above 90.80 in the Dollar Index will likely bring tremendous pressures to Crude.
Technicals: Friday’s session low of 67.49 ultimately held a very key level at 67.57-67.73; we look to this level as signaling the uptrend is strongly intact but a close below here will encourage more of a consolidation pattern down to major three-star support. Still, Friday’s session could not get out above the 68.35-68.61 pivot which would have likely encouraged further waves of buying into the weekend. After a series of lower highs below this pivot, the market has again become vulnerable.
Resistance: 68.81-69.09**, 69.55**, 70.00**, 72.35****
Support: 67.49-67.73**, 66.61-66.87***, 65.59-65.70***
Last week’s close: Settled at 1338.3, down 10.5 on Friday and down 9.6 on the week
Fundamentals: Gold is taking it on the chin as the Dollar Index is trading to the highest level since in nearly two months and has nudged the highest level since January. Another burden for the metal has been rising Treasury yields; the 10-year is at the highest level since 2014 and right up against 3%. U.S economic data has not been robust, and the rise of each the Dollar and Treasury yields have come on the cooling of geopolitical tensions; another factor weighing on Gold. The Citi Economic Surprise Index is at the lowest level since the beginning of Q4 2017. The PMI trio of Manufacturing, Services and Markit Composite are due at 8:45 am CT. Existing Home Sales is due at 9:00 am CT.
Technicals: Price action has pushed down below the 1331.8-1333.7 level and this has encouraged further waves of selling. Gold is now testing into the lowest level since Nonfarm Payroll on April 6th, but the long-term chart remains far from damaged. It will be key to see how support at the 1322.4-1325.4 level is treated today and a close back above 1331.8-1333.7 will be significant in keeping the bears neutralized. While the tape is vulnerable in the near-term, we remain unequivocally long-term bullish Gold.
Resistance: 1340.5-1342.8**, 1348.8**, 1356.7-1358.4**, 1367.8-1370***
Support: 1322.4-1325.4**, 1312.4-1316.6***, 1304.6***
Natural Gas (June)
Last week’s close: Settled at 2.767, up 0.072 on Friday and up 0.003 on the week
Fundamentals: Natural Gas ripped higher ahead of the weekend as risk premium continues to price in uncertain and unseasonable weather patterns. Furthermore, this was also a likely delayed reaction to Thursday’s storage report which was a larger drawdown than estimates. Early indications this week are for another draw.
Technicals: Price action continues to build a base and we are looking at 2.66-2.69 in the June contract. Below here, there is not much support until the long-term and rare major four-star level of 2.486-2.532. To the upside major three-star resistance continues to pose a significant headwind and aligns with the 200-day moving average.
Support: 2.66-2.69** 2.486-2.532****
Last week’s close: Settled at 119’175, down 0’09 on Friday and down 0’30 on the week
Fundamentals: While the 10-year Treasury yield is at the highest since January 2014, the price is at the lowest since April 2011. With tremendous supply on the horizon this week coupled with reduced geopolitical fears, buyers have been few and far. Furthermore, not many have wanted to step in front of what has become a likely path to 3%. We look to data this morning and tomorrow to confirm this rise in yields while recent releases have overall fallen short of expectations. Manufacturing, Markit Composite and Services PMIs are due at 8:45 am CT and Existing Home Sales is at 9:00 am CT.
Technicals: While we remain Neutral and do not want to catch a falling knife; we do have long-term and rare major four-star support down at 119’00-119’14. This is a level that we imagine holds after a rough battle through this week and next that includes supply, ECB, BoJ, the Fed and Nonfarm Payroll. We have instructed bulls to stay patient, and they should continue to do so; the path of least resistance remains lower for now.
Resistance: 119’285-120’01**, 120’09**, 120’15-120’17**, 120’24-120’28***
Last Week’s Close: July corn futures traded 8 cents lower for the week, trading in a 9 ¼ cent range. Friday’s Commitment of Traders report showed funds sold 43,496 futures, this reduces their net long position to 126,389 futures. Keep in mind this data is for April 10th-April 17th.
Fundamentals: With May options off of the board we are shifting our focus to the July contract (for the daily reports). Weather will continue to be a leading catalyst this week, mostly because there is nothing else to talk about yet. There are some “concerns” over planting delays in areas, we are not putting much weight into that just yet; when push comes to shove, farmers will get the crop in the ground. The weekly crop progress report will be released after the close today, that is expected to show corn 7% planted. This would be a 4% increase from the previous week, but still lags the 5-year average of 18%.
Technicals: Corn futures have been bleeding lower for the better part of the last two weeks as managed money tightens the books a bit. First support this week comes in from 379 ½-383 ½. This pocket represents the 100 and 200 day moving average, previous support at the end of March, and the 50% retracement (middle of the range) from the January 12th lows to the March 13th highs. We continue to be friendly the corn market, but this level must hold on a closing basis for us to keep our bullish bias. A break and close below could encourage some additional long liquidation from the funds. On the resistance side of things, the first pocket comes in from 387 ¼-389 ½. This pocket represents a key retracement, support last week, and the 50-day moving average.
Resistance: 387 ¼-389 ½**, 392 ½-393***, 400 ½-402 ¾****
Support: 379 ½-383 ½****, 377 ½**, 362-365 ¼***
Last Week’s Close: July soybean futures finished the week down 21 ½ cents, trading in a range of 30 cents. Friday’s Commitment of Traders report showed funds bought 18,624 futures, this extends their net long position to 188,163 futures. Keep in mind this data is for April 10th-April 17th.
Fundamentals: With May options off of the board, we are turning our attention to the July futures contract (for the daily reports). As with corn, weather will continue to be a leading catalyst for the time being. Concerns over corn planting delays could keep the chatter going with regards to more acres moving to soybeans, this has helped keep a lid on the market recently. Though we do not have any serious concerns on that, the market is making calculations for the chance. Harvest in Brazil is all but complete with over 90% out of the field, this is on pace with last year and the 5-year average.
Technicals: The market trickled lower for the majority of last week, and we would not be surprised to see that continue into weakness to start this week’s trade. The market is firm this morning, but we will want to see volume confirm price on the floor open. The bulls need to reclaim 1050 on a closing basis to sleep better at night. A failure to regain ground could lead to some long liquidation from the funds. There is not a lot of significant support until 1025 ¾-1027 ¾. This pocket represents the 100-day moving average, previous support in March, and the 50% retracement (middle of the range) from the January 12th lows to the March 2nd highs.
Resistance: 1050***, 1060 ¾-1064 ½**, 1077-1078***
Pivot: 1042 ½
Support: 1025 ¾-1027 ¾***, 1013-1016***, 988 ¾-994 ¾****
Last Week’s Trade: July wheat futures finished the week down 12 ¼ cents, trading in a range of 17 ¾ cents. Friday’s Commitment of Traders report showed funds were sellers of 2,099 futures, this expands their net short position to 46,960 futures. Keep in mind this data is for April 10th-April 17th.
Fundamentals: Weather has been a near term catalyst for wheat prices and we are expecting to see that continue. We are continuing to keep a close eye on the KC wheat contract, as it will likely be the leader for Chicago futures. Some areas got some much-needed moisture over the weekend, much of that was likely priced in on Friday’s session. This afternoons weekly crop progress report is expected to show an improvement in crop ratings. Last week’s good/excellent rating came in at 31%, traders are looking for 33-35% this week.
Technicals: First technical support this morning comes in from 472 ¾-475 ¼. This pocket represents the 100-day moving average, previous resistance at the end of March, and the 38.2% Fibonacci retracement from the January 16th lows to the March 2nd highs. A break and close below will likely accelerate selling which could press prices back towards 459-461 ¾. On the resistance side of things, bulls need to reclaim 486-488 ½ to get the ball rolling in their direction. This pocket represents the 50 and 100 day moving average, along with the 50% retracement (middle of the range) from those January lows to March highs.
Resistance: 486-488 ½****, 494-496 ¾***, 508 ½-510 ½**
Support: 472 ¾-475 ¼***, 459-461 ¾****, 440 ¼**
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