Cabrera Update:

Tuesday, January 7, 2018                                                         Trading Desk: (312) 236-8907

 

TODAY’S GAME PLAN:  

DATA/HEADLINES:   8:30ET Trade Deficit;  10:00ET ISM Non-manufacturing Index, Factory Orders

Iran said even the weakest of the retaliatory options it is assessing would be a “historic nightmare” for the U.S.

TODAY’S HIGHLIGHTS:   

Stocks in Europe and Asia jumped and U.S. equity futures rose on Tuesday as investors set aside their fears about escalating tensions in the Middle East. The lack of any immediate military reaction is starting to ease fears of a rapid deterioration of the situation.

EQUITIES:   pre market movers at bottom of this page

E-mini S&P is +0.05%, Nasdaq +0.3%, RTY flat, Dow future +0.06%. SPX will have 3249 as early resistance with 3234.50 initial support. Intraday short term momentum is elevated, so early strength would like be sold into. Yesterday, the early weakness was bought as investors are willing to buy stocks ahead of the signing of the China/US phase one agreement, despite anxieties about tensions the US and Iran.

Tech heavy QQQ has been outperforming the major indices, which is an overall positive for market tone. FAANG stocks have been leading since mid-December.

The bank sector has been weak since mid-December with KBE falling 4% from the recent high.  KBE fell 0.79% yesterday, but was able to hold the 50 day moving average.

European stocks rose on Tuesday, rebounding from two days of losses as technology shares, retailers and banks gained. The Stoxx Europe 600 Index is up 0.37%, Euro STOXX future +0.5% and DAX +0.9%.

Asian stocks gained, led by health care and consumer staples, rebounding from a drop on Monday amid U.S.-Iran tensions. Concerns over the Middle East flare-up have begun to ease, even as the U.S. ordered additional forces into the region. Most markets in the region were up, with Japan’s Topix index gaining the most since early November, +1.6%.  Bank of China led the Shanghai Composite Index higher (+0.67%).

FIXED INCOME:   

Treasuries slightly richer across the curve, underpinned amid fears of escalating tensions in the Middle East after Iranian news agency said the country is assessing reprisals for the U.S. assassination of a military leader. Gains are limited as Treasury auction cycle is set to begin.  Today we have the 3yr auction at 1pm followed by $24b 10-year reopening Wednesday and $16b 30-year reopening Thursday.  U.K. bonds fell on the open following Chancellor Javid’s plans to increase borrowing.   

10 year yield holding well below its 200dma.

Bund future is holding below its 50 and 200 day moving averages.

Yield curve is flatter again today.  The 2/5 curve has .050 as closing short term key support.

METALS: 

Gold held its ground near the highest level in more than six years even as some appetite for risk crept back into equity markets.  “Elevated geopolitical risks across the heart of the Middle East should support a stronger gold price environment this winter,” Citigroup Inc. analysts wrote in a note, adding there are “bullish fundamental tailwinds” in place. Front month Gold future has key resistance around the .618 retracement from the 2011 high at 1588 area. Silver has been underperforming of late, but remains positive above 17.78 area.

ENERGY

Oil eased from a three-month high as traders waited to see whether the clash between the U.S. and Iran would lead to a disruption in Middle East crude supplies. While Iran is assessing retaliation ‘scenarios’ against the U.S., and the White House ordered additional forces to the Middle East, oil flows out of the region continue unimpeded for now.

March Brent has a bullish technical picture with the Golden Cross formation (50dma crossing the 200dma), Relative Strength is elevated.

Oil Services sector ETF (OIH) gained 1.85% yesterday, settling just above its 200dma for the first time since July, 2018.

CURRENCIES:   

The yen erased gains with signs of returning risk appetite, as the currency market took Middle-East tensions in stride.  Australia’s dollar saw the biggest losses among G-10 peers — falling on a decline in Australia’s job advertisements, while a bush-fire crisis boosted the odds for a central bank interest-rate cut.

US$ Index is slightly higher.  AUDUSD (down nearly 1%) turns s/t negative back below its 200dma.  USDJPY has 107.70 as s/t key Fibonacci support. GBPUSD has 1.3285 as s/t key resistance. EURUSD remains positive s/t with settles above 1.1143 (200dma).

TECHNICAL LEVELS:  (futures)    

 

ESH

TYH

Feb Gold

CLG

DXH

Resistance

3285/86

132’02

1650.0

68.75

99.000

 

3271.00

131’11/13

1620.0

*66.52*

98.145

 

3263.50

130’20/22*

1600.0

65.00

97.475

 

3258/59

130’03

*1588.0*

63.85

97.285

 

3249/51

129’21

1578.0

63.16/23

96.875

Settlement

3243.50

129’08

1568.8

63.27

96.350

 

3234/35

129’00

1555/57

62.19

96.000

 

3226/27

128’18

1535.0

61.01

95.700*

 

3221.50

128’09

1518/19

60.63

95.100

 

3203.50

127’28+*

1501.5*

59.87

94.050

Support

3186/89*

127’00

1477.0

57.58

93.500

Colors within the report: Green is always the 200 period (day, week). Red is always 21, Blue = 50, Brown = 100  *Stars have

Equity movers in early trading, as of 7:35am EST:

Advancers

  • APLS +57.3% (+$17.3); Apellis Medicine Beats Alexion’s Soliris in Severe Anemia Study
  • XERS +19.5% (+$1.13); Xeris RTU Glucagon Maintained Normal Blood Glucose in Trial
  • LLEX +16.4% (+$0.11)
  • APA +12.7% (+$3.26); Apache and Total Make ‘Significant’ Oil Discovery in Suriname
  • ADMA +9% (+$0.33)
  • LPG +7.2% (+$1.11); PC Connection, Dorian LPG to Join S&P Smallcap 600
  • PLX +6.3% (+$0.29)
  • ACOR +4.8% (+$0.12)
  • MCHP +4.8% (+$4.97); Microchip 3Q Prelim. Sales Top Estimates, Boosting Peers
  • ONTX +3.3% (+$0.02)
  • MU +3.1% (+$1.68); Micron Raised to Outperform at Cowen
  • WDC +3% (+$1.93); Western Digital Raised to Outperform at Cowen
  • SQ +2.9% (+$1.84); Square Raised to Buy at BofA; PT $75
  • VBIV +2.5% (+$0.03)
  • VNE +2.3% (+$0.33)
  • MBOT +2.1% (+$0.25)
  • BNTX +7.9% (+$3.52)
  • HIMX +7.7% (+$0.25); Himax Technologies Prelim 4Q Gross Margin Beats Est.
  • CYAD +4.4% (+$0.45)
  • XNET +4% (+$0.19)
  • NIO +3% (+$0.11)
  • STM +3% (+$0.80)
  • DBVT +2.5% (+$0.28)
  • SNE +2.3% (+$1.59)

Decliners

  • MTNB -10.6% (-$0.22)
  • SAVA -6.6% (-$0.57)
  • ADXS -6.5% (-$0.07)
  • OSMT -6.5% (-$0.38)
  • ALXN -4.7% (-$5.06); Apellis Medicine Beats Alexion’s Soliris in Severe Anemia Study
  • ZN -3.8% (-$0.02)
  • OBSV -2.7% (-$0.1)
  • ARE -3.4% (-$5.42); Alexandria Real Estate Offering Prices 6m Shares at $155/Share