|E-mini S&P (June)|
Yesterday’s close: Settled at 2670 up 7.00
Fundamentals: The S&P is lower this morning after yesterday’s momentum shift. Price action slipped from unchanged at 2:15 am CT, right as Fed Chair Powell spoke at a forum in Switzerland. His emphasis here was that the Fed wants to communicate policy clearly while it normalizes in order to avoid market disruptions. He added that the market is “well aligned” with the Fed’s projections and particularly the Dot Plot. Trade Balance data from China last night was robust and helped equity markets regain footing from yesterday’s green but otherwise disappointing session. Momentum in the low volume grind higher yesterday shifted after President Trump announced he will decide on the Iran Nuclear Deal at 1:00 pm CT today. This announcement as well as competing headlines about the Nuclear Deal sent Crude Oil more than a dollar from its high and back to unchanged; the quick turn of events in low volume hurt the budding bullish momentum. NFIB Small Business Optimism missed expectations this morning and next we look to JOLTs Job Openings data at 9:00 am CT. As for earnings, we look to Disney after the bell as the highlight of the day.
Technicals: Price action is lower this morning after failing to hold a test of major three-star resistance. While the settlement stayed above the pivot, the momentum shift in yesterday’s low volume session did not do the bulls any favors in the near term. Our Bias has not shifted, and we expect this market to continue higher, however, it now must build a base through today. We have tightened up major three-star support to 2655; the market has spent a lot of time and volume in this area. Below here is strong support, but not quite three-star, at 2647; a move below this level will encourage further selling. A move out above first key resistance at 2669.75-2672.25 and new highs on the session is bullish and signals a test deeper into major three-star resistance above. Lastly, keep an eye on the volume; we need to see participation on strength.
Resistance: 2669.75-2672.25**, 2682-2688.50***, 2708.25-2709.50**, 2718.50***
Support: 2655***, 2647**, 2636.25-2638.75**, 2526.75**, 2612.25-2617***
Crude Oil (June)
Yesterday’s close: Settled at 70.73, up 1.01
Fundamentals: It is Decision Day. Yesterday, just as Crude Oil settled above $70 and at the highest level since November 2014, President Trump tweeted he will announce his decision on the Iran Nuclear Deal today at 1:00 pm CT. This announcement coupled with other headlines on the Nuclear Deal quick sent Crude oil about 2% from its high. Price action has remained subdued since. While inventory expectations come into the picture through today, the focus is President Trump’s announcement; does he scrap the deal altogether, does he piece together a new deal, does he stay, what is the reaction from the EU? We may not even have all the answers today. European members have made last ditch efforts to persuade President Trump to stay in the deal, adding they will continue to implement the deal. Furthermore, Iran said it will not renegotiate the deal and will retaliate if it is scrapped. Traders also must keep an eye on the U.S Dollar strength, it has made new swing highs and we maintain it has held Crude back from higher prices in recent weeks.
Technicals: Yesterday’s volatility played out quickly. Price action has hugged first key support at 69.72-69.97; a continued close above here is needed to keep the immediate-term bull trend intact. Major three-star support comes in at 69.31 because a move below here will neutralize the tape in the near term.
Resistance: 70.73-70.84**, 72.35****
Support: 69.72-69.97**, 69.31***, 68.65-68.85**, 67.44-67.55**, 66.87-67.14***
Yesterday’s close: Settled at 1314.1, down 0.6
Fundamentals: Gold started the week on firm footing but this has slowly dissipated. U.S Dollar strength continues to be the driver and the Dollar Index is trading to a new swing high this morning. Gold saw only little volatility on Fed Chair Powell’s speech at a forum in Switzerland early this morning; there were not surprises. We look to JOLTs Job Openings data at 9:00 am CT. Additionally, President Trump will announce his decision on the Iran Nuclear Deal at 1:00 pm CT. All markets will be on watch for his decision and the details. Iran has said it will not renegotiate the deal and they will retaliate if it is dropped. Geopolitical tensions in the Middle East are heightened; Gold could wake up from its slumber because of this.
Technicals: Price action in Gold remains subdued, but it is not falling apart. This is a good sign as we stated yesterday, the net-long position has been reduced by 80% from the highs earlier this year. There just has not been a technical or fundamental catalyst to speed up the bottoming process in the face of a strengthening U.S Dollar. We remain unequivocally long-term bullish.
Resistance: 1323.9**, 1327.2-1327.9***, 1335.9**, 1343.8**, 1356.7-1359**, 1367.8-1370***
Support: 1303.6-1306.6**, 1300***, 1296.2***
Natural Gas (June)
Yesterday’s close: Settled at 2.741, up 0.03
Fundamentals: We see one major driver in the fundamentals and that hotter than average temperatures in late June and through July. Therefore, we see tremendous value in the long run as we near 2.50-2.70. Weather in parts of the Midwest heads into the 80’s today. While the northern East Coast is expected to stay in the 70’s over the next 10 days, southern parts will see cooling days in the high 80’s.
Technicals: Yesterday’s low of 2.695 was the latest test into first key support that held. As we stated yesterday, aggressive bulls can look to position long on tests into here. The tape is out above the pivot level and this can lead things higher and back into major three-star resistance as the ping-pong continues.
Resistance: 2.8169-2.837***, 2.93**, 3.00***
Support: 2.66-2.69**, 2.486-2.532****
Yesterday’s close: Settled at 119’22 down 0’005
Fundamentals: Yesterday was the lowest volume day of the year as the U.K was on a bank holiday and as traders awaited Fed Chair Powell to speak at a forum in Switzerland early this morning. The trading range and volume remain tight as he did not surprise with any comments. His emphasis was that the Fed wants to communicate policy clearly while it normalizes in order to avoid market disruptions. He added that the market is “well aligned” with the Fed’s projections and particularly the Dot Plot. There is a 3-year Note auction at noon CT today and President Trump speaks at 1:00 pm CT regarding the Iran Nuclear Deal; both should bring volume back which means today’s settling level will be important.
Technicals: We remain Bullish in Bias though we acknowledge that the downside is susceptible to tests into our rare major four-star support. With extremely low volume yesterday, momentum from Thursday and into Friday has stalled, today will be critical and reinvigorating such.
Resistance: 119’285-120’01**, 120’09**, 120’15-120’17**, 120’24-120’28***
Yesterday’s Close: July corn futures finished yesterday’s session down 5 ¼ cents, trading in a range of 5 ½ cents. Funds were estimated to have been sellers of 15,000 contracts for the day.
Fundamentals: Yesterday’s planting progress report showed that we are now 39% planted, this was within the range of most estimates. This was a nice uptick from last weeks 17%, but we are still lagging the 5-year average of 44%. The biggest laggards continue to be the Upper Midwest and the Northern Plains. Export inspections yesterday morning came in at 1,916,461 metric tons, this was well above the top end of the expectations of 1,100,000-1,600,000 metric tons. Despite the better than expected export inspections the market was under pressure on profit taking and producer selling (hedging). We still like corn on an intermediate term basis but feel this is a healthy pullback for the market. We do have a USDA report out on Thursday, we will have estimates out for you in the coming days.
Technicals: We continue to hold our short-term bias at bearish on the idea that we could see some more long liquidation and producer selling at these levels. With that said, the market has fallen back into first support which we have defined as 398 ¼-402 ¾. A break and close below this pocket could accelerate things towards 390 ½-393 ¼. If the market does continue to pull back to this pocket, we would think there is value on the first test (baring any near term fundamental changes). On the resistance side of things 411-412 ¾ remains the barrier that the bulls need to close above to get that next leg higher.
Bias: Bearish (Short Term)
Resistance: 411-412 ¾***, 425 ¾-426 ½**
Support: 398 ¼-402 ¾***, 390 ½-393 ¼**, 379 ½-383 ½****
Yesterday’s Close: July soybean futures finished yesterday’s session down 23 cents, trading in a range of 29 ¼ cents. Funds were estimated sellers of 16,000 contracts for the day.
Fundamentals: Yesterday’s planting progress report showed that soybeans are now 15% planted, this is up from 5% last week. The range of expectations were anywhere from 10-22% (average 14%); the five-year average for this time is 13%. The weekly export inspections report came in at 533,677 metric tons, this was within the range of estimates of 380,000-650,000 metric tons. Soybeans have found some ground in the overnight and early morning session as the Press Secretary mentioned that China’s Vice Minister will be in Washington next week for trade negotiations. There is a USDA report out on Thursday, we will have estimates for you ahead of time.
Technicals: The chart broke below 1027 on the open yesterday which accelerated the selling down to our next pocket which we had defined as 1013-1016. This pocket represents a key retracement from the years range as well as the 200-day moving average and previously important price points. If the market can hold this on the floor open, we could see the market make a run back at 1027 which will now act as first resistance. A breakdown on the floor open could open the door to our next pocket which doesn’t come in until 988 ¾-994 ¾. Expect the volatility to remain relatively high and be sure to manage risk appropriately. We have changed our bias from “Neutral/Bearish” to neutral for the day.
Resistance: 1026 ½-1027 ¾***, 1040-1042 ½**, 1051 ¼-1055 ¼**
Support: 1010 ¾-1016***, 988 ¾-994 ¾****, 965 ¼-969 ½***
Yesterday’s Close: July wheat futures finished the day down 12 ¾ cents, trading in a range of 13 ½ cents for the day. Funds were estimated to have been sellers of 7,500 contracts for the day.
Fundamentals: Yesterday’s crop progress report showed that spring wheat is 30% planted, this was inline with most estimates and still well behind the 5-year pace of 51%. Winter wheat crop conditions are at 34% good/excellent; still not great but another week of “improvements”. Weekly export inspections came in at 327,662 metric tons, this was within the range of estimates which came in from 275,000-500,000 metric tons. There is a USDA report out on Thursday, we will continue to compile estimates and make them available to you before the release. On the macro side of things, we are continuing to watch the US Dollar. It has been resilient recently which could start pressuring commodities, including wheat.
Technicals: Wheat futures finished yesterday’s session in the middle of our support pocket from 510 ½-513 ¼ (yesterday’s low was 510 ½). The market made lower lows in the overnight session on light volume, the floor open will be more telling due to more market participation. If the selling pressure continues, the next support pocket is 499-502. In our opinion, the market is in “no-mans land” which has our bias at neutral for the time being.
Resistance: 523-524**, 543 ½-545***, 570-572**
Support: 510 ½-513 ¼**, 499-502***, 477 ½-482 ¾****