E-mini S&P Futures (September)
Yesterday’s close: Settled at 2982.25, down 30.00
Fundamentals: Expectations mounted for dovish rhetoric from the Federal Reserve yesterday and realistically those expectations became nearly impossible to meet. Fed Chair Powell and his committee cut rates by 25 basis points, but it was commented during his press conference that soured U.S benchmarks. When referring to the cut, he said, “This is a mid-cycle adjustment not the start of a long cutting cycle.” He went on further to describe a strong U.S economy where this is a precautionary measure due to uncertainties on the horizon. Probabilities for a follow-up cut in September rose from 67% to 75% before his presser. This morning, the odds for a 25-basis point cut in September have tapered back to 51.9%. Yesterday, we witnessed that black box reaction upon his comments; the S&P sunk to a low of 2958 before quickly bouncing back. With a deluge of key economic indicators upon us, the data will either force the market to make a transition or elevate the odds of future hikes. We do hold the belief that the U.S economy is attempting to turn a corner and today we look to ISM Manufacturing at 9:00 am CT before Nonfarm Payroll tomorrow. We believe that in the end, better data but not stronger than expected wage growth would ultimately lift sentiment in what should prove to be a volatile two sessions.
Technicals: In the near-term, equity markets did not finish constructively yesterday. The long-term landscape is a different story; this market is still in a strong uptrend. In fact, there are two critical levels of support in the S&P well below yesterday’s low and both can arguably define this uptrend. The first comes in at 2944.25, the gap from June 28th. In the NQ, this is 7693.75. The most important thing to know here is that a decisive move through here on strong volume can quickly become very bearish; we saw similar such moves in October and December. Below there is strong support at 2914.50-2916, this aligns multiple indicators with a previous low and a rising 100-day moving average comes in just below at 2905.75 today. Similarly, this comes in for the NQ at 7609.50-7637.75. More closely to price action, given yesterday’s damage things can quickly begin repair by holding 2969.25 and 7815.25-7842.75 intraday and on a closing basis. Major three-star resistance does come in overhead at 2989-2993.75 and 7917-7928.25; a move and closeout above here should be bullish.
Resistance: 2989-2993.75***, 3001.50-3002***, 3021.75**, 3027.75-3029.50**
Support: 2969.25***, 2955-2959.25**, 2944.25***, 2930.50**, 2914.50-2916***
Resistance: 7917-7928.25***, 8001.50-8012.50***, 8038**, 8072.50-8076.50***
Support: 7815.25-7842.75***, 7782.25**, 7743**, 7693.75***, 7609.50-7637.75***