The following Commodity Futures Market Analysis is the opinion of Optimus Futures. Click on the charts below to enlarge it.
S&P 500 Index Futures (ES)
The S&P 500 E-Mini futures market remained strongly bullish despite some weak economic data for the country this past week.
Philadelphia Federal Reserve business index fell to a negative 4.1 this month after being as high as 17 in just one month prior in January. This is the lowest recorded level for the index since May 2016. IHS Market also dropped some negative numbers last week saying its US Manufacturing Purchasing Managers’ index dropped to 53.7 in February, down from 54.9 last month to its lowest level in 17 months.
None of the bad news, however, had a lasting effect on buyers for this market as price continued to bid higher for the most part of the week, Thursday is the only exception.
Notably, however, we also note that the market on Friday closed at an important technical level around the 2700 index mark which we acknowledge as a long term source of support and resistance. Despite the strong bullish momentum we are currently seeing in the market, we will recommend caution for traders as the market tries to test the resistance at this level. We have seen sharp bullish activity for the past several weeks and believe a small pull back into this market could be a possibility going into the future trading sessions.
Light Crude Oil Futures (CL)
The market for crude oil amidst the OPEC output cut decision and easing relations between the US and China also continued noticeably higher last week as the rebound above the $50 psychological mark proves to be a solid one.
We have seen this market being mainly dominated by the bulls after struggling for momentum initially as it broke past the $50 price level. But that break has proven to sustain itself well enough as the market inches closer towards the $60 round number and support and resistance level (see chart above).
We are seeing no signs of a slowdown for this market yet, and believe this will be a move that could potentially erase much of the losses that it posted in the last year. A lot, of course, depends on the resistance capabilities of the $60 level. If this level gives way to the buyers as and when the market hits it, this market may well post even higher price levels before the first quarter close of this year.
Gold Futures (GC)
The market for Gold appeared to find good support from the $1300 major round number and support and resistance level last week as buyers pushed price higher, however, the market did also find some strong resistance off the $1350 level which again comes as a little surprise for us.
In our last week’s analysis, we had already identified the $1350 level as a major target for this strongly bullish market and had identified it also as a major trouble area for the market. We did see some strong selling in the latter half of last week as the market rebounded from the $1350 level, and while the market still closed bullish for the week, it did end up erasing much of the gains posted early in the week.
We do believe this market appears to be sandwiched now between the $1300 and the $1350 levels – both of which have proven their abilities as sources of support and resistance. We look forward to seeing this market venture past either of these two levels in the near future. Looking at the current price action, it is hard to place a bias and expect the market to be more likely to break past one level over another.
Euro Currency Futures (6E)
The market for Euro currency futures remained mostly indecisive and within a consolidation phase last week while traders continue to struggle to push price past the $1.13 – $1.135 support and resistance level for good.
We did notice, however, that much of the trading activity on the market last week may potentially have been part of a retest of the rising support trendline that price broke through earlier as it moved out of the wedge pattern formation (see chart above). We notice that while sellers remained mostly inactive in the market last week, the lack of interest from bulls may potentially be an indication that the trend line may have flipped from support to resistance.
If so, this may eventually play out as a typical breakout, pull back, continuation pattern around the all-important $1.135 level. This can only be warranted however if we do see a strong move from sellers taking price noticeably lower and well away from the $1.135 level early this week.
We will be watching for that, but for now, we see the market as caught up still within the consolidation phase at large.
10 Year US Treasury Futures (TY)
The futures market for 10 Year US Treasury remained majorly indecisive last week as it continued to be pressed between two major support and resistance levels marked by the 121 and 122 round numbers.
We do however note that last week’s trading activity is strongly reminiscent of being in a wedge pattern formation as we noticed lower highs and higher lows as the market tightened up within the narrow channel (see chart above). We believe this may be a tell-tale sign of an impending breakout at some point in the near future especially as price breaks past either the 122 price level or the support level found at 121. For now though, we see this market still mainly indecisive and so we remain on the sidelines for this one.
There is a substantial risk of loss in futures trading. Past performance is not indicative of future results.