E-mini S&P Futures (September)
Yesterday’s close: Settled at 2972, up 33.50
Fundamentals: U.S benchmarks are looking to secure a weekly breakout from a month-long range. Standing in the way is Nonfarm Payroll at 7:30 am CT and a speech from Fed Chair Powell at 11:30. Risk-sentiment was boosted yesterday as the U.S and China jawboned an October meeting and both ISM Non-Manufacturing and Factory Orders came in much better than expected. Our narrative here has been this market wants to see better data whereas recessionary-like numbers would encourage selling. At the same time, stronger inflationary reads will hinder the Federal Reserve’s ability to cut rates. A 25-basis point cut in two weeks is now not fully priced-in with only a 91.2% probability. The White House is not wearing blinders to the fact sentiment is mounting that a U.S and China trade deal would bring a sell the news event. Therefore, there is a reason to believe President Trump is pressuring the Federal Reserve to cut rates and only looking to make a deal once he gets 75-basis points worth of cuts; we are only one-third of the way there now. This would mean a stronger than expected Nonfarm Payroll report today, particularly wage growth, would not only hinder the Fed but a trade deal as well. All in all, if a 25-basis point cut in two weeks continues to become priced-out, the market will trade lower and we will see what Fed Chair Powell has to say about that today.
Average Hourly Earnings are expected to come in at +0.3% MoM and +3.1% annually. Job growth is expected at 160,000 in the month of August.
Technicals: Price action surged through our next major three-star level of resistance yesterday at 2969.75-2975.25 but could not settle out above there. Today’s session low comes in at this level and it will now act as strong support to define this fresh bull leg. Still, there is major three-star resistance overhead at 3004. As for the NQ, we said here yesterday that a closeout above 7789.50-7808 would pave a path of least resistance to 7960.25-7963.25. The tape has stayed very strong and is trading out above resistance levels ahead of here. Our momentum indicator comes in this morning at 7856.50 and this aligns with that previous key resistance at 7865.25-7866.75; as long as the NQ holds out above here, the bulls are unquestionably in the driver’s seat.
Support: 2969.75-2975.25***, 2952-2958**, 2938.50-2946.50***
Resistance: 7960.25-7963.25***, 8014.50***
Support: 7789.50-7808***, 7751.50**, 7690.75-7722.75***, 7599.25-7617.75***