E-mini S&P (June)
Yesterday’s close: Settled at 2706.50, up 24.75
Fundamentals: The breakout above major four-star resistance continues, but so does the lack of participation; volume this week has been at the lowest of the year. However, yesterday’s rally was fairly broad being led by tech. Despite good earnings, the banks are fighting to hold ground and have underperformed greatly given the landscape. European benchmarks are clinging to gains on the week with a quiet session while the Nikkei is up more than 2% today. Major Chinese benchmarks are bouncing back this morning, they are down about 5% over the last 30. We said this yesterday, but this is something to keep an eye on. Additionally, we do not understand why media headlines point to strong data from China Monday night, we viewed it as poor. President Trump has pointed to Russia and China in order to keep them from beginning to devalue their currency. He is meeting with Japanese Prime Minister Abe this week and there is traction on a meeting with the North Korean dictator Kim Jong Un. The de-escalation of geopolitical tensions from Syria to North Korea has been a huge catalyst in this strong week. Earnings continue to heat up and Morgan Stanley among others are due before the bell today and American Express will take center stage after the bell. Eurozone CPI data was a soft this morning and the Bank of Canada meets at 9:00 am CT. Outgoing NY Fed President Dudley is on the calendar at 7:30 am CT and we look to him and Fed Governor Quarles later in the day as well. The Fed’s Beige Book is due at 1:00 pm CT.
Technicals: The S&P flirted out above major three-star resistance yesterday but failed to secure the settlement above. Price action into this morning though is leaving little doubt as it pushes to new swing highs. First key resistance does come in at 2718.25, this is the settlement on March 21st before opening the following intraday session below 2700. The technicals remain strong with the breakout above major four-star resistance on Monday providing a bullish move out above the ascending triangle. Furthermore, yesterday’s sharply higher session negated any doubt as to a budding ascending wedge (a bearish pattern). The trend line from the all-time high aligns with a couple technical indicators to bring major three-star resistance at 2743-2745 and on Sunday’s Tradable Events this Week we pointed to a potential move to this level though the low volume has made it difficult to buy into this completely.
Bias: Neutral/Bullish
Resistance: 2718.25**, 2743-2745***, 2756**
Support: 2705-2709.75***, 2690.50**, 2679.75***
Crude Oil (June)
Yesterday’s close:
Fundamentals: Early weakness in Crude was abated after a test to major three-star support. Price action steadily rose into options expiration and ahead of inventory data as analysts pointed to draws with the seasonally bullish time of year coming upon us. Additionally, now that we are through options expiration, Friday’s OPEC Meeting is likely to rebuild some premium in the sector. Traders should now be using the June contract. API data yesterday showed a draw of 1.047 mb Crude when a build of 625k was expected. The API also reported draws on the products and price action has traded about a dollar from yesterday’s low. Expectations for today’s EIA report come in at -0.5 mb Crude, -0.227 mb Gasoline and -0.268 mb Distillates. With price action already elevating on yesterday’s API reports, bulls do want to be cautious and compare today’s official release to yesterday’s API data and not just relative to the EIA expectations. Production data will be key, and we maintain that a steady increase is already priced in.
Technicals: Price action held major three-star support yesterday at 65.36-65.49 in the May contract yesterday with a session low of 65.56 before working its way higher. The settlement was not out above the May pivot at 66.55-66.87 but the tape has firmly moved out above there today. We brought a Bearish perspective to the mix as we looked for the combination of geopolitical premium being reduced and options expiration to weigh on the market; this time has passed. We have first key resistance in the June contract at 67.68-67.76 with the next upside move likely extending to 68.43. Our pivot is a wide range and a continued close above here will keep the bulls in the driver’s seat while a close below should encourage selling.
Bias: Neutral/Bullish
Resistance: 67.68-67.76**, 68.43**, 70.00***
Pivot: 66.37-66.87***
Support: 65.46-65.59***, 64.77**, 63.88-64.08**
Gold (June)
Yesterday’s close: Settled at 1349.5, down 1.2
Fundamentals: Gold fought off strong waves of selling early in the yesterday’s session upon strong housing data and Industrial Production. Quietly though, Silver is trying to take the reins for the next leg higher. Silver did not pull back much yesterday and as is now out above the elusive 200 day moving average and testing the psychological $17 mark. All the while, over the last 24 hours, the Dollar has not legged lower. We remain unequivocally Bullish in Bias on both Silver and Gold and as Bill Baruch stated in the Kitco interview (link yesterday), Silver has the best risk versus reward out there. The Fed’s Beige Book is due at 1:00 pm CT. Outgoing NY Fed President Dudley is on the calendar at 7:30 am CT and we look to him and Fed Governor Quarles later in the day as well.
Technicals: Gold’s grind back to and settle above first key resistance at 1348.8 yesterday said how technically strong this market is. Furthermore, the daily chart is building a beautiful bottoming pattern. If Silver gets going, the sector is most bullish when the two work in tandem. There are two resistance levels in Silver we are eyeing, the first is 17.33 and the second is 17.70; both are trend line.
Bias: Bullish/Neutral
Resistance: 1356.7-1358.4**, 1367.8-1370***, 1375.5**, 1392.6**, 1427.2***
Pivot: 1348.8
Support: 1340.5-1342.8**, 1331.8-1333.7**, 1322.4-1325.4**, 1312.4-1316.6***, 1304.6***
Natural Gas (May)
Yesterday’s close: Settled at 2.738, -0.014
Fundamentals: Natural Gas has stayed elevated above the pivot and weather remains unseasonably cold. While a draw is expected on tomorrow’s storage read, next week’s injection is now in question and this is keeping a bid under the market.
Technicals: While the door was open for the bears yesterday, the fundamentals have buoyed price action. Still, major three-star resistance at 2.8169-2.831 is a tremendous hurdle but if price action gets above there it could run to $3.
Bias: Neutral
Resistance: 2.8169-2.831***
Pivot: 2.726-2.736
Support: 2.60**, 2.486-2.532****
10-year (June)
Yesterday’s close: Settled at 120’18, up 0’03
Fundamentals: The 2-year traded to the lowest level since August 2008 while the 10-year ticked up and the 30-year gained. While we have been very Neutral the 10-year on its own, we have been adamantly favoring a flattening yield curve. Yesterday, the curve was the flattest since 2007. On a regular occasion we ask readers here to call our trade desk at 312-278-0500 to discuss how to play this.
Technicals: Price actin continues to hug the 120’15 pivot and is once again attempting to build a bottom but this time at key support at 120’07-120’09. Though we remain Neutral here, we do see the potential for an upside move.
Bias: Neutral
Resistance: 120’24-120’28***, 121’19***, 122’02*, 122’14-122’25****
Pivot: 120’15
Support: 120’07-120’09**, 120’045 119’305**, 119’265**, 119’00-119’14****
CORN (May)
Yesterday’s Close: Corn futures closed 2 ¼ cents lower yesterday, trading in a range of 4 ¾ cents. Funds were estimated sellers of 8,500 contracts.
Fundamentals: Planting delays continue to be the big headline but at this stage in the year, the market is shrugging it off fairly easy. If we see this weather persist for the next few weeks, that will likely be a different story. Outside of weather, there is not a lot of new news to report. May option expiration is Friday and there is a lot of open interest on the puts and calls side of things which could be playing a role in recent price action. As of right now, the 380 strike looks like it may be a magnet into Friday’s close. There are 14,668 puts and 21,856 calls. The recent pressure has wiped out premium on the call side where open interest is substantially higher from 380-400.
Technicals: May corn futures tested and held our support very well (so far), We have had our support pocket defined as 379 ¾-382 ¾. We continue to believe this pocket represents great value on the first test from the risk reward perspective. If the bulls cannot defend this level in the back half of the week it is possible that we long liquidation break us back down towards 369 ¼-371 ¾. This pocket represents the March 23rd spike low, the 100-day moving average, and a key Fibonacci retracement level. On the resistance side of things, the significant pocket remains intact at 391 ¾-395 ¼.
Bias: Bullish
Resistance: 391 ¾-395 ¼***, 400 ¾**, 413 ¼-415***, 430****
Support: 379 ¾-382 ¾***, 369 ¼-371 ¾****, 364 ¼-365 ¼***
SOYBEANS (May)
Yesterday’s Close: Soybean futures finished the day up 3 ¼ cents, trading in a range of 9 ¼ cents for the session. Funds were estimated buyers of 5,000 contracts.
Fundamentals: Soybean futures are consolidating some as the market searches for new news. Planting delays for corn continue to be a headline, but it is more of an annoying itch as opposed to a real problem at this point in time. If the delays continue for another few weeks, then we would start to put a little more weight into those concerns. May option expiration is on Friday which could keep things interesting. The open interest is something we keep an eye on into expiration. Strike prices with higher open interests tend to be a bit of a magnet for prices. There are nearly 25,000 puts from 1050 down to 1040; this may provide a bit of a floor into the market.
Technicals: The market looked like it was going to make a run at 1034 ¼-1036 ¾ but there appears to be a change of plans this morning. This pocket represents a key Fibonacci retracement from the January lows to March highs, the 50-day moving average, and the gap from March 6th. We feel this pocket also represents a great opportunity to the buy side. We posted higher highs last week, and if that pocket holds it would be higher lows. The bulls want to see a close back above 1052 ¾. This represents a key Fibonacci retracement level which was also previous support.
Bias: Bullish
Resistance: 1079 ¼-1082 ½***, 1097 ¾-1102 ¼**
Pivot: 1052 ¾
Support: 1034 ¼-1036 ¾****, 1015-1019 ¼***, 1001 ¼-1006 ¾****
WHEAT (May)
Yesterday’s Close: May wheat futures finished the day up 3 ¼ cents, trading in a range of 9 ¼ cents. Funds were estimated buyers of 3,500 contracts on the session.
Fundamentals: Wheat futures have caught a bid in the overnight and early morning session as weather concerns work their way back into the lime light. If we continue to see poor weather conditions, we could see this market take off in a hurry. We will be keeping a very close eye on the KC wheat contract, as we are anticipating it to be the leader. We are also keeping an eye on the USD as it quietly softens up; this would add additional support to the market. May option expiration is this Friday, it does not appear there are any significant strikes that would be a “magnet” for the market.
Technicals: The market is making a nice turn this morning, taking out yesterday’s highs, working to fill the gap from the Sunday night open. The 50 and 200 day moving average come in from 472 ¾-475 ½. If the bulls can close above these indicators today, that would likely invite momentum traders into the market and potentially encourage some short covering as well. A failure to breakout will lead to continued consolidation. Technical indicators look about as neutral as they can get so we are keeping our bias in check for now.
Bias: Neutral
Resistance: 472 ¾-475 ½ ***, 483-484 ¾**, 493-495**, 516 ¾-518 ½**
Support: 457 ¾-461 ¾***, 450 ¼**, 440-443 ½**
Last Trades:
LEM8: 1.00 at 105.175, trading in a range of 1.925
LEQ8: .325 at 104.525, trading in a range of 1.80
GFK8: UNCH at 140.375, trading in a range of 2.325
GFQ8: .20 at 144.975, trading in a range of 2.05
Cattle Commentary: Cattle futures managed to hang on to gains today, after it appeared we would see another day of the afternoon fade. We still think there is a push higher left in the market but may be limited after that (see technicals below). Expectations for cash trade this week are steady to firm. The bulk of cash trade to start last week came in at 117 but that rose quickly to 122 by late Friday afternoon. Tomorrows Fed Cattle Exchange has 3,220 head offered which is the second week in a row of decent numbers. Early estimates for tomorrows cattle on feed report are: Cattle on Feed to come in at 107.5%, Placements at 90.6%, and Marketing’s at 96.1%.
PM Boxed Beef / Choice / Select
Current Cutout Values: / 212.13 / 199.58
Change from prior day: / .34 / (.40)
Choice/Select spread: / 12.55
Cattle Technicals
Live Cattle (April)
April live cattle poked their head above yesterday’s highs and into our resistance pocket from 106.05-106.925 but failed to attract new buyers at this point. Though we didn’t get a verifiable breakout today, it was encouraging to see a decent close in the green. Resistance remains intact for tomorrows session and another test to that resistance could be just what the market needs to get that bigger move. A close above resistance could encourage momentum traders to jump on board and take prices towards our next resistance pocket which comes in from 109.00-109.125. If the bulls cannot get the move higher we would expect to see consolidation for the back half of the week. On the support side of things 103.225-103.925 is the pocket that the bulls need to defend.
Resistance: 106.05-106.925***, 109.00-109.125****
Support: 103.225-103.925**, 101.20-101.85****
Feeder Cattle (May)
May feeder cattle started the day with a bang but failed to hold the early morning gains yet again. The market attempted to breakdown through support but managed to hold from 139.425-139.95, this support pocket remains intact but the longer we linger here the less sturdy it becomes. If the bulls can defend support, we would expect to see the next move higher take us to 143.30-144.50. his is a much wider resistance pocket than we would typically want, but there is a lot of significance in it. This includes the 50% retracement from the November highs to the April lows. This pocket also contains the 50, 100, and 200 day moving average. The market may struggle a bit from here. Shorter term moving averages are moving below longer-term ones which is often looked at as bearish, earning the nickname “death cross”.
Resistance: 142.65**, 143.35-144.50****
Support: 139.425-139.95**, 136.375-136.50**
Lean Hog Commentary and Technicals (June)
June futures finished the day down .025 at 76.775, trading in a range of 1.125. June lean hogs managed to hold their ground above technical support which we had outlined as 76.00-76.25; this pocket remains intact for tomorrows session. The failure against resistance from 78.05-78.45 over the past few sessions leads us to believe that we could see a breakdown before we see a breakout. If support gives way we would expect to see the selling pressure accelerate, the next support pocket comes in from 73.95-74.00. The cash market seasonally finds a bid this time of year but we may have seen that priced in a bit over the last two weeks.
Resistance: 78.05-78.45***, 70.85-80.90****
Support: 76.00-76.25***, 73.95-74.00** 72.35-72.70***
Euro (June)
Session close: Settled at 1.2422, down 15.5 ticks
Fundamentals: Today was a win for the Euro bulls. The currency started the session on its back foot, topping at the European open before seeing bad Italian CPI and the worst German Sentiment data since 2012 which led to a poor read on Eurozone Sentiment. However, something interesting took place; U.S Building Permits and Housing starts both beat and so did Industrial Production, but the Dollar could not go higher. Additionally, comments from San Francisco Fed President Williams and the usually dovish Chicago Fed President Evans were not blatantly dovish. In the face of all this, the Euro pared much of its losses on the session and fundamentally speaking this is extremely impressive and pointes to further gains ahead. The big read tomorrow is Eurozone CPI at 4:00 am CT. Outgoing NY Fed President Dudley speaks at 7:30 am CT
Technicals: Today’s new swing high failed to hold, but on a positive note, the pullback did not trade lower than yesterday. Furthermore, today was the third session in a row with a higher low. Trend line resistance from the high now comes in at 1.2490. The most impressive thing on the session is how the technicals battled out very weak fundamentals and maintained a settlement near the pivot area. We remain upbeat in the near, intermediate and long-term.
Bias: Bullish
Resistance: 1.2458*, 1.2490**, 1.2547-1.25535***, 1.2659***, 1.2725****
Pivot: 1.2427
Support: 1.23565-1.2380**, 1.2346**, 1.2254-1.22765***, 1.2040-1.2079***
Yen (June)
Session close: Settled at .93805, up 5 ticks
Fundamentals: President Trump hosts Japanese Prime Minister Abe in Florida and it should be on your radar to listen out for any developments here. In addition to a weaker Dollar we believe the Yen carried strength from yesterday’s twist that BoJ Deputy Wakatabe is not taking the expected ultra-dovish stance. In a forecast released earlier today, the Bank of Japan maintained its view that inflation will reach 2% next fiscal year. However, we maintain that inflation will surprise to the upside later this year. Trade Balance data is due at 6:50 pm CT.
Technicals: Price action faces a big hurdle at major three-star resistance at .9420-.9429 but a move out above here is bullish in the immediate-term. Regardless, the hold against major three-star support last week was enormous and confirms that the Yen is still in an uptrend.
Bias: Bullish/Neutral
Resistance: .9420-.9429***, .9465*, .9500-.9512**, .96145***, .9729***
Support: .9310-.9342***, .9120-.9145***
Aussie (June)
Session close: Settled at .7769, down 12 ticks
Fundamentals: The RBA released the Minutes from their last Monetary Policy Meeting last evening. While the economy is growing faster than expected, weak wages and lagging inflation are a hurdle. However, a continued fall in unemployment should lift wages. Most importantly, they said the next move in interest rates is likely to be up rather than down. Still though, they pointed to this being some time away. Employment data is due tomorrow night.
Technicals: The Aussie finished lower today though on the chart, the session remained within the range of construction due to U.S Dollar weakness. Still, price action cannot get out above the major three-star resistance hurdle and this makes us more cautious than anything.
Bias: Neutral/Bullish
Resistance: .7774-.7797***, .7830-.7848**, .7921.7944***
Support: .7727*, .7691-.7695**, .7644***, .7501***
Canadian (June)
Session close: Settled at .7974, up 6.5 ticks
Fundamentals: Today was another green session as traders gear up for tomorrow’s Bank of Canada meeting at 9:00 am CT. The Technicals, discussed below, remain superb. While NAFTA and strong energy prices are very supportive, the economic data needs to agree in order to get the price really going. Manufacturing Sales did surprise to the upside today and this along with a weaker U.S Dollar helped set a positive tone heading into the big data tomorrow.
Technicals: Today’s green close was not quite enough to confirm a bull flag breakout but it surely lays the groundwork for such tomorrow. Yes, tomorrow will be more fundamental due to the Bank of Canada meeting but the Technicals are as strong as they come. We remain outright Bullish in Bias until a close below .7904-.7924.
Bias: Bullish
Resistance: .7968*, .8045-.8047**, .8100**, .8175***, .8544****
Support: .7904-.7924***, .7867* .7771.7790***
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