Strong Retail Sales, Yields Rise, Stocks Lower

Comments from Trump on trade with China that sent stocks lower
Strong Retail Sales data on heels of better CPI
Fed mulls rate moves - Evans wants 50 basis point cut
Stock Market Update for Traders

Stock Market Update for Traders

E-mini S&P Futures (September)

Yesterday’s close: Settled at 3007, down 10.25

Fundamentals: U.S benchmarks finished lower yesterday. Overhead technical resistance and strong Retail Sales data brought an early ceiling to price action. Retail Sales has trended better since February and coming on the heels of stronger CPI, solid job growth and less-worse Manufacturing it begins to raise longer term doubts to the path of Federal Reserve rate cuts already priced into the market.

Fed Chair Powell spoke and hit on many of the same points we heard last week at his Congressional testimony; uncertainties due to the trade war, debt ceiling and inflation persistently below the Fed’s target. Right now, those trade uncertainties are becoming the leading catalyst for the Fed to move later this month.

In fact, it was comments from President Trump yesterday on trade with China that sent stocks lower. After positive developments were reported by U.S Treasury Secretary Mnuchin early in the session, President Trump said there is still a long way to go and he could add tariffs on the other $325 billion of Chinese goods. Powell’s comments on the debt ceiling were also timely, although it does not come into play until September, Congress takes summer break at the end of the month and does not return until the week after Labor Day.

We are diving headfirst into earnings season. Bank of America reports ahead of the bell today and after a more or less dull reaction to bank earnings Monday and Tuesday. Earnings from Netflix, IBM, Alcoa and eBay after the bell promise to bring some excitement. Building Permits and Housing Starts are due at 7:30 am CT, Crude inventory data is out at 9:30 am CT and the Fed releases their Beige Book at 1:00 pm CT.

Technicals: Yesterday, both the S&P and NQ settled in the red for the week. This pullback has brought tradable opportunities and expecting such is exactly why we reduced our Bullish Bias yesterday morning. Price action is overall holding ground and major three-star support in each has worked perfectly to buoy the tape at 3004-3006 and 7902.75-7928.75. We are not increasing our Bias from more Neutral as the market is exuding a bit of exhaustion, however, it is still in breakout territory. If it cannot respond early at these major three-star support levels though it is highly likely we see a move down to the next shelf of support. Traders should approach things looking from both sides.

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Bias: Neutral/Bullish

Resistance: 3023.75**, 3045-3057.75***

Pivot: 3012.50-3015.50

Support: 3004-3006***, 2997.50*, 2992.50-2993.25**, 2981.50-2986.25***

 

NQ (September)

Resistance: 7993-8000***, 8012.75**, 8076.50***

Pivot: 7960

Support: 7902.75-7928.75***, 7872.50-7879.50**, 7834.25-7845.25***, 7803.50-7804*, 7743**, 7693.75***

 

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Blue Line Futures, is a leading futures and commodities brokerage firm offering discounted personalized service and futures and commodity research.