E-mini S&P (March)
Yesterday’s close (Thursday, Dec. 28): Settled at 2685.75
Fundamentals: U.S. equity markets are in the green this morning and eyeing a solid finish to a historical year. Despite weakness in parts of Europe, the S&P 500 is up 0.33% this morning and the Nasdaq and Russell are following closely behind. Energies and Materials have each put in a strong week for a number of reasons but despite transitory factors, a weaker dollar and higher import quotas from China in 2018 have the most traction. The People’s Bank of China said this morning that they will keep monetary policy “prudent and neutral” and also announced looser reserve standards for the upcoming Lunar New Year which has boosted confidence. For the last three years in a row the S&P 500 has lost significant ground on the last trading day of the year. Right now, the bulls are in the driver’s seat but either side should want to remain nimble and cautious in this last trading day of the year.
Technicals: Yesterday, we turned our bias neutral. The fact still is this week has brought weakness for the last eight years. However, there seems to be bigger powers at work. Price action is testing resistance at the 2494.50-2496 level this morning. This comes in ahead of the all-time high at 2698. The strength in the NQ is trailing as is a little more subdued as it has held major three-star support at the 6446-6450 level. For the last two weeks, we have discussed the Russell 2000 failing to make a new all-time high above the December 4th level. This is in play today and if the Russell gets out above first resistance at 1557 and the all-time high of 1564.4, we would expect to see fresh buying. On the downside, the bears need to get the S&P back below the 2688.50-2690.25 level in order to neutralize this strength. We would not expect to see strong waves of selling unless first support is taken out.
Resistance – 2694.50-2696**, 2700*, 2715.25***
Pivot – 2688.50-2690.25
Support – 2679-2680.75**, 2675.25-2675.50**, 2667.25-2669.75**, 2651.75-2652.50***
Yesterday’s close: Settled at 60.10
Fundamentals: Yesterday’s inventory report was bullish. Not so much on the headlines, but estimated production dropped by a total of 35,000 bpd with 24,000 coming from the lower 48 states. With transitory factors that include the North Sea and Libyan pipelines already creating a tighter supply this gave the bulls the ammo to secure a close above the psychological $60 mark.
Today is Friday and we have a long New Year’s holiday weekend ahead with markets closed until Monday night, we do not expect to see fresh selling ahead of this. A couple things for traders to remember going into the weekend. Libyan production is now estimated to have dropped as much as 130,000 bpd but is expected to come back online in a week. The Forties pipeline is expected to be back at normal levels around the New Year. Crude oil put in a high on the first trading day of the year last year. Several seasonal reasons could have contributed to the drop in production. Refinery output was at the highest rate for this time of year in nearly two decades. This created a higher demand of Crude and we believe taxing of inventory at yearend could be a driver behind this. Lastly, don’t forget Baker Hughes rig could data is due at noon Central Time.
Technicals: Price action is bullish with a clear close out above $59.96 per barrel and ahead of a long weekend. We would expect there to remain a bid under the market through today’s session. We are Neutral and though we found reason enough to get bulled up on breakouts above $53 and $55 we are on the sidelines for now.
Resistance – 60.32*, 62.58**
Pivot – 59.96
Support – 58.97-58.99***
Yesterday’s close: Settled at 1297.2, the highest level in more than a month
Fundamentals: Gold’s rise continues as it faces the psychological $1,300 per ounce mark and our rare major four-star resistance head on. There is no data in the last trading day of the year other than ECRI Weekly at 9:30 am CT. If you missed the buy Dec. 23 and hold through Jan. 11 seasonal trade that has hit in 13 out of the last 15 years don’t be disappointed. The month of January has been very positive for Gold; 9 out of the last 12 years, the metal finished the first month of the year in the green. One of those misses was the year gold ran as much as 35% and hit its record high. There are ways to get involved in Gold even after this run, don’t hesitate to contact our trade desk at 312-278-0500 to discuss in detail.
Technicals: The U.S. Dollar Index is at the lowest level since late September and its RSI is at 32, nearing oversold territory at 30. Gold is at the highest level in a month and its RSI is at 65, nearing overbought territory at 70. We believe the metals are most bullish when Gold and Silver work in tandem. Gold has done a lot of the heavy lifting while Silver has lagged for much of the year and has finally shown some recent life. Silver faces strong resistance from 17.00-17.20. It is important to note that silver has had a net-short CoT for two weeks now and a move out above here should spark a strong short covering rally, one that should begin to do the heavy lifting for a tiring Gold. Last time Silver went net-short was July of this year and it rallied more than $3. So far, it has rallied only half of that.
Resistance – 1302-1303.4****, 1312.7*, 1317**, 1335.8**
Pivot - 1288-1292.5
Support –1278-1278.8**, 1272.5-1273.9**, 1259.7-1262.3**
Natural Gas (February)
Yesterday’s close: Settled at 2.914
Fundamentals: Yesterday was a looooong over-due and it has been a tough ride for the last 30 days or so. Tougher for some than others, but nothing is sweeter than some vindication. Okay, now that’s out of the way let’s not forget to trade smart. Inventory expectations two weeks out are piling up and a very early look shows a draw of more than 300 bcf. It will be key through this long weekend for weather to remain at its current levels and for price action to pick up where it left off. Remind yourself on Tuesday that the first trading days of the week have shown a positive start before dissipating.
Technicals: We have been bullish through all of this and yes, we remain bullish. Price action traded to a high overnight of 2.983 and we have major three-star resistance at 2.96-3.01. This level comes in play for several reasons and will be a key hurdle to close above to attract fresh buyers. The move out above 2.86-2.88 was necessary to force shorts to cover, but we might not have seen the fresh buying just yet. The next key resistance level does not come in until 3.108-3.145. Ultimately, we are targeting a move to 3.28-3.32 into mid-February and only a close above here would potentially turn this into a bull market; this would be a 30% recovery from the lows.
Resistance – 2.8095**, 2.86-2.88**, 2.96-3.01***, 3.108-3.145**,
Support – 2.745-2.76**, 2.658-2.681**, 2.562***, 2.486-2.522****
Yesterday’s close: Settled at 123’27
Fundamentals: Yesterday’s U.S. data missed from all sides. German 10-year bund yields continue their grind higher and are now at the highest level since late October. The continuation pattern in the bunds has worked against the relief in the 10-year note yields. As prices trade inverse to yields, this makes sense as major three-star resistance has kept the action in check. There is not data out today other than ECRI weekly at 9:30 am Central. We do have another long holiday weekend ahead and markets do not reopen until Monday night. This could help keep a bid in the market for haven purposes.
Technicals: Major three-star resistance is doing its job and price action is trading in an inside session around this level. We are Bullish and believe this bottoming process has begun and the market is merely consolidating after a strong push to start the week. If it can start getting out above yesterday’s session high, we believe buyers will flock to grind it higher into the weekend.
Resistance – 123’27-123’285***,124’01*, 124’06-124’07**, 124’125-124’135**, 124’295-125’00***
Support – 123’20-123’225**, 123’10-123’135**, 122’29****