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 Emini futures market pulled back to the all-important former resistance area and all-time high around 2880, which we had identified last week as a strong possibility.
The selloff last week was mostly driven by the tech sector, with disruptive steaming service Netflix taking the driver’s seat posting a 6.2% drop. Other tech stocks like Amazon and Microsoft followed suit. Notably though, the market may still see the impending NAFTA talks between the US and Canada as a potential catalyst for more buying activity in the market.
On the technical front, the pullback to the 2880 level was largely expected given the initial push towards the upside past that level did not print an immediate confirmation of the level acting as support, via a quick market pullback. We notice last week’s bearish activity as rather dull and in fact see some bullish implicit divergence coming in, which points to the increased likelihood of the market potentially finding support at the 2880 level and eventually moving higher.
Light Crude Oil Futures (CL)
Light crude oil futures market found formidable resistance at the $70 round number allowing for the sellers to mark a re-entry to the market and dominate proceedings for the most part of last week.
Despite no major friction from buyers last week, we notice the market still seems to be lacking momentum and seems to be pushing down rather laboriously. Still, if more selling comes in this week, we still see the market knocking at the $66 support level yet again.
Last week’s rather dull trading activity just adds to the sideways consolidation theme for this market around the long term support and resistance levels at and above the $75 mark. Seeing how the market seems to be transitioning from a smooth uptrend to a choppy indecisive one in lieu of the major $75 support and resistance level, we see more downside in the mid-to-long-term for this market.
Gold Futures (GC)
Futures market for Gold behaved rather oddly last week, as the market despite pushing back above the $1200 level earlier confirming a fake break of the level to the downside, actually failed to use the level as support to gather more upside momentum.
At large the market still seems rather caught up between the tight range patrolled by the 1210 and 1200 support and resistance levels while last week’s trading activity just added more weight to that development.
On the lower time frames however, we see the market potentially entering into a tight wedge pattern formation at the base of the 1200 round number which could make for an interesting breakout play in the trading sessions to follow.
Euro Currency Futures (6E)
Euro currency futures market last week yet again closed in close proximity to the 1.16 major support and resistance level, counter to our expectations from the market to move away from the level.
The market did actually find some support at the level in the first half of last week, although it was short-lived as the sellers – especially on Friday – pulled price much lower to close authoritatively under the 1.16 price level.
Despite the strong bearish close, we would like to see more sell side momentum in earlier trading sessions this week, and a definite move past the 1.16 level to re-ignite our interest in the longer term down trend possibly resuming itself. As of now we see the market still rather tied up to the thick support and resistance zone surrounding the 1.16 round number.
10 Year US Treasury Futures (TY)
The market for 10 year US treasury bonds on Friday last week finally broke a multi-week streak of dull trading and small-range candlestick formations, as weakness in the US equity sector fueled some gains for safe-haven instruments like the 10 year bonds.
Interestingly, the strong move to the downside on Friday puts the market in contention to possibly test the rising support trend line for a third time. For quick perspective, we have been seeing the recent consolidation phase as capped at the top by the 121 round number and resistance level and at the bottom by the rising support trend line (see chart above).
If this bearish momentum continues forth this week, we could see the market potentially breaking to the downside and possibly continuing with the longer term downtrend preceding the recent phase of consolidation. A bounce off the rising support trend line however could lead to the market again oscillating around the 120 round number and potentially further tightening up within the pattern formation outlined in the chart above.
There is a substantial risk of loss in futures trading. Past performance is not indicative of future results.