E-mini S&P (December)
Last week’s close: Settled at 3111.50, up 7.50
Fundamentals: Risk-sentiment is getting a boost to start the week after China promised to tighten intellectual property laws. IP has been a major hurdle in U.S-China trade talks and what we’ve referred to as the substance. China has been extremely reluctant to include it in negotiations, even saying at one point in October it would never be included. The nation now seems to have a change of heart announcing a plan to increase penalties on violations of intellectual property rights and is supposedly considering making it easier to hand down criminal punishments. This is a major step forward in trade talks and equity markets are responding, however, it hasn’t moved the needle on commodities such as Crude Oil and Copper. Today, the People’s Bank of China warned of financial risks and mounting economic headwinds due to trade in an annual report. Furthermore, the self-imposed deadline is nearing for Washington to implement a fresh round of tariffs on December 15th. Considering the smoke in mirrors jawboning we’ve become accustomed to over these last two years of negotiations, although for face value China’s announcement is a considerable positive, we must still take it with a grain of salt until there is further proof.
The economic calendar for this holiday week is off to a slow start. Chicago Fed National Activity worsened in October to the lowest in more than three years. Tonight, Fed Chair Powell is expected to speak at the Greater Providence Chamber of Commerce annual dinner at 6:00 pm CT and traders should look for comments on monetary policy. Tomorrow brings housing data and Consumer Confidence. The odds of a hike at the Fed’s December 11th policy meeting are holding steady at 6%.
Technicals: After a healthy consolidation to finish last week, price action is firmly higher ahead of the opening bell. For the S&P, Friday’s settlement aligns with our momentum indicator to bring support at 3111.50-3114.25 and the tape is overall bullish in the near-term as long as it can hold out above here. Furthermore, the bulls have a clear advantage in setting fresh records into the close while holding our 3118.50 pivot. Similarly, we have support in the NQ at 8280.50-8295.75 and the bulls are in the driver’s seat holding above here. Still, there are overhead resistance levels and for the S&P it aligns the rising trendline from April that the market has yet to close out above with the record high bringing major three-star resistance at 3126-3132.50.
Resistance: 3126-3132.50***, 3165-3180***
Support: 3111.50-3114.25**, 3095.50-3099***, 3086*, 3075.50-3077**, 3063.25-3069.25***
Resistance: 8330-8341.50**, 8375.50-8384.25***
Support: 8280.50-8295.75**, 8233-8250***, 8207.25-8213**, 8150-8179.25***, 8090.25-8100**