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E-mini S&P (March)
Yesterday’s close: Settled at 2791.50, unchanged
Fundamentals: U.S benchmarks sit marginally in the red while trading in a tight range as there has been a lack of fresh catalysts to invigorate either the bulls or bears in the last 24 hours. Yesterday, the data was better than anticipated, headlined by U.S ISM Non-Manufacturing. However, the broader theme hasn’t changed, and the OECD lowered their global growth forecast for 2019 by 0.2% to 3.3%. They cited the headwinds due to trade tensions and dissipating confidence levels. Despite such, China posted another strong session overnight; the Shanghai Composite has gained 18% over the last month as investors look to a small glimpse of light at the end of the tunnel on trade. Elsewhere, the British Pound has lost some ground on Brexit uncertainties. Overall, the sea is quiet, and ADP Payrolls came in at 183k versus 189k expected. Trade Balance data is due at 7:30 am CT. The Bank of Canada meets at 9:00 am CT. NY Fed President Williams, a 2019 voter, and Cleveland Fed Mester, an alternate, each speak at 11:00 am CT. The closely watched Fed Beige Book is released at 1:00 pm CT. Traders should keep a close eye on some of the individual components today as strength in Facebook and Google yesterday, who gained 2.32% and 1.37% respectively, kept potential broader weakness from gaining traction.
Technicals: First key support at 2783-2784.75 kept the only true wave of selling through yesterday’s session in check. However, the longer price action remains suppressed below our pivot, there is an open invitation for this level to be violated. We find this to be a similar case with our pivot in the NQ at 7156-7169, a level in which yesterday’s stronger tech sector remained tethered to for much of the session. This morning, our near-term momentum indicators align with our pivot levels which confirms that the bears have an opportunity early.
Resistance: 2805-2807.75**, 2814-2819***, 2424.25**, 2431.50-2431.75***
Support: 2783-2784.75**, 2775**, 2762-2766.50***, 2750.25-2751.75**, 2729-2737.75***
Resistance: 7218.50-7231***, 7278.50***
Support: 7114.75-7120**, 7074.50-7085***, 7043.25-7048**, 6999.75-7005***
Yesterday’s Close: May corn futures finished yesterday’s session up ½ of a cent, trading in a range of 3 ½ cents. Funds were estimated buyers of 7,000 contracts on the day.
Fundamentals: The market caught its breath yesterday as market participants anxiously await new news, the big-ticket item this week being Friday’s USDA report. U.S. carryout estimates range from 1.680-1.795 billion bushels, last month was 1.735. World carryout estimates range from 306.30-312.00mmt, last month was 309.78. The averages of these estimates are little changed from the February report.
Technicals: Yesterday’s tight ranging trade did little to change the technical landscape. First support today comes in from 372 ¼-373 ½, this pocket represents yesterday’s lows and the gap from Friday’s close to the Sunday night open. The bulls must defend this on a closing basis, a failure to do so leaves the door open for a retest of contract lows. We remain friendly on prices but need to see technical confirmation to feel comfortable with getting more aggressive.
Resistance: 377-380***, 385 ¾-387 ¾***
Support: 372 ¼-373 ½***,363 ¼****
Yesterday’s Close: May soybean futures finished yesterday’s session down 2 ½ cents, trading in a range of 9 ½ cents. Funds were estimated sellers of 4,000 contracts on the day.
Fundamentals: Soybeans were softer in yesterday’s trade thanks in part to a rather mute technical picture. Trade news has continued to be underwhelming, so the bulls will want to see good news from the USDA in it’s place. The range of estimates for U.S. carryout is from 860-940mmt, the average being 902. Estimates for world carryout range from 104.40-113.57, the average being 106.33mmt. The averages for both of these would be slightly under what we saw in the February report.
Technicals: The market worked lower yesterday morning, filling the gap and holding our support near 910. The chart has left a lot of tails over the last three sessions, providing little clarity for market participants. Support and resistance levels from yesterday’s report are little changed. First resistance comes in from 922 ¼-924 ¾. On the support side of things, 900-904 ¾ is the must hold pocket. This pocket represents the lows on the year (Jan 16th), they psychologically significant 900 handle, and the middle of the range from the contract lows to the highs in December.
Resistance: 922 ¼-924 ¾***, 934 ½-939 ¾****
Support: 909-910 ½**, 900-904 ¾***, 893 ½****
Yesterday’s Close: May wheat futures finished yesterday’s session up 8 ½ cents, trading in a range of 11 cents. Funds were estimated buyers of 5,000 contracts.
Fundamentals: Wheat saw a modest recovery yesterday, thanks to short covering ahead of Friday’s USDA report. Estimates for U.S. carryout range from 1.010-1.050 billion bushels, the average being 1.020 billion bushels, a notch above the 1.010 we saw in February. Estimates for world carryout come in from 266.0-269.0mmt, the average also being little changed from last month’s report.
Techncials: The overnight and early morning session is softer, but we take that with a grain of salt due to the low volume. Friday’s reversal and price action since then remains fairly encouraging, but the bulls must see follow through and a close above technical resistance to feel more comfortable into Friday’s report. We have defined resistance as 463 ¾-466 ½ (previous support). A conviction close above here opens the door for another round of short covering.
Resistance: 463 ¾-466 ½***, 479 ¾***, 495-497 ½***
Support: 447 ¼-450**, 441 ½**
Crude Oil (April)
Yesterday’s close: Settled at 56.56, down 0.03.
Fundamentals: Inventory data is largely in focus now and early-session pressures is due to a much larger than expected build from the private API survey late yesterday. They reported a massive build of 7.29 mb of Crude, -0.391 mb Gasoline and -3.1 mb Distillates. The is in contrast to the expectations of the official EIA data coming in at +1.203 mb Crude, -2.084 mb Gasoline and -1.44 mb Distillates. Remember, last week’s EIA data showed a surprisingly large draw of 8.647 mb; something has got to give. However, this is where traders must now understand the bar set by the API data last night and be cautious selling until a strong technical level of support, which we will discuss in the ‘Technical’ section below. Lastly, the OECD’s weaker revision to global GDP is lurking in the background.
Technicals: We are now outright Neutral in Bias. We have supported the breakout for two weeks by keeping some Bullish Bias over this timeframe. However, yesterday we emphasized that traders should now capitalize on a range bound trade as overhead major three-star resistance at 57.05-57.35 has refused to give-way. Anther failure yesterday has encouraged us to watch and wait on today’s fundamental news. Traders must be cautious to the downside with major three-star support coming in at 55.44-55.75; we must see a close outside of these three-star levels in order to encourage a directional move.
Resistance: 57.05-57.35***, 57.69**, 58.16-58.35**, 59.63***
Support: 55.44-55.75***, 54.71-54.76***, 53.51-53.98***
Yesterday’s close: Settled at 1284.7, down 2.8
Fundamentals: Gold failed to push out above resistance overnight and again finds itself battling near at the lows. ADP Payrolls was nothing to write home about. U.S Trade Balance showed a larger deficit than expected and data that the deficit to China grew by 11.6% in 2018. Although neither of these data points should directly encourage selling in Gold on the surface, there could be some thought that a trade deal is more elusive than imagined; denting the Yuan. Overall though, the risk-appetite to equity markets remains stable while on a historical run in 2019 and this alone has deterred potential interest in Gold. This afternoon we look to NY Fed President Williams, a 2019 voter, and Cleveland Fed Mester, an alternate, each speak at 11:00 am CT. The closely watched Fed Beige Book is released at 1:00 pm CT.
Technicals: The battle just above major three-star support continues. However, the real headwind is shaping up to be first key resistance at 1291.3, a level in which Gold has tested but been unable to trade out above. We maintain that Gold must close out above here in order to take the first step in neutralizing the technical damage over the last week.
Resistance: 1291.3**, 1298.1-1299.2**, 1304.7-1306.5***
Session close: Settled at 1.13145, down 29 ticks
Fundamentals: This morning’s better than expected final PMI and Retail Sales from the Eurozone was quickly swept under the rug after both U.S ISM Non-Manufacturing and New Homes Sales beat expectations. More surprising was the lack of enthusiasm early this morning after the better European data. Maybe we shouldn’t be surprised with the 9-week Average True Range at the lowest level since August 2014. Furthermore, bulls are certainly nervous ahead of Thursday’s ECB meeting. However, we find this to be an interesting opportunity where the market might be pricing in some of that flexible TLTRO language we heard just two weeks ago. In fact, since then, the economic data has been broadly favorable, especially on the sentiment side. This leads us to believe that we could see an upside surprise in the Euro come Thursday and that there is solid value at this 1.13 region. We recommend traders look to use options so that they can withstand wild swings not only from the ECB meeting but all of the data leading through Friday’s Nonfarm Payroll. Tomorrow, there is no data out of Europe, and we look to ADP Payrolls from the U.S at 7:15 am CT, December Trade Balance at 7:30 am CT and speeches from both NY Fed President Williams and Cleveland Fed President Mester at 11:00 am CT.
Technicals: The Euro finished in the red for the third straight session although its arguably the fifth. First key support at 1.1302-1.1328 has so far held and brings a pivotal test in the overnight. Overall, we find tremendous long-term value down here as volatility has slipped from the currency and the tighter ranges signal an impending sharp move. First key resistance comes in at 1.1351-1.13585 and this is a level in which price action has slipped upon each test since Monday morning; we need to see a move above here in order to neutralize this wave of weakness.
Resistance: 1.1351-1.13585**, 1.1392-1.1395**, 1.1434-1.1447***, 1.1491**, 1.15575-1.1563***
Support: 1.1302-1.1328**, 1.1283*, 1.1245-1.1261***
Session close: Settled at .89455, down 13 ticks
Fundamentals: The Dollar strengthened on better data and pressured the Yen to a new swing low, in which it did quickly battle back from. Overall, low volatility in equity markets and the Dollar holding near the top-end of its range has sucked out any premium in the Yen. Looking ahead, if these tables turn, the Yen would find life quickly. Tonight, Japanese Household Spending is due at 5:00 pm CT and BoJ Board Member Harada speaks at 7:30 pm CT.
Technicals: Price action tested and held first key support today. We remain Neutral but a sharp descending wedge is still intact, and this leaves a number of possibilities on the table if other asset classes fall into place. Only a close above .9004-.9014 will neutralize this immediate-term weakness.
Resistance: .9004-.9014**, .9091-.9015**, .91555-.9186**, .9238-.9249***
Support: .8919-8931**, .88355-.8845***
Session close: Settled at .7088, unchanged
Fundamentals: Lat night, the RBA left rates unchanged as expected in order to accommodate and continue recent strides in growth and inflation. In fact, this was so expected that the Aussie had only a 39-tick range on this session. Shortly, ago RBA Governor Lowe spoke adding it is unlikely to see rates rise this year. Bigger uncertainties persist with tonight’s GDP data due at 6:30 pm CT.
Technicals: Price action continues to build a shelf at major three-star support, however, there is a feeling of vulnerability given the lower peak on the latest rise. We must see a close above .7121-.7137 in order to place the bulls back in the near-term driver’s seat.
Resistance: .7121-.7137**, .7208**, .7278- .7300***, .7407****
Support: .7063-.7082***, .7001-.7024**, .6825***
Session close: Settled at .74944, down 17.5 ticks
Fundamentals: The Canadian slipped, continuing its slow bleed on the heels of Friday’s bloodbath. This comes ahead of tomorrow’s Bank of Canada meeting and slew of data. Labor Productivity and Trade Balance are due at 7:30 am CT. Ivey PMI is due at 9:00 am CT and the Bank of Canada releases their policy statement at that time. The bank is not expected to move on rates tomorrow, but the anticipation will be more tied to any clues as to future plans and whether the BoC will signal no plans to hike at all this year and if a cut is potentially on the table.
Technicals: We are nothing but Neutral ahead of tomorrow’s deluge and as the Canadian hangs by a thread at major three-star support at .74855-.7505. We look forward to tomorrow’s close to tell us a story and potentially give us a trade.
Resistance: .7565**, .7615-.7649***, .7716-.7725**, .7835
Support: .74855-.7505***, .7436**, .7330***
LEJ9: .475 at 128.825, trading in a range of .975
LEM9: .075 at 119.875, trading in a range of .825
GFH9: -.375 at 140.825, trading in a range of .775
GFJ9: -.60 at 144.425, trading in a range of .85
Cattle Commentary: The market managed to rebound today on the back of technical support and stable fundamentals. In the Tech Talk section of yesterday’s report, we said (regarding Monday’s pullback): “The pullback wasn’t concerning by any means, in fact we looked at it as an opportunity to work with clients in getting out of short positions and buying to go net long.”. See our tech talk section below to see how today’s action changes the chart and our bias. Cash trade has yet to develop, most are expecting steady to firm. Tomorrows Fed Cattle Exchange has 300 head offered.
PM Boxed Beef / Choice / Select
Current Cutout Values: / 224.04 / 217.79
Change from prior day: / .49 / .58
Choice/Select spread: / 6.25
Live Cattle (April)
Dips have proved to be buying opportunities for some time now, and yesterday’s pullback was no different. The market managed to hold technical support which remains intact from 127.00-128.10. First resistance was tested and held on a closing basis. In yesterday’s report we defined that as 128.90-129.025, this was an opportunity for those dip buyers to lock in gains. We have no problem looking for bigger moves in the markets we are trading, but the daily ranges have narrowed up which has kept our expectations tempered with a nimble mindset. We continue to believe there will be opportunity to play both sides of the market for the foreseeable future.
Resistance: 128.90-129.10***, 130-130.45**, 134.55****
Support: 127.70-128.00***, 126.60-127.25**
Feeder Cattle (April)
April feeder cattle struggled to gain traction as higher grain prices acted as a bit of a headwind. Though today’s price action neutralized the intermediate term chart, near term support suggests a short-term buying opportunity. We have outlined that support as 143.85-144.30. A break and close below here could accelerate the selling pressure. On the resistance side of things, the bulls want to reclaim ground above 145.60.
Resistance: 145.60**, 146.10-146.375**, 147.80-147.825****
Support: 143.85-144.30****, 142.60-142.90**, 140.35-141.20****
Lean Hogs (April)
Yesterday’s encouraging close led to another move higher today as shorts looked to cover. If the bulls can continue to defend support in the back half of the week, we could see an extension towards 60.35. If we do get that extension it may turn into a selling opportunity. Right here right now, we don’t see much of a reason to buy, and would like to sell at higher prices.
Resistance: 58.60**, 60.35***
Support: 56.50-56.825***, 52.25-52.75****
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