E-mini S&P (March)
Yesterday’s close: Settled at 3345.25, up 10.25
Fundamentals: It’s Jobs Friday and Nonfarm Payroll is due at 7:30 am CT. U.S benchmarks are incurring a healthy downtick ahead of the report. Some selling pressures are due to the mounting Coronavirus numbers, but others come as Germany’s economic data echoes a recession. The Coronavirus death toll has surpassed 600 and the number of confirmed cases has topped 31,000. These increases have been tamer over the last two days, however, some are warning of another heightened wave. On Monday, Germany’s Manufacturing PMI has revised a touch higher, this brought relief, but the read has been in a consistent contraction for a year now. Factory Orders fell sharply yesterday by 2.1% yesterday. This morning, Industrial Production fell by 3.5% while Imports and Exports were also dismal. What we are getting at is, where the data had begun to show a light at the end of the tunnel, such is dissipating. Traders should keep a pulse on the German DAX which is down 0.6% this morning and struggling at the record level of 13,500.
This is a great segue into today’s Nonfarm Payroll report and our narrative that this market needs to make a transition from Fed easing dependence to better data dependence. In an interview with Yahoo! Finance at the close yesterday, Bill Baruch hit on a number of topics including how a strong jobs report will fuel the next leg higher. Both ISM Manufacturing and Non-Manufacturing beat expectations this week and not-so-coincidentally stocks set fresh record highs. Analysts expect that 165,000 jobs were created in January. Wednesday’s private ADP survey posted a massive 291,000 and yes fueled stocks higher. Wage Growth is not as important as it once was. Believe it or not, there was a time long, long ago that the Fed wanted to raise rates if consumers were making more money. Expectations are for an increase of Average Hourly Earnings by 0.3%. Strong data will equate to a strong market today barring any jaw-dropping headlines.
Technicals: Price action stayed contained by key resistance at 3344.50-3346 through yesterday’s intraday session, but more importantly provided trading opportunities against major three-star support at 3332.50-3337.50. For now, the tape is consolidating roughly within this range ahead of a more fundamental session. The NQ has traded very similarly and key resistance at 9468.25 has kept rally attempts in-check, such as last night poke to new highs. The bulls have responded to major three-star support at 9355-9381.50 and the tape remains extremely bullish above here. Our momentum indicators are sideways but if price action remains at the lower end of the day’s range through the first hour of the cash open we would likely begin to see them point down; currently they come in at 3342 for the S&P and 9434 in the NQ.
Resistance: 3344.50-3346**, 3353.25***, 3385.25***
Support: 3332.50-3337.50***, 3311.75*, 3299.50-3305.25***
Resistance: 9468.25**, 9500-9510.75***
Support: 9355-9381.50***, 9317.75**, 9263.5-9287.25***