COMMODITIES: Latest Move Lower for WTI Futures Reinforces Bearish Theme

WTI futures traded sharply higher Monday. This undermines the medium-term bearish condition and instead signals scope for a continuation higher near-term. The rally has exposed the next key resistance at $72.91, the Feb 11 high. Clearance of this level would strengthen the bullish theme.  On the downside, initial firm support to watch lies at $68.78, the 20-day EMA. A breach of this level would signal a potential reversal. The trend condition in Gold is unchanged, it remains bullish. The latest rally  highlights a bullish start to this week’s session and confirms a continuation of the primary uptrend. The rally also once again, highlights fresh all-time highs for the yellow metal. Sights are on the $3151.5, a Fibonacci projection. Support to watch lies at $3004.9, the 20-day EMA. A pullback would be considered corrective.

• WTI Crude down $0.18 or -0.25% at $71.31
• Natural Gas down $0.02 or -0.39% at $4.105
• Gold spot up $7.17 or +0.23% at $3130.71
• Copper up $6.55 or +1.3% at $509.7
• Silver down $0.09 or -0.27% at $33.9952
• Platinum down $5.67 or -0.57% at $992.05

Eurostoxx 50 futures traded lower Monday resulting in a breach of key support at 5229.00, the Mar 11 low. The print below this support undermines a bullish theme and signals scope for a deeper retracement. Note that the 5200 handle has also been cleared, opening 5079.00, the Feb 3 low. It is still possible that recent weakness is part of a broader correction. Initial firm resistance to watch is 5343.17, the 20-day EMA. S&P E-Minis maintains a softer tone following recent bearish price action. Attention is on key support and the bear trigger at 5559.75, the Mar 13 low. It has been pierced, a clear break of it would confirm a resumption of the downtrend that started Feb 19, and open 5483.30, a Fibonacci projection. MA studies are in a bear-mode position, highlighting a dominant downtrend. Key short-term resistance has been defined at 5837.25, the Mar 25 high.

• Japan's NIKKEI closed higher by 6.92 pts or +0.02% at 35624.48 and the TOPIX ended 3 pts higher or +0.11% at 2661.73.
• Elsewhere, in China the SHANGHAI closed higher by 12.689 pts or +0.38% at 3348.435 and the HANG SENG ended 87.26 pts higher or +0.38% at 23206.84.
• Across Europe, Germany's DAX trades higher by 268.86 pts or +1.21% at 22434.71, FTSE 100 higher by 67.36 pts or +0.78% at 8650.18, CAC 40 up 67.9 pts or +0.87% at 7858.61 and Euro Stoxx 50 up 54.36 pts or +1.04% at 5302.75.
• Dow Jones mini down 72 pts or -0.17% at 42189, S&P 500 mini down 3.5 pts or -0.06% at 5649.75, NASDAQ mini up 12.5 pts or +0.06% at 19451.25.

Rabobank suggest that “with Le Pen having done little to move the needle in terms of the perceived cohesiveness of the Eurozone, her current political problems seem unlikely to have much if any impact on a systemic level”. 

• They go on to note that “French 2014 5-Year CDS now matches levels reached in the immediate wake of last year’s shock election announcement. Much of this widening move, however, took place in prior weeks. The reason for the subsequent ascent, in our view, is that the German-led sell-off in rates has prompted a tightening of financial conditions”.
• The conclude by noting that “Le Pen’s travails look currently to be something of a sideshow. The disconnect between French financial conditions and the country’s fundamental outlook is the more important theme for investors to focus on and one which raises the odds of OAT/Bund spread widening. Resonating with this view is a notable nugget of feedback we received during a client visit last week which was from an investor who noted that the back up in German yields would now see them operating with a clear home bias as there is no longer a need to hunt for returns elsewhere. They believe many of their peers would be of a similar view”.