Key Drivers This Week: Earnings, China Trade and Fed Expectations on Interest Rates

U.S benchmarks slipped sharply into Friday
China said a new round of trade talks could happen soon.
Monitoring Earnings Season
Stock Market Update for Traders

Stock Market Update for Traders

E-mini S&P Futures (September)

Last week’s close: Settled at 2977, down 20.50 on Friday and down 38.50 on the week

Fundamentals: Earnings, trade and the Fed are all in focus this week and expectations will gyrate, but you must keep a pulse on these three charts, Bill Baruch joined CNBC’s Trading Nation on Friday to discuss. U.S benchmarks slipped sharply into Friday afternoon as Fed rate cut expectations for next week’s meeting were toned down. The table was really set Thursday afternoon when NY Fed President Williams said the Fed should act preemptively to battle slowing growth. Markets digested his comments as signaling a 50-basis point cut and the S&P rallied nearly 1%. The NY Fed released a statement clarifying his speech as academic and not an imminent policy action. Still, the S&P held ground at or near its spike high through the opening bell Friday. As the session unfolded, rate cut odds continued to dissipate and Iran seized a British tanker. Considering all, it was not surprising to see selling ahead of the busiest earnings week of the quarter.

U.S benchmarks lost the tailwind from Williams’ comments just as rumblings of a Wall Street Journal article made the rounds Friday afternoon; ‘Fed Officials Signal Quarter-Point Rate Cut Likely at July Meeting’. Headlined by Williams, Fed Chair Powell and Vice Chair Clarida, this also exuded what was known to be hawkish comments from Boston Fed President Rosengren, a 2019 voter. In a CNBC interview, he noted, “the economy is doing perfectly well without easing”. What was a 70% probability of a 50-basis point cut Thursday evening has now become a 25%

Price action is stable this morning after China said a new round of trade talks could happen soon. Both sides have seemingly taken steps to appease the other. However, tensions with Iran remain high and this could erode sentiment in the near-term. Today’s earnings calendar doesn’t boast the big names, although Halliburton does release ahead of the bell. This week, we look to Amazon, Alphabet, Facebook, Starbucks, 3M, Visa and much more. 

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Technicals: Both the S&P and NQ traded to new lows on the week right into the electronic close. Today’s session has held those lows that align perfectly without major three-star supports at 2963-2969.25 and 7821-7851.75. Given today’s positive workings, this provides a nice line in the sand early in the week. Above here, the bulls can quickly regain control and arguably still are in the driver’s seat. In fact, a move below here is not really even bearish, we have major three-star supports at 2944.24 and 7693.75 that would be tremendous buying opportunities. However, what you do not want to see this week is a move below those two levels with strong volume; that would quickly create panic. The tape is right at our pivot levels 2984.75 and 7878.50; these are the .382 retracement levels from Friday’s low back to Friday’s high; a failure to hold here would neutralize the recovery. A closeout above 2986.25-2989.50 will help the bulls regain the driver’s seat while a move above 7917.25-7933 in the NQ is bullish. As we noted here last week; the tape can be traded from both sides.

Bias: Neutral/Bullish

Resistance: 2986.25-2989.50**, 2994.25*, 3004.75**, 3012.50-3015.50***, 3023.75**, 3045-3057.75***

Pivot: 2984.75

Support: 2975.75-2977**, 2963-2969.25***, 2944.25***


NQ (September)

Resistance: 7898**, 7917.25-7933***, 7993-8000***, 8012.75**, 8076.50***

Pivot: 7878.50

Support: 7821-7851.75***, 7805.50*, 7743-7759.25**, 7693.75***

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