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E-mini S&P (March)
Yesterday’s close: Settled at 2718.50
Fundamentals: All major U.S indices gained at least 1% yesterday, continuing a recovery from an exacerbated move Thursday and into Friday’s open. Their global counterparts followed suit into this morning with the DAX +1% and the Nikkei +1.8%, both of which gapped higher on cash opens. While tariffs are coming later this week or next, we are now in a ‘sell first, ask questions later environment’ and the ‘tariff talk’ was overblown for at least the near-term. With yesterday’s recovery, the S&P finds itself trading above the midpoint from last week’s high and low well ahead of a busy week. Traders must keep an ear to the ground on tariff developments; President Trump is seeing Republican opposition, the EU is set to impose tariffs of their own and NAFTA talks continue. Today will be a pivotal day for Fed speak with NY Fed President Dudley who we believe set off the selling on Thursday with his “four rate hikes this year is gradual comment” is due to speak at 6:30 am CT, Fed Governor Brainard speaks at 4:30 pm CT and Dallas Fed President Kaplan speaks at 7:30 pm CT. Factory Orders are due at 9:00 am CT. Lastly, traders should keep an eye on the 10-year yield pushing 2.90% this morning.
Technicals: The S&P’s strong session yesterday was the by product of a wedge breakout; while buyers stepped in front of trend line support at the cash open, volume picked up above trend line resistance at 2690.25-2691.75 and major three-star resistance at 2701.75-2703.50. Price action pulled back from a session high of 2727.75 to settle right at our 2718.50 level but has extended gains higher this morning. The next key level we are watching comes in at 2735.25-2738, this encompasses multiple indicators as well as the 50-day moving average. Our Bias remains Bullish, but traders do want to make sure to capitalize on this move higher and prepare to be nimble as this busy week unfolds. A close above 2727.75 will keep the bulls with the immediate-term upper hand. The session low comes in at 2716 and aligns with the 2718.50 to bring a line in the sand; if this level gets taken out today we would expect waves of selling.
Resistance: 2735.25-2738**, 2745*, 2758.50-2762**, 2768***
Pivot – 2727.75
Support: 2716-2718.50**, 2701.50-2703.75***, 2685**
Crude Oil (April)
Yesterday’s close: Settled at 62.57
Fundamentals: Dollar weakness this morning has given a supportive hand to commodity prices and Crude is up more than 0.5% and testing the $63 mark. The risk on trade dominated the session yesterday while Crude is also seeing support on comments from OPEC Secretary General Barkindo that there “is a common understanding” between producers ahead of a dinner Monday hosted by OPEC for U.S shale producers. OPEC is in Houston with one mission, to create price responsibility among U.S shale producers who have offset OPEC production cuts. Inventories will begin to come into the picture today as estimates are released and API is due out after the bell. An early estimate on tomorrow’s EIA is for +3.0 mb.
Technicals: Yesterday was a bullish tape and the close out above first key resistance secured such. We discussed yesterday morning that the market must remain contained below 61.70 to be susceptible to waves of selling. As the Dollar weakens this morning, price action is now testing major three-star resistance which we have had at 63.09-63.15. This level is now adjusted to 63.27-63.50 to align with trend line resistance, another level and today’s strength. We will continue to beat this drum; the Dollar’s impact on Crude cannot be underestimated. While we have now become Neutral Crude, we are Bearish the Dollar; take it for what its worth.
Resistance: 63.27-63.50***, 64.24-64.39**, 66.00**, 66.66-66.87***
Pivot – 62.57-62.67
Support: 62.19-62.20**, 60.45-60.90***, 60.19**, 59.54-59.59**
Yesterday’s close: Settled at 1319.9
Fundamentals: After a tame and arguably disappointing start to the week, Gold is reinvigorated this morning, trading to the highest level in a week. The Dollar has lost ground due to an upward bias in the Euro; a relief of concerns surrounding the deadlocked Italian election, support from a German coalition and ultimately because the White House wants to see a weaker Dollar. Since Thursday’s bottom upon the tariff announcement, our Bias has been outright Bullish Gold. Today will be a pivotal day for Fed speak and thus Gold and the Dollar. NY Fed President Dudley speaks at 6:30 am CT, he has been more hawkish of late and said last week that “four hikes this year is gradual”. Fed Governor Brainard speaks at 4:30 pm CT and Dallas Fed President Kaplan speaks at 7:30 pm CT. Factory Orders are due at 9:00 am CT.
Technicals: Price action is flirting out above first key resistance at 1326.8 and this is very positive. A continued hold out above here will grind the tape to 1332.9-1334, a more crucial area. We are outright Bullish Gold due to our long-term bias that the Dollar is heading lower for many reasons. We see value at and near the $1300 level in which we just tested. However, this is still an extremely pivotal week and we expect to see tremendous volatility. Support comes in against yesterday’s settlement and the low of from yesterday, a close below here will give the bears an upper hand into the next session.
Resistance: 1332.9-1334**, 1341.2-1342.9**, 1350.2-1351.3**, 1367.8-1370***
Pivot – 1326.8
Support: 1318.3-1319.9**, 1305.5-1306.6***, 1291.5-1295.7****
Natural Gas (April)
Yesterday’s close: Settled at 2.704
Fundamentals: The trade is trending in a consolidation phase as we are heading through the seasonal shift with no true demand surprises in sight. Yes, winter storm weather with hurricane wind pummeled the East Coast but this was minor in the grand scheme of things. We maintain that there is long term value in near the 2.55-2.60 level and the risk is fundamentally to the upside.
Technicals: Price action is building its third lower daily high in a row after 2.731 on the EIA storage data last week. Resistance at the 2.7247 level is holding very strong and the market must close out above here in order to break the near-term downtrend. We have been discussing that this current consolidation pattern edging higher is creating a bearish ascending wedge and traders need to take note.
Resistance: 2.7247**, 2.774**, 2.8233-2.837***, 2.983***
Support: 2.565**, 2.486-2.532****
Yesterday’s close: Settled at 119’285
Fundamentals: Fear has subsided and yesterday can be characterized by risk-on. All major U.S indices gained 1% and global markets followed into this morning. Trade war talk has heated up, but the fears seem far and few, Italian election “shock” has subsided, North Korea wants to talk to South Korea; what is there not to like? Well the 10-year yield has traded 2.90%, the highest in a week, with Fed speak on tap today. Market have come to terms with higher yields, we maintain that it is the velocity in which they move. Thursday and Friday will be crucial for the trade with the ECB and then BoJ policy decisions ahead of Nonfarm Payroll. The real risk is a strong wage growth number that sends the 10-year to 3%.
Technicals: Price action has failed from last week’s swing higher. Yesterday’s support was below first key support and is now making its way to a rough trend line that aligns with support at 119’20-119’23. While selling could pick up upon a close below here, there is still a land mark level just below. We remain Neutral and do not see an edge to either side.
Resistance: 120’05**, 120’24**, 121’02**
Support: 119’20-119’23**, 119’00-119’14****
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