Today’s Market Spotlight

  • https://www.bloomberg.com/news/videos/2017-04-19/focusing-on-oil-production-amid-opec-jawboning-video

    Click the link above to watch our interview with Bloomberg discussing Crude Oil (4.19.17)

    This mornings EIA report showed crude inventories down by 1.03 million barrels, this was a smaller drawdown than expected; that coupled with a surprise build in gasoline and increased production has put pressure on prices in the mid-morning trade. We laid out the bear case in an interview with Bloomberg this morning siting both fundamental and technical reasons. On the fundamental side of things, production has been a point of focus for us. Baker Hughes releases rig count numbers every Friday at noon central and they have showed rigs increasing 13 of the last 13 weeks. The uptick in activity in the states has led to a trailing increase in demand with US production increasing 8 out of the last 8 weeks with the average increase being roughly 35,000 barrels per day, this has production at the highest levels in 20 months.

    OPEC has started some jawboning with regards to extending their production cuts but it is unlikely we will see any definitive agreement before their May 25th meeting in Vienna. Even if they do extend cuts, they will come back online at some point because the longer they are not pressing, the more market share they give up. Not only is future production going to weigh on the market, but lower demand will too. Last week we received an updated report from the IEA that showed demand growth estimates lowered with a footnote that those lowered expectations may be fairly optimistic.

    On the technical side of thing, the market has been trading in $10 range (give or take) for almost exactly a year. First technical support today comes in a pocket from 51.68-52.17, this represents the 50 and 200 day moving average as well as the 50% Fibonacci retracement from the November lows to the January highs. If we close below this pocket we could see long liquidation from the funds who have a sizeable net long position, this would likely lead to accelerated selling and press us back to the 47.58 lows we saw at the end of March.

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    04/19/17

  • photo from Tumblr

    Gold (June) Click image to enlarge

    Gold gapped higher on the open last night and extended to a high of 1297.4 early before paring gains. This is the test to the psychological 1300 level that we have been calling for. Now, everyone is talking about the metal and how it’s breaking out; ultimately, this is not when to buy. Price action took out the 200 day moving average last week (at 1268 today) while the 50 Dma is trailing at 1243.1. Furthermore, the higher low this December when compared to the last is extremely significant in the longer scheme of things. It becomes even more significant if Gold can get out above trend line resistance it currently faces; not only from last year’s high but from the all-time high in 2011. This trend line, as we discussed last week, comes in at about 1290 so yes it was nudged but we need to see a close above 1300 on a weekly basis to clearly break through. With that, the Golden Cross follows. Pullbacks to 1268-1273.3 remain a strong buying opportunity. Retail Sales and CPI missed widely on Friday and the Atlanta Fed dropped their estimated Q1 GDP to .5%. We have TIC data at 1:00 pm CT today and housing and Industrial Production data tomorrow.

    Resistance – 1300-1302.1**, 1309.3**, 1317.7**

    Pivot - 1290.7

    Support – 1280.8**, 1268-1273.3****, 1253.9-1254.7*, 1248.2**, 1241.5-1244.5***

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    04/17/17


  • SOYBEANS

    Soybeans had a strong rally following this weeks bearish USDA report, which we pointed out as a very bullish catalyst in a special update to you earlier in the week (Soybean Update). As mentioned, we called to talk with clients about what they were comfortable with on an individual basis with regards to reducing hedges/re-owning bushels. Towards the end of this afternoon, we were in contact again with clients wanting to see if they wanted to sit tight through the long weekend, or take advantage of the cheaper protection they sold at a better price earlier in the week; again, the market is not one size fits all so we had a lot of different clients going about this differently.  

    I personally feel that there is more room in this bounce, but for now that’s just what it is, a “dead cat bounce”. The fundamentals are marginal at best, if weather starts to dry out the premium will likely evaporate from the market. On the technical side of things, there are several barriers the bulls need to close above to encourage momentum buyers to get on board. 967, 973, and 980 are the exact levels we are watching for in the November futures. It is at these points we would really push clients to put hedges back on.

    We would love the opportunity to work with you and earn your business, we are very confident we can bring a lot of value to what you are wanting to do in the markets. If you are someone who likes to do things on their own, we can provide you a great desktop/mobile platform along with a great rate. If you have any questions, please do not hesitate to contact me. Have a great Easter weekend.

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    04/13/17

  • SOYBEANS

    Soybean futures traded lower following yesterdays bearish USDA/WASDE report which brought wheat and corn down too, despite being more neutral. The USDA showed US carryout at .445 billion bushels, this was within the range of estimates from analysts. The world carryover estimate came in at 87.41 million tonnes, this was well above the average estimate of 83.91 and above the top end of estimates at 85.75. The fact that the market stopped going lower on bearish news is a bullish indicator in our mind. That coupled with technical support and a long weekend with weather concerns looming in Argentina prompted us to contact clients with recommendations of reducing hedges for some producers (each client is different, the market is not a one size fits all), and initiating long positions for speculative clients. We feel there is good opportunity here for producers to try to capitalize from, if you would like to discuss more in depth strategies or have any questions, please do not hesitate to call or email me.

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    04/12/17

  • If you missed our interview on Bloomberg discussing the Gold trade, you can watch it here: Can gold make a run to $1,300?

    Gold (June) 

    Gold is elevating back above 1260 this morning and the metal has been extremely constructive since the rate hike only three weeks ago. With even the slightest bit of weakness in the equity market, investors quickly turned to safe haven assets such as Gold and Treasuries. However, US data has been solid and some even consider it great. Then you might ask why is Gold rising? First, we again want to hammer home the fact that we do not expect the Dollar to rise during a rate hike cycle, in fact, the Fed is in many ways slowing growth. Secondly, the French elections are at the end of the month and there is a large degree of uncertainty and to that, risk must be managed. This leads to lastly, equity markets are beginning to show a slight bit of vulnerability and there are many reasons for this, such as the French election, official Brexit and the Trump trade coming back down to reality. Ultimately, we like Gold and we always have. First resistance comes in at 1264.2-1264.9 and our rare major four star resistance comes in at 1268.1-1270; a close out above here is needed to spark the next bullish leg higher that should test 1300. Still, buyers must manage risk and you must not forget there is a lot going on this week. Tomorrow we have ISM Non-Manufacturing data and FOMC Minutes. New session lows will soften the tape while a move back below support at 1238.9-1241.5 will signal a failure.

    Resistance – 1264.2-1264.9**, 1268.1-1270****, 1280.8**, 1300**

    Support – 1255.5-1256.6**, 1246.4*, 1238.9-1241.5**, 1229.9-1231.7**, 1223.2**, 1211.7-1213.5***

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    04/04/17

  • If you missed our interview on CNBC discussing the crude oil trade, you can watch it here: Is it time to sell the rally in crude?

    Crude Oil is down marginally this morning after settling near its high yesterday of 50.47 at 50.35. Price action dipped to a low of 49.90 overnight but has edged back near unchanged. We remain bearish Crude Oil and view this as a relief rally. There was a perfect storm of news that helped lift the market from major three star support at 47.60-47.70, not to mention a failure to close below here; product demand, Libya outages, OPEC jawboning (Kuwait yesterday), etc. No trade is easy and for those of you that have stayed short looking for the ultimate breakdown to $40/41 this can be a tough bounce. It does highlight the importance of locking something in. We still believe the bigger picture to be bearish and our rare major four star resistance comes in at 51.00-51.33. This is the big .382 retracement and as long as the close remains below a .382 the trend can stay intact. Furthermore, this is also the 200 day moving average. Though we do not believe in trading ETFs we do watch them as an indicator. The XLE (Energy Sector) hit its 200 day moving average yesterday and traded to the top end of a four month long channel. For both the tradeable WTI Crude and the XLE the 50 day moving averages sit just above the 200 day; if price action begins to fail here we expect to see the Death Cross as the 50 slices through the 200.

    Resistance – 50.22-50.35**, 51.00-51.33****, 52.50-52.78**

    Support – 49.63**, 49.18*, 48.78**, 48.83**, 47.60-47.71***, 47.09*, 45.78**

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    03/31/17

  • If you missed our interview on CNBC yesterday talking natural gas, you can watch it here: What’s next for natural gas?

    Natural Gas (May)

    May natural gas futures were mixed for the most part during yesterdays session, that after the EIA showed a drawdown of 43 billion cubic feet.  The drawdown was within the range of analyst expectations, but well above the five year average of -27; in fact it was the largest drawdown for this time since 2014.  Total storage is at 2.049 trillion cubic feet, still above the five year trend but 17.1% below levels seen for the same time last year.  On the technical side of things, the market is pressing up against trend line resistance that comes in from the December highs.  If the market can achieve a close above resistance, we could see another push higher.  On the flip side, a failure to break out will likely lead to consolidation towards 3.09.

    Resistance-3.253***, 3.308-3.311**, 3.507**

    Support –3.09**, 2.995-3.001**, 2.891-2.908***, 2.815-2.82**

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    03/31/17


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    03/29/17



  • 03/29/17

  • E-mini S&P (June)

    Read our full Morning Call here: iiTRADERs  Morning Call

    The S&P gapped lower on the open last night and was down more than 1% trading to a low of 2317.75 before paring losses. The market sold off late in the day Friday as it appeared the House would not pass Trump’s healthcare plan. However, traders were thrown a twist and the House pulled the vote altogether. This somehow lifted price action from 2331.75 to 2347.25. Given, that low was another test to our major three star support at 2327.50-2330.50 and everyone was so bearish at that time, it would seem that no one was left to sell. Support didn’t last too much longer as the S&P opened up lower Sunday night and traded through it within the first hour. What we are seeing is the unwind of the Trump trade as there is now doubt that he will be able to get his pro-growth agenda through Washington in a timely manner. This is EXACTLY what we wrote about in the first two weeks of March in our pieces discussing the Culmination of Enthusiasm; the market was pricing in perfection. Resistance now comes in at 2331 and then above there at the gap at 2339.25. The 50 day moving average comes in at 2325. Support did come in at our old 2318 level. The next major three star support level comes in at 2389-2393.50. We have Case Shiller, Consumer Confidence and Yellen tomorrow. 

    Resistance – 2331**, 2339.25**, 2344.25**, 2352.75**, 2361-2363***, 2377.25-2378.75***

    Pivot - 2325

    Support – 2318**, 2309.75**, 2389.00-2393.50***

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    03/27/17


  • Read our GRAINcast here: iiTRADERs GRAINcast 3.24.17

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    03/24/17

  • Gold is Looking Strong With 3-Week High But There is Resistance - Trader

    Click the link above to watch our interview with Kitco (3.22.17), we share our thoughts for the gold and silver markets going forward.

    Below is an excerpt from our Morning Call (3.23.17)

    Gold (April)

    Gold is stalling against first key resistance 1251.5-1255.5 this morning; a level that aligns with a trend line from last August. Above there are recent swing highs at 1264.9 that align with the 200 day moving average at 1268.5. Traders this morning await Jobless Claims at 7:30 am CT but more importantly Janet Yellen is set to deliver a speech at 7:45 am. New Home Sales is due at 9:00. The House is also set to vote on the new healthcare bill later today and this could easily bring volatility. First support comes in at 1237.3-1238. Over the last week the Fed has taken a slightly more dovish approach and this has supported Gold, we expect Yellen to middle the ground. Furthermore, we want to remind you that we do not believe the Dollar rises in a rate hike cycle, however, this recent drop in the Dollar is a little too much too quick.

    Resistance – 1251.5-1255.5**, 1264.9-1268.5****, 1280.8**, 1300**

    Support – 1237.3-1238**, 1226.4**, 1220.6-1220.7**, 1211.6-1212.1**, 1202.9-1205.9**

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    03/23/17

  • Crude Oil (May)

    Crude Oil is lower this morning and this has begun to play out exactly as we have called; price action will again head south once the April contract expires. Inventories will come into play today and API yesterday showed a build of 4.529 mb (though Gasoline was bullish). This helped push Crude through key support at the 47.60-47.70 level. It will be critical for us bears to maintain a close below here. Expectations for EIA come in at +2.8 mb Crude, -1.386 mb Distillates and -2 mb Gasoline. First minor resistance will come in against yesterday’s settlement and the session high of 48.24; a move out above here will encourage a consolidation. Yesterday’s high of 49.48 will also become a critical level.

    Resistance – 49.48**, 50.14-50.22**, 51.00-51.50***, 52.50-52.78**

    Pivot – 48.24

    Support – 47.60-47.71***, 47.09*, 45.78**

    Read our full Morning Call here (3.22.17): iiTRADERs Morning Call

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    03/22/17


  • Read this mornings (3.17.17) full GRAINcast here: iiTRADER GRAINcast

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    03/17/17

  • Crude Oil (April)

    Crude Oil is higher this morning after some jawboning from Saudi Arabia following the FACT that they increased production and API data showed draw of 531,000 barrels of Crude. First, yesterday’s OPEC report showed that Saudi Arabia in fact increased production. However, Saudi officials said that this was for their reserves. There is only one reality here, they pumped more Crude and this eludes to the production cut deal going in only one direction… sour. Do you think Iraq, Iran and Russia are going to like the fact that Saudi Arabia produced more, regardless of where this Crude is earmarked? Surely not. This reduces the already small chance that this production deal is extended into the second half. Crude price action did ascend off of Saudi jawboning, however, we view this only as short covering ahead of inventory data. Furthermore, I need not remind you how long term bearish we are, but we still have been hammering home this April option expiration tomorrow and how this will work to buoy the market. Once we get through this options expiration and the April contract falls off the board next Tuesday, we expect that selling to recommence. Today’s EIA data is due at its regular 9:30 time and expectations are for +3.713 mb Crude, -1.663 mb Distillates, -1.95 Gasoline. Remember our adage that those who would buy because of inventories, many of them have already bought. Unless this report is more bullish than API, immediate gains may be limited. However, a bearish report would send this market lower fairly quickly. First resistance now comes in at 48.96 this morning with 50.00-50.12 being strong resistance through the end of the week. Only a close back above 51.06-51.12 will negate this bearish activity.

    Resistance – 48.96**, 50.12**, 51.06-51.12***

    Support – 47.72-47.90**, 46.65***, 45.00-45.18****

    Read our full Morning Call here: iiTRADERs Morning Call

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    03/15/17