A Soft End to the Trading Day for U.S. Equity Futures

Initial Jobless Claims and Philly Fed Manufacturing out today
Powell conclude 2 days of testimony
Technical perspective
Stock Market Update for Traders

Stock Market Update for Traders

Wednesday's Close

E-mini S&P 500 Futures (September): Settled at 3107, down 11.25

E-mini Nasdaq-100 Futures (September): Settled at 9983, up 21.50

After a soft finish yesterday, U.S. benchmarks trekked lower last night and found strong major 3-star support. Price action has ping-ponged around ahead of the U.S. session, Initial Jobless Claims and Philly Fed Manufacturing. Central banks are grabbing headlines this morning; the ECB unleashed a record cash injection, the Swiss National Bank promised to fight Franc strength and the Bank of England announced a £100 billion stimulus program. The ECB ramped up their TLTRO program and banks borrowed 1.3 trillion Euros at a rate of -1%. However, the operation only netted to add about 550-billion Euros. Banks across Europe are lower, but so are risk-assets broadly. 

Federal Reserve Chair Jerome Powell concluded his 2-day semiannual Congressional testimony yesterday and markets seemed to key off his emphasis that Congress must not back down from supporting individuals and small businesses through fiscal policy. The strength did not last through the session as virus concerns cast a cloud of uncertainly on risk-sentiment at these elevated levels. Additionally, a Uighur Rights Bill signed by President Trump yesterday to punish China further deteriorates relations between the two nations while the Phase-One trade deal and China’s treatment of Hong Kong have also caused friction. 

Technicals

We have held a cautiously bullish bias this week with major 3-star support in the S&P 500 at 3062-3072.25 being our line in the sand. Another test last night held before price action elevated. However, that overnight strength is dissipating into this morning and brings a concern that a third test may not hold. However, if this level proves to hold through today, there is a constructive bull-flag pattern in the S&P 500 and one that could ultimately power it back to recent swing highs at a minimum.

Weighing the two outcomes, a violation of support or a hold and bull-flag breakout, we want to emphasis that we will only continue to hold this cautiously bullish bias as long as support holds. Our momentum indicator comes in at 3105 today and price action must regain this level or the tape remains susceptible to waves of selling that would crack through that strong support. That is your roadmap. As for the Nasdaq-100, our pivot comes in at 9978-9983 and above here there is a path of least resistance to trade higher. First key support held overnight, but the gap from last Wednesday’s settlement at 10,073.25 continues to be a barrier to the upside.

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