Technical Levels To Watch In Today's Futures Market

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E-mini S&P (June)

Yesterday’s close: Settled at 2723.50

Fundamentals: U.S equity indices come into this morning after a more or less quiet overnight while the trade continues to consolidate on the heels of Monday’s beating and ahead of today’s FOMC Meeting. The Dollar gained ground during yesterday’s session but paring such into this morning has added some pressure to foreign benchmarks (Japan is on holiday). Facebook remains under scrutiny and a one-directional trade. It slid as much as another 2% overnight, pinning it about 15% from its all-time high on February 1st. This has added weight to the NQ while energy has helped offset such in the S&P. We look to Existing Home Sales this morning at 9:00 am CT and a crucial read on Crude inventories at 9:30 am CT. The Federal Reserve concludes their two-day policy meeting at 1:00 pm CT and new Fed Chair Jerome Powell will host his first post-press conference at 1:30 pm CT. It is a foregone conclusion that the Fed will raise interest rates today, but the question surrounds the tone in which they do so. By tone, we mean the path set forth by the dot plot, will they reassure three or signal a potential fourth hike? Additionally, the manner and confidence in which Powell speaks about the economy after lackluster inflation data and consumer demand along with trade fears. In our opinion, we will only see a median of three hikes this year while Powell might have to take a small step back in comparison to how hawkish he was at his Congressional Testimony in the last week of February. All in all, this would be supportive to equity markets.

Crude Oil (May)

Yesterday’s close: Settled at 63.54

Fundamentals: Crude Oil continues to gravitate higher on a combination of favorable fundamentals and technicals. While a technical breakout began to occur last Friday, tension in the Middle East has quickly become the most important. The Saudi Crown Prince met with President Trump with a message for Iran, if they develop a nuclear bomb, so will Saudi as soon as possible. Though this is the unlikely scenario, it eludes to support for Trump’s unfavorable stance against the current nuclear deal. If the White House were to rescind the nuclear deal it will take Iran supply off the market which is very bullish Crude in the immediate-term. However, this paves the way for Saudi Arabia to add production. Developments here will be key. Venezuela remains in the news as production collapses in the debt-ridden nation. Today, inventories will grab headlines early while Crude will remain susceptible to sharp price swings in the Dollar upon the FOMC Meeting. Yesterday’s API read showed a surprise draw of 2.739 mb when a build of 3.2 mb was expected. The key on this read was the draw in Gasoline was comparable to expectations while Distillates were in line. This will place a strong emphasis on today’s official headline EIA read to confirm such while expectations only sit at +2.6 mb Crude, -2.008 mb Gasoline and -1.746 mb Distillates. Crude is elevating this morning, but yesterday’s API does make it easier for the EIA read to slow the rally.

Gold (April)

Yesterday’s close: Settled at 1311.9

Fundamentals: The big day has arrived; the FOMC concludes their two-day policy meeting at 1:00 pm CT with a decision and new Fed Chair Powell will hold his first post-decision press conference at 1:30 pm CT. The Dollar has chopped around this week on little news as traders speculate the potential message from the Federal Reserve. As we discussed in our Tradable Events this Week, we do not believe that they have the firepower to ramp up their dot plot to show a median of four rate-hikes this year. While December and January gave positive developments on both CPI and wages, February essentially back-tracked. Furthermore, consumer spending has been dismal this year and could become a real concern. We have been unequivocally long-term bullish Gold and long-term bearish the Dollar, we continue to hold this opinion strongly.

Natural Gas (April)

Yesterday’s close: Settled at 2.675

Fundamentals: There is more daily volume in the April contract, but the open interest made the shift a few sessions ago. We will continue to talk about April today. Price action recovered yesterday, as traders see value with the continued cold across the country and massive ice/snow storm that has been hammering for the East Coast. Storage estimates remain stable and the move higher more represents the April/May roll as well as a value area for bulls.

10-year (June)

Yesterday’s close: Settled at 120’03

Fundamentals: Treasury prices are under pressure and we discuss the reasoning behind this ahead of each FOMC meeting. The Federal Reserve is in a tightening cycle and while traders point to a potential bear market in the complex, the bull trade was one that worked well for a long time. Though many who have rode the trend continue to reduce size, it has always been common to see large longs reduce size ahead of these meetings to take risk off the table purely because we are in a hiking cycle. This eludes to a potential buy opportunity after today’s meeting and especially so because we believe the FOMC will leave their forecast at three hikes this year while new Fed Chair Powell might have to take his foot off the hawkish gas that we saw at his Congressional Testimony in the last week of February.