Last week’s close: Settled at 2989.50, down 18.50 on Friday and down 19.00 on the week
Fundamentals: U.S benchmarks are working off the worst levels of the session; a two-sided tape, one that ripped higher on the open due to positive jawboning from both the U.S and China on trade before bleak European Flash PMIs quickly eroded the better sentiment. Lower level Chinese delegates traveled to Washington last week to lay the groundwork with their counterparts before higher-level meetings are expected to take place in the coming weeks. Through the middle part of the week, it was announced the Chinese delegation would travel to Montana and Nebraska for a farm visit. That visit was canceled Friday leading to speculation trade talks were quickly turning sour, but it was later reported the U.S requested the cancellation. Both sides worked to restore confidence ahead of last night’s open which led to a strong tape before French, German and Eurozone Flash PMI data. Not a single component came in better than expected. Most importantly, German Manufacturing came in at 41.4, the worst contraction since July 2009 and furthermore, the Composite read signaled a contraction for the first time since May 2013. Today, we look to U.S Flash PMI data at 8:45 am CT. Although neither Manufacturing nor Services are expected to be anywhere near robust, lingering just above the contraction expansion line, the Composite is expected to contract for the first time since November 2013. ECB President Mario Draghi speaks at 10:00 am CT. St. Louis Fed President Bullard is due to speak at noon CT and San Francisco Fed President Daly is on the docket for 1:30 pm CT.
Technicals: After multiple tests at record highs and major three-star resistance last week, the S&P failed to hold ground and breakout. Price action slipped sharply late in the session but major three-star resistance at 2975-2980.75 has buoyed the tape thus far. We have a bit of an air pocket below here with support not coming in until previous swing lows at 2957.25-2958.75. However, we are really eyeing major three-star support and the September 4th gap at 2938.50-2943.75 upon such a move and close below 2975-2980.75. To the upside, major three-star resistance at 3008.50 is still a crucial barrier intraday and more importantly on a closing basis as last night’s spike high before failing was 3008.25. As for the NQ, its range has been defined by major three-star support and resistance at 7798.25-7805 and 7908.25-7918. Broader volatility slipped out of the NQ last week and even on rallies, it failed to settle out above this resistance; look for it to become more of a leader upon closing outside of this range.
Resistance: 2999.25*, 3008.50***, 3013.75*, 3027.25-3032.50***, 3044-3057.75***
Support: 2975-2980.75***, 2957.25-2958.75**, 2938.50-2943.75***
Resistance: 7908.25-7918***, 7960.25-7963.25***, 8014.50-8037***, 8072***
Support: 7798.25-7805***, 7739-7761.50**, 7687**, 7580.75-7612.50***