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E-mini S&P (June)
Yesterday’s close: Settled at 2613.25, up 38.25
Fundamentals: Yesterday’s late day rebound has vanished and a full-blown trade war has taken the S&P down as much as 2%. China retaliated to U.S tariffs by announcing it would impose 25% of such upon 106 U.S products including soybeans, automobiles, planes, chemicals and more totaling $50 billion. Crude Oil is down about 2%, soybeans nearly 5% and Boeing 6%. Yesterday’s Amazon inspired rally on the heels of a report that the White House has no plans to take action has fully dissipated; the likes of Amazon and Apple are down 2.5%. Getting lost in China’s retaliation is a list of more than 1,300 Chinese goods that the U.S will levy tariffs against and this has also weighed on sentiment. We continue to encourage investors to take a step back from the forest to see the trees; the S&P is still up nearly 10% over the last 12 months. Additionally, we are not coming out of a long period of low volatility this week, this has now been around for more than two months. This volatility will continue, and your trading plan must be prepared for such but most importantly, these tariffs really should not come as a surprise. Today we look to ADP Payrolls at 7:15 am CT; the economy has moved closer and closer to full employment and this read has mattered less and less. St. Louis Fed President Bullard who has a history of giving the market dovish comments when needed most, speaks at 8:45 am CT. Markit Composite and Services PMIs are also due at 8:45 am CT. The most closely watched read today will be ISM Non-Manufacturing at 9:00 am CT. Durable Goods Orders also due at 9:00 will be closely watched on a day like today with tariffs freshly announced. Cleveland Fed President Mester speaks at 10:00 am CT.
Technicals: Price action did manage to close above the 200-day moving average and major three-star resistance at 2590.75-2593 yesterday but the tables have quickly turned into this morning. Yesterday’s strong close though could not get out above our key resistance at 2615.75-2618.50. With trade war fears flooding markets, we will be closely watching the 2573-2575 pivot; this support level held yesterday and aligns with Monday’s close, the lowest since November. First key support at 2559.75 has held into the morning. First key resistance comes in today at 2582 while major three-star resistance remains above here and is a level that we must see a close above in order to see further upside in the coming days. While many are only focused on the 200-day moving average, we continue to hammer the importance of the 200-day smoothed moving average that comes in at 2545.75, this level has not been violated intraday since the Brexit in June 2016 (was violated overnight upon the U.S 2016 election). Traders must remain nimble in this volatility and remember there are trades from both sides in this type of market. We are Neutral amidst this uncertainty as we have been all week. However, we do like the long-term upside and feel that a lot of this has been exacerbated.
Resistance: 2582**, 2590.75-2593***, 2605.75**, 2615.75-2618.50**, 2635-2643***
Support: 2559.75**, 2529-2545.75***, 2467-2488****
Crude Oil (May)
Yesterday’s close: Settled at 63.51, up 50 cents
Fundamentals: Crude Oil took a sharp turn south overnight on fears that the U.S and China trade war will weigh on global growth and demand. This is the continuation of what began on Monday and the drop of as much as $3 and roughly 4% is beginning to feel exacerbated. EIA inventory data is due at 9:30 am CT and will overpower these near-term trade war fears. Expectations are for +1.4 mb Crude, -1.246 mb Gasoline and -1.134 mb Distillates. Yesterday’s API report was the complete opposite showing a draw of 3.28 mb Crude and builds in the products that neutralized such. A draw on Crude today with only a steady production increase (which is priced in) coupled with a weaker U.S Dollar would pave the way for a strong recovery.
Technicals: We Neutralized our Bullish Bias below the $64 mark but remain very upbeat in the long-term. Despite weakness this morning and continued volatility due to the EIA data we are now reintroducing our Bullish Bias because our next major three-star level which aligns with a trend line from the February lows has been tested; we see long-term value at this level. A supportive EIA report will allow the technical landscape to quickly shift; the potential is here, and we believe the risk is to the upside. A move back above 63.86-64.23 is very bullish. There are ways to reduce risk and we encourage traders to call our trade desk at 312-278-0500 to discuss.
Resistance: 63.86-64.23***, 65.47**, 66.02**, 66.66-66.87***, 70.00***
Support: 61.70-62.07***, 59.91-60.00***
Yesterday’s close: Settled at 1337.3, down 9.6
Fundamentals: Gold is up about 1% this morning with U.S and China trade war fears being the key catalyst. This has just been one of the many reasons why we are bullish Gold. While we see this exacerbating moves in the likes of equities and other markets, we see it continuing to support Gold. Additionally, we believe the Dollar has not taken the toll it will because of such. Yes, if the equity market recovers today some of these gains in Gold could get pared but we see it continuing to make a constructive move to the highest level in five years as all of this unfolds in the coming weeks. U.S data will quickly come into the picture this morning with ADP Payroll at 7:15 am CT. St. Louis Fed President Bullard who has a history of giving the market dovish comments when needed most, speaks at 8:45 am CT. Markit Composite and Services PMIs are also due at 8:45 am CT. The most closely watched read today will be ISM Non-Manufacturing at 9:00 am CT. Durable Goods and Factory Orders are also due at 9:00 am CT. Cleveland Fed President Mester speaks at 10:00 am CT. Traders must keep a close eye on the U.S Dollar today.
Technicals: We are Bullish Gold and have been. Fundamentals are lifting the metal today and this will continue to be a pivotal week from that perspective. Still, the technicals are inarguably constructive and after a gain like this overnight, the path is paved for a sharp move higher if the data can agree. First resistance comes in at 1353.8 and a close above here at minimum will continue to build this path.
Resistance: 1353.8**, 1360**, 1367.8-1370***, 1375.5**, 1392.6**, 1427.2***
Support: 1337.3-1339.6**, 1327.3-1331.8**, 1312.4-1316.6***, 1304.6***
Natural Gas (May)
Yesterday’s close: Settled at 2.697, up 0.014
Fundamentals: Weather is becoming less of a focus but does remain a headwind with temperatures again below freezing across the Midwest. However, after snow early this week on the East Coast temperatures are beginning to warm. We currently see no fundamental edge to either side in the near-term.
Technicals: Price action continues to consolidate around the 2.644-2.72 pivot level. The reversal from the overnight swing high as the tape is back below the pivot does elude to a slight edge to the bear camp through the session.
Support: 2.60**, 2.486-2.532****
Yesterday’s close: Settled at 120’27, down 13.5 ticks
Fundamentals: Treasury prices grinded lower through much of yesterday’s session, this did not come out of nowhere upon the late day Amazon-driven equity market spike. The 10-year has jumped back slightly this morning as the U.S and China trade war escalated overnight but the price action has remained subdued and eludes that this it not a true fearful situation. Ultimately, this can signal further consolidation ahead of Friday’s jobs data and Fed Chair Powell’s speech. Data today will be critical and while ADP Payrolls came in better than expected, ISM Non-Manufacturing is the headliner today at 9:00 am CT. Markit Composite and Services PMIs are due at 8:45 am CT. St. Louis Fed President Bullard speaks at that time and we would expect to hear comments involving the trade war; this would be dovish and supportive to the 10-year. Cleveland Fed President Mester speaks at 10:00 am CT.
Technicals: Major three-star resistance at 121’19 has kept rallies this week in check and we expect this to hold ahead of Friday’s jobs report. Price action settled into the pivot but did not dip below it before bouncing, we will continue to watch this level as it helps define the recent uptrend.
Resistance: 121’19***, 122’02*, 122’14-122’25****
Support: 120’15**, 120’09**, 120’045 119’305**, 119’265**, 119’00-119’14****
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