E-mini S&P Futures (September)
Yesterday’s close: Settled at 2830, down 102.50
Fundamentals: U.S benchmarks suffered their worst day of the year Monday and extended losses early last night after the U.S Treasury labeled China a currency manipulator. Things have taken a sharp turn for the better though and the S&P has gained as much as 3.2% off its early evening low. In retaliation to President Trump’s threat of raising tariffs, China allowed the Yuan to float freely Sunday night, the currency lost 1.54% and hit the weakest level against the Dollar since April 2008. A stable Yuan overnight has certainly lifted sentiment. The People’s Bank of China fixed the currency stronger than expected and tightened supply; it has firmed by 0.4%.
Adding a tailwind has been broadly better economic data from around the globe since U.S ISM Non-Manufacturing whiffed yesterday. Starting with New Zealand, employment data was much better. Next, South Korea had a stronger read on Current Account; meaning they exported more goods than expected. Spending data beat in Japan and Australia had a significantly better Trade Balance. Probably the most important though was the blowout read on German Factory Orders. From the U.S this morning, we look to JOLTs Job Openings. Let’s also not forget, we are still working through earnings season and this morning there are a number of energy, pharmaceutical and food names. After the bell, all eyes will be on Disney. St. Louis Fed President Bullard speaks at 11:00 am CT. Quietly, a 3-year Note auction at noon could hold more weight than anticipated and set a tone for where risk-sentiment finds itself.
Technicals: Price action is much more healthy than last night, but it certainly is not in the clear. Traders should not take a hard-bias approach; thinking they must either be short or long but instead that this market is tradable and its ok to be wrong, just how long you stay wrong. Major three-star resistance in the S&P at 2871.50-2872.75 will be crucial early; if price action gets out above here and holds above here, the bulls will gain a near term edge targeting 2902.50-2907.25 at minimum. For the NQ, 7540.50 will act similarly. But make no mistake, the tape is not foreseeably bullish again until a close back above strong resistance levels that align with Friday’s settlement at 2932.50-2944.25 and 7702.25-7735.75. This tells us there will be increased volatility through the end of the week. Yesterday’s settlement prices will bring strong support early at 2830 in the S&P and 7385.25 in the NQ. However, a decisive move through here with strong volume will encourage additional selling.
Resistance: 2871.50-2872.75***, 2902.50-2907.25***, 2914.50**, 2932.50-2944.25***
Support: 2830***, 2801.25**, 2775.75**, 2757.25***, 2722-2732.25***
Resistance: 7493.75**, 7540.50***, 7638.25-7642.25**, 7686**, 7702.25-7735.75***
Support: 7510**, 7385.25***, 7264.25**, 7199.50-7224.50***, 6936.25-6941.25****