DAILY BONDS, STOCKS, & CURRENCY COMMENTARY Wednesday December 23, 2020

BONDS COMMENTARY 12/23/20

We expect rallies off scheduled data but doubt the gains will hold

OVERNIGHT CHANGES THROUGH 3:16 AM (CT): BONDS -0

Overnight treasury prices extended yesterday's bounce but ultimately failed to hold the gains and have settled back into negative territory early today. We suspect the volatility in treasuries was the result of news that the President might reject the intensely negotiated stimulus deal because direct payments were not sufficient. While not a recent definitive impact on treasury prices, it would also appear as if yet another major junction looms from the exit negotiations with both sides the table committed to one last attempt to solve the divorce before it is forced upon the parties. While the markets are likely to view the US durable goods order as the primary release of the day, (early due to holiday) initial and ongoing claims data figures will add to the potential volatility in the 7:30 release window. On the other hand, traders should acknowledge yesterday's significant jump in quarterly PCE readings were the highest since the second quarter of 2011 and that could be an early warning sign that deflation is being replaced with reflation. Therefore, the monthly PCE index this morning might be very important measure to watch, especially with predictions for that reading only expected to post a fractional gain! Given the markets inability to rally off weak scheduled data recently, we would suggest traders wait for a rally to the vicinity of 174-00 to sell March bonds and or a rally to 138-07 to get short March Notes. The North American session will start out with a weekly private survey on mortgage applications, followed by November durable goods which are expected to have a moderate downtick from October's 1.3% reading. November personal income is forecast to have a modest uptick from October's -0.7% reading while November personal spending is expected to have a moderate downtick from October's 0.5% reading. A weekly reading on initial jobless claims is forecast to roughly hold steady with the previous 885,000 reading. Ongoing jobless claims are expected to have a modest weekly increase from the previous 5.508 million reading. October Canadian GDP is forecast to have a modest downtick from September's 0.8% reading. The October FHFA home price index is expected to have a modest downtick from September's 1.7% reading. November new home sales are forecast to have a modest decline from October's 999,000 annualized rate. A private survey of December consumer sentiment is expected to have a minimal downtick from the previous 81.4 reading.

TODAY'S MARKET IDEAS: With a very full slate of US scheduled data combined with a fresh wrinkle in the stimulus negotiations, treasury prices are likely to exhibit a measure of expanded volatility this morning. However, we leave the "trend" with the bear camp, but given that bond and note prices are close to the middle of recent trading ranges, we advise selling rallies just above this week's initial high.

NEW RECOMMENDATIONS: None.

PREVIOUS RECOMMENDATIONS: None.

BONDS TECHNICAL OUTLOOK: Note: Data is collected using the closing values of the previous session and calculations and analysis are run at the same time. Technical commentary is based solely on statistical indicators and does not necessarily correspond to any fundamental analysis that may appear elsewhere in this report. Data sources can and do produce bad ticks that can cause computation errors. Please verify before use.

BONDS (MAR) 12/23/2020: The daily stochastics gave a bullish indicator with a crossover up. Positive momentum studies in the neutral zone will tend to reinforce higher price action. The market's short-term trend is positive on the close above the 9-day moving average. It is a mildly bullish indicator that the market closed over the pivot swing number. The near-term upside objective is at 173-170. The next area of resistance is around 173- 100 and 173-170, while 1st support hits today at 172-220 and below there at 172-080.

10 YR TREASURY NOTES (MAR) 12/23/2020: The market now above the 40-day moving average suggests the longer-term trend has turned up. The daily stochastics have crossed over up which is a bullish indication. Momentum studies are rising from mid-range, which could accelerate a move higher if resistance levels are penetrated. The cross over and close above the 18-day moving average indicates the intermediate-term trend has turned up. With the close higher than the pivot swing number, the market is in a slightly bullish posture. The next upside objective is 138-045. The next area of resistance is around 138-020 and 138-045, while 1st support hits today at 137-270 and below there at 137-220.

STOCKS COMMENTARY 12/23/20

Apparently stimulus problems have not discouraged investors

OVERNIGHT CHANGES THROUGH 3:16 AM (CT): S&P 500 +12

Global equity markets overnight were higher with the-exception-of the FTSE 100 which saw a very marginal decline. Going forward we see tailwinds from the positive international equity market action overnight but seeing a pre-Christmas rally has become somewhat problematic with the President's demand for higher direct payments in a package that was thought to have been agreed-upon already. While the equity markets have not been overly sensitive to US scheduled data recently an avalanche of scheduled data today following signs of softening of US data over the last month, could be problematic for the bull camp. Earnings announcements will include Paychex before the Wall Street opening.

S&P 500: With a range down extension clearly rejected overnight, it-would-appear that the bull camp has regained its footing. While not usually a significant earnings release, today's Paychex report could be-seen-as a leading indicator of the state of the US jobs market. However, even if Paychex results are positive, the bull camp will should remain on guard through a heavy wave of US scheduled data. In the end, the bull camp would appear to be poised to return to the highs and a setback off scheduled data or from Washington antics should be viewed as a buying opportunity (3664).

Other US Indexes: While the Dow action this morning is not as impressive (in its rejection of the overnight low) as was seen in the S&P it would appear as if the March contract found value on the charts around 29,875. Unfortunately for the bull camp large cap stocks need quick movement on-the-subject of direct payments and payroll loans to pull in a fresh wave of investors and in turn send prices back to all-time highs. However, American Airlines announced it will begin to return some furloughed workers because of the aid package and we expect some preholiday investor interest to flow over the coming 36 hours. In conclusion, we expect support to be respected above an uptrend channel support line of 29,457. As for the NASDAQ it remains very close to all-time highs and is likely to make new highs in the coming sessions as electronic commerce reaches a fever pitch ahead of the holiday. In fact, we expect to see anecdotal headlines touting the surge in sales and that could be the force that ignites of pre-holiday euphoria rally. Uptrend channel/buying support in the March NASDAQ is seen at 12,533.

TODAY'S MARKET IDEAS: We leave the edge with the bull camp and suggest traders by corrective action through the US scheduled data window this morning.

NEW RECOMMENDATIONS: None.

PREVIOUS RECOMMENDATIONS: None.

STOCKS TECHNICAL OUTLOOK: Note: Data is collected using the closing values of the previous session and calculations and analysis are run at the same time. Technical commentary is based solely on statistical indicators and does not necessarily correspond to any fundamental analysis that may appear elsewhere in this report. Data sources can and do produce bad ticks that can cause computation errors. Please verify before use.

S&P E-MINI (MAR) 12/23/2020: Daily stochastics turning lower from overbought levels is bearish and will tend to reinforce a downside break especially if near term support is penetrated. A positive signal for trend short-term was given on a close over the 9-bar moving average. The close over the pivot swing is a somewhat positive setup. The next downside target is 3651.69. The next area of resistance is around 3702.12 and 3714.18, while 1st support hits today at 3670.88 and below there at 3651.69.

MINI-DOW (MAR) 12/23/2020: The daily stochastics gave a bearish indicator with a crossover down. Stochastics turning bearish at overbought levels will tend to support lower prices if support levels are broken. The intermediate trend has turned down with the cross over back below the 18-day moving average. The market's close below the pivot swing number is a mildly negative setup. The next downside objective is 29694. The next area of resistance is around 30049 and 30235, while 1st support hits today at 29779 and below there at 29694.

E-MINI NASDAQ (MAR) 12/23/2020: Studies are showing positive momentum but are now in overbought territory, so some caution is warranted. A positive signal for trend short-term was given on a close over the 9-bar moving average. The close over the pivot swing is a somewhat positive setup. The near-term upside objective is at 12859.75. The next area of resistance is around 12793.00 and 12859.75, while 1st support hits today at 12626.50 and below there at 12526.75.

DAILY TECHNICAL STATISTICS 14 DAY 14 DAY 9 DAY 14 DAY SLOW SLOW 4 DAY 9 DAY 18 DAY 45 DAY 60 DAY CLOSE RSI RSI STOCH D STOCH K M AVG M AVG M AVG M AVG M AVG FINANCIAL COMPLEX USAAH21 173-000 49.83 48.10 41.89 44.15 172.54 172.98 173.01 173.62 174.34 TYAAH21 137-305 54.62 51.70 61.02 61.95 137.83 137.90 137.81 137.89 138.12 EPH21 3686.50 54.91 58.94 79.60 74.94 3697.88 3680.86 3670.25 3551.91 3517.03 ENQH21 12709.75 67.37 65.45 86.10 86.87 12725.06 12600.53 12524.06 12043.46 11937.80 YMH21 29914 50.64 55.60 80.71 75.19 30125.25 30044.89 29945.56 29001.58 28752.27 Calculations based on previous session. Data collected 12/22/2020 Data sources can & do produce bad ticks. Verify before use.

DAILY SWING STATISTICS Contract Support 2 Support 1 Pivot Resist 1 Resist 2 FINANCIAL COMPLEX USAAH21 Bonds 172-070 172-210 172-280 173-100 173-170 TYAAH21 10 Yr Treasury Notes 137-215 137-265 137-290 138-020 138-045 EPH21 S&P E-Mini 3651.68 3670.87 3682.93 3702.12 3714.18 ENQH21 E-Mini NASDAQ 12526.75 12626.50 12693.25 12793.00 12859.75 YMH21 Mini-Dow 29693 29778 29964 30049 30235 Calculations based on previous session. Data collected 12/22/2020 Data sources can & do produce bad ticks. Verify before use.

CURRENCIES COMMENTARY 12/23/20

A lack of definitive direction today swings in both directions

OVERNIGHT CHANGES THROUGH 3:16 AM (CT): US DOLLAR -261, YEN +24, SWISS +14, CA DOLLAR +160

Upcoming International Reports (all times CT) 12/23 2-Yr note Auction 12/23 France Producer Price Index 1:45 AM 12/23 Canadian GDP (By Industry) 7:30 AM 12/23 Personal Income 7:30 AM 12/23 New Home Sales 9:00 AM 12/23 EIA Energy Stocks 9:30 AM 12/23 Japan BOJ Minutes 6:50 PM 12/24 4-Week BILL Auction 12/24 Japan Construction Orders 12:00 AM 12/24 Japan Housing Starts 12:00 AM 12/24 Adv Durable Goods 7:30 AM 12/24 Canadian Building Permits 7:30 AM 12/24 Jobless Claims 7:30 AM 12/24 EIA Gas Storage 9:30 AM 12/24 Japan Unemployment Rate 5:30 PM 12/24 Japan Retail Sales 5:50 PM

DOLLAR: In retrospect, it is possible that the dollar rally yesterday was the result of a jump in a quarterly PCE index reading. However, we see initial resistance at a double high on the charts at 90.62 today with the best chance of taking out that level on the upside seen in the aftermath of the 7:30 data window. Like the treasury markets we see the dollar ultimately remaining in a downtrend but suggest traders restrict fresh sales to levels up near downtrend channel resistance which is seen in the dollar index this morning at 90.74.

EURO: While the euro technically failed at yesterday's low overnight, it has rejected that action despite the potential derailment of what was thought to be a done US stimulus deal. However, it is possible the euro is drafting support from "hope" of a last-ditch effort to carve out some form of exit deal. On the other hand, without some abatement in the spread of the infections in Europe and the US, we see the euro remaining vulnerable to a retest and possible failure of this week's low down at 1.2158 in the coming sessions.

YEN: While Japanese domestic numbers have not been a key driving force in the currency, a jump in October Japanese leading economic index readings should help the Yen respect key support this morning at 96.62. While we see the uptrend continuing in the Yen, we would suggest traders wait for a setback to uptrend channel support at 96.21 today and to 96.26 on Thursday before establishing fresh longs.

SWISS: While the Swiss has certainly corrected a moderate amount of the extreme overbought condition from the massive December rally of 340 points fundamentals this morning favor the bear camp with a slight hitch in US stimulus negotiations and the potential for slack US scheduled data potentially undermining global economic sentiment.

POUND: While the Pound has rejected the depths of the massive washout on Monday off comments that negotiators are poised once again to work hard to achieve a last-minute deal, there are reports that "serious issues" have yet to be solved. Furthermore, logistical logjams in the UK and other mechanical trade problems, combined with a "trend" of negative virus news leaves favor with the bear camp.

CANADIAN DOLLAR: While the Canadian is certainly short-term technically oversold with the declines of the prior 4 trading sessions, it is possible that today's Canadian GDP reading will disappoint at-the-same time that US scheduled data prompts flows toward the US dollar. Therefore, we see the bias pointing down but suggest aggressive traders wait to sell a rally in the March Canadian up at 77.78.

TODAY'S MARKET IDEAS: Risk-off early should benefit the Dollar before the afternoon presents a reversal of the morning patterns.

NEW RECOMMENDATIONS: None.

PREVIOUS RECOMMENDATIONS: None.

CURRENCIES TECHNICAL OUTLOOK: Note: Data is collected using the closing values of the previous session and calculations and analysis are run at the same time. Technical commentary is based solely on statistical indicators and does not necessarily correspond to any fundamental analysis that may appear elsewhere in this report. Data sources can and do produce bad ticks that can cause computation errors. Please verify before use.

US DOLLAR (MAR) 12/23/2020: The crossover up in the daily stochastics is a bullish signal. Rising from oversold levels, daily momentum studies would support higher prices, especially on a close above resistance. The market's close above the 9-day moving average suggests the short-term trend remains positive. A positive setup occurred with the close over the 1st swing resistance. The next upside objective is 91.07. Consider buying pull-backs since daily studies are bullish. The next area of resistance is around 90.85 and 91.07, while 1st support hits today at 90.18 and below there at 89.73.

EURO (MAR) 12/23/2020: The daily stochastics have crossed over down which is a bearish indication. Daily stochastics turning lower from overbought levels is bearish and will tend to reinforce a downside break especially if near term support is penetrated. The market's close below the 9-day moving average is an indication the short- term trend remains negative. The daily closing price reversal down is a negative indicator for prices. The close below the 1st swing support could weigh on the market. The next downside objective is 121.1213. Bearish daily studies indicate selling minor rallies this session. The next area of resistance is around 122.5025 and 123.2312, while 1st support hits today at 121.4475 and below there at 121.1213.

JAPANESE YEN (MAR) 12/23/2020: The daily stochastics gave a bearish indicator with a crossover down. Momentum studies trending lower at mid-range could accelerate a price break if support levels are broken. A positive signal for trend short-term was given on a close over the 9-bar moving average. It is a slightly negative indicator that the close was lower than the pivot swing number. The next downside objective is now at 96.30. The next area of resistance is around 96.88 and 97.15, while 1st support hits today at 96.46 and below there at 96.30.

SWISS (MAR) 12/23/2020: Momentum studies trending lower from overbought levels is a bearish indicator and would tend to reinforce lower price action. The market's short-term trend is negative as the close remains below the 9-day moving average. The close below the 1st swing support could weigh on the market. The next downside target is 112.17. Short-term indicators on the defensive. Consider selling an intraday bounce. The next area of resistance is around 113.17 and 113.66, while 1st support hits today at 112.43 and below there at 112.17.

CANADIAN DOLLAR (MAR) 12/23/2020: Momentum studies trending lower at mid-range should accelerate a move lower if support levels are taken out. The close under the 18-day moving average indicates the intermediate-term trend could be turning down. The market's close below the pivot swing number is a mildly negative setup. The next downside objective is now at 77.07. The next area of resistance is around 77.81 and 78.13, while 1st support hits today at 77.28 and below there at 77.07.

BRITISH POUND (MAR) 12/23/2020: A bearish signal was triggered on a crossover down in the daily stochastics. Stochastics trending lower at midrange will tend to reinforce a move lower especially if support levels are taken out. The intermediate trend has turned down with the cross over back below the 18-day moving average. It is a slightly negative indicator that the close was under the swing pivot. The next downside target is now at 132.27. The next area of resistance is around 134.66 and 135.58, while 1st support hits today at 133.00 and below there at 132.27.

DAILY TECHNICAL STATISTICS 14 DAY 14 DAY 9 DAY 14 DAY SLOW SLOW 4 DAY 9 DAY 18 DAY 45 DAY 60 DAY CLOSE RSI RSI STOCH D STOCH K M AVG M AVG M AVG M AVG M AVG CURRENCY COMPLEX DXAH21 90.51 44.99 40.27 17.76 25.79 90.04 90.36 90.72 91.96 92.35 JYAH21 96.67 56.43 56.78 71.87 69.65 96.92 96.62 96.38 96.05 95.77 EU6H21 121.9750 56.25 60.30 88.12 81.54 122.66 122.18 121.60 119.71 119.27 BPAH21 133.83 47.99 51.58 66.02 62.99 134.91 134.19 134.09 132.52 131.77 CAAH21 77.54 40.57 48.50 72.54 55.96 78.10 78.33 78.02 76.96 76.63 SFAH21 112.80 52.66 57.89 86.18 78.82 113.24 113.14 112.60 111.18 110.81 DAAH21 75.41 57.48 62.08 86.78 80.12 0.76 0.76 0.75 0.73 0.73 Calculations based on previous session. Data collected 12/22/2020 Data sources can & do produce bad ticks. Verify before use.

DAILY SWING STATISTICS Contract Support 2 Support 1 Pivot Resist 1 Resist 2 CURRENCY COMPLEX DXAH21 US Dollar 89.73 90.18 90.40 90.85 91.07 JYAH21 Japanese Yen 96.29 96.45 96.72 96.88 97.15 EU6H21 Euro 121.1212 121.4475 122.1762 122.5025 123.2312 BPAH21 British Pound 132.26 133.00 133.92 134.66 135.58 CAAH21 Canadian Dollar 77.06 77.27 77.59 77.81 78.13 SFAH21 Swiss 112.16 112.42 112.91 113.17 113.66 DAAH21 Australian Dollar 74.80 75.05 75.52 75.77 76.24 Calculations based on previous session. Data collected 12/22/2020 Data sources can & do produce bad ticks. Verify before use.

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