E-mini S&P Futures (September)
Yesterday’s close: Settled at 2876, up 46.00
Fundamentals: Equity markets are off their best levels of the session and U.S Treasury yields are in the spotlight. Recession fears are being echoed loud and clear after three central banks (from New Zealand, India, and Thailand) cut rates and German Industrial Production fell sharply. There is no major U.S data on today’s economic calendar but Chicago Fed President Evans speaks at 11:00 am CT and there is a 10-year Note auction at noon CT. Yesterday, St. Louis Fed President Bullard said at least another 25 basis point cut by the Fed may be necessary but reiterated the committee should not react to daily trade war headlines by coming to the rescue with additional cuts. The odds for a 50-basis point cut in September have risen to near 30% this morning and there is more than a 50% probability the Fed cuts 75-basis points in 2019. The 10-year note yield is at the lowest level since October 2016 and trying to keep pace with those mounting expectations. Yesterday’s 3-year auction showed strong demand, if money is going into Treasuries it is coming for somewhere and ultimately brings a ceiling to stocks.
Price action turned lower after the People’s Bank of China denied rumors that it will cut borrowing and lending rates on August 10th. A stable fix to the Chinese Yuan overnight helped lift sentiment early in the session.
Technicals: Price action early yesterday in the S&P fought pullbacks that ultimately held our pivot of 2845.75-2849.50 before ramping out above major three-star resistance at 2871.50-2872.75 into the settlement. The overnight action gyrated back below here again holding the pivot before trading to a new swing high of 2889.25. Today, we will look to first key support now becoming that 2845.75-2849.50 and a move below here should open the door to major three-star support that aligns with Monday’s settlement at 2830-2832.50; if this lower level is taken out, we view the recovery as simply being a dead-cat bounce and it opens the door to strong waves of selling. Similarly, to the downside the NQ has strong support aligning multiple levels including yesterday’s low at 7437-7437.50, however, a move below 7385.25-7396.75 will accelerate the selling. To the upside, the S&P must regain 2871.50-2872.75 in order to neutralize this early weakness. The NQ did not settle out above major three-star resistance at 7540.50 yesterday and doing so today would be necessary for turning the tape bullish.
Resistance: 2889.25**, 2902.50-2907.75***, 2914.50**, 2932.50-2944.25***
Support: 2845.75-2849.50**, 2830-2832.50***, 2819.25**, 2801.25-2802.50**, 2775.75**, 2757.25***, 2722-2732.25***
Resistance: 7540.50***, 7638.25-7642.25**, 7686**, 7702.25-7735.75***
Support: 7437-7437.50**, 7385.25-7396.75***, 7356**, 7264.25**, 7199.50-7224.50***, 6936.25-6941.25****