E-mini S&P Futures (September)
Yesterday’s close: Settled at 2978.50, up 0.25
Fundamentals: U.S benchmarks are on the positive side of flat this morning with Thursday’s ECB interest rate decision and U.S CPI data looming. First, price action spiked late last night after China published a list of products that won’t be subject to the 25% tariff. Unfortunately, these exemptions do not include agricultural products and are limited to the likes of feed for livestock and fish, grease and lubricating oil, and a range of pharmaceuticals among other things. This will go into effect on September 17th and last for a year.
The tape was broadly soft through the first half of yesterday’s session on reports ECB President Mario Draghi won’t announce as heavy dose a dose of stimulus as anticipated. It is a foregone conclusion that the ECB will cut rates deeper into negative by 10 basis points to -0.50%, but there are odds showing we could see more. Additionally, the ECB is expected to announce a fresh wave of Quantitative Easing. If the ECB underdelivers, investors may not feel it’s enough to stave off deteriorating conditions.
Offsetting the weakness was National Security Advisor Bolton being pushed out of the White House. Bolton, a long-know hawk, was the aggressive voice in President Trump’s ear towards both China and Iran. His exit has been received as favorable to stocks. All in all, the market is right where it finished Friday and traders and investors alike await tomorrow’s news. The less closely watched PPI data is due at 7:30 am CT and Wholesales Inventories are out at 9:00 am CT.
Technicals: Price action in both the S&P and NQ broke below our major three-star support levels that help define the immediacy of the current uptrend. However, neither index closed below here, and this has allowed a technical wave higher for two reasons; shorts got trapped who were forced to cover and now within the underlying uptrend there is a developing bull flag that bulls are now feasting their eyes on. The wave lower, though it broke major three-star support, did hold key support levels for both indices. Through the cash open, traders should keep a pulse on our pivot in the S&P at 2978.25-2980.75 and minor resistance in the NQ at 7830.75-7834.75; sustained price action above both of these is ultimately likely to encourage additional buying. Still, there is overhead resistance at the swing highs, and this will prove to be a headwind without a true fundamental catalyst ahead of tomorrow. Lastly, with price action rangebound since last Thursday’s spike, this tends to tighten up the levels. Although our momentum indicator in the S&P is 2975.25, only slightly below our pivot, they each hold their own significance and continued price action below 2975.25 will open the door to waves of profit-taking ahead of tomorrow. Our momentum indicator in the NQ aligns with major three-star support at 7789.50-7808 and this will act as the same.
Resistance: 2991.50**, 3004***
Support: 2975.25*, 2967.25-2969.75**, 2957.25-2958**, 2952.25*, 2938.50-2946.50***
Resistance: 7830.75-7834.75**, 7887-7895**, 7960.25-7963.25***, 8014.50***
Support: 7789.50-7808***, 7751.50**, 7683-7722.75***, 7599.25-7617.75***