Crude futures have surged through our 2nd tier downtrend line and are now climbing above our near-term uptrend line. It seems crude has put in a nice bottom, and we could see a retest of February 27 highs shortly.
The OPEC supply cuts are having their desired effect on price, which could be confirmed further by the Crude Oil Inventories release this afternoon. While the medium-term downtrend is far from over, Crude futures could easily continue their solid near-term rally.
The mid-January to mid-February trading range will provide a true test for the futures. Fundamentally, we find supports of $42.22/bbl, $41.75/bbl, $41.35/bbl, and $40.60/bbl.
Gold sold off further on Tuesday despite equities finishing the session relatively flat. Gold has dipped below our 2nd tier uptrend line, but still has the psychological $900/oz area and our 1st tier uptrend line to rely on.
Gold's correlation with equities has been a bit out of whack over the past few sessions, which could indicate healthy fundamental profit-taking.
On the other hand, if Gold closes below $900/oz. and our 1st tier, we could witness a heightened selloff in Gold coupled with a strong rally in equities. Considering the remaining fundamental supports, we maintain our positive outlook on Gold trend wise.
Fundamentally, we find resistances of $922.49/oz, $930.76, $937.81/oz, and $945.57/oz.
The 30 Year T-Bond futures are weakening Wednesday, but found temporary support on our 124.98 level. If the futures are to fall below February lows, we anticipate a heightened near-term selloff. Since equities and treasuries are normally negatively correlated, the lack of movement to the upside in the 30 Year with equities at critical lows shows the downtrend is intact.
Furthermore, the fact the 30 Year futures are declining with equities shows investors are concerned the demand for government debt is insufficient to satisfy supply. As a result, yields are rising and price falling, placing exorbitant downward pressure on the 30 Year T-Bond futures.
Rate follows GBP lower and cross-spreading likely adding pressure; rate holds a test of 1.2520 area again but rally is needed to hold support zone otherwise another low is likely. Stops building on both sides as the rate tests for stops on the downside first.
Upside stops likely cleared at 1.2630/50 area for now; likely layered above 1.2680 through 1.2750 area now. Key 1.3030 area likely next; failure to hold 1.2900 likely going to be the test for the bulls this week. Close above key 1.3030 area needed for further upside until then rallies likely to be sold so expect more two-way action.
Rate rallies overnight then falls back to test support in NY again, low prints at 1.3982 above major bids said to be around 1.3950 area; shorts are gaining confidence for a break under 1.4000. Rally to clear close in stops above 1.4300 and a close over the handle suggest more upside and a short-squeeze; bounce off the lows back to
1.4080/90 area suggests bids are increasing.
Two-way action between existing S/R the past 72 hours likely to continue. Stops likely building on both sides increasing the chance for whipsaw. Traders report stops in-range adding for two-way action. Long-term tech resistance now at 1.5000 area likely to cap near term but stops are building above and the 1.5000 handle is a big psychological number.
