E-mini S&P Futures (December)
Fundamentals: Price action continues to run in circles on the ever-revolving U.S and China trade headlines. The sentiment was roiled early last night on reports of no progress between deputy level negotiators and that China was planning on heading home early. It’s a different story at the onset of U.S hours with price action clawing back losses on renewed hopes of an interim or partial deal, that Washington would suspend a scheduled increase in tariffs and Chinese delegates are planning to stay the full schedule through Friday.
Talk this week of the Federal Reserve expanding its balance sheet have had little impact on the market with much of the focus being on U.S and China trade talks. It also exemplifies how those expectations were already set forth and seen in action when the overnight lending rate surged to 10%; as we explained here yesterday, with the Dollar underpinned by necessity around the globe, the Fed must naturally purchase more government assets. At the same time, the odds of a rate cut later this month have mounted to 85% and two more 25-basis point cuts this year sit at a 45% probability. The Fed’s flexibility in doing such also relies on inflation remaining tame. Earlier this week MoM PPI data from both the headline and Core reads contracted. CPI is watched much, much more closely though and today read at 7:30 am CT will certainly set a tone after steady strength over the last three months. Weekly Jobless Claims are also due at 7:30, Minneapolis Fed President Kashkari speaks at 11:15 am CT, there is a 30-year Bond auction at noon and Cleveland Fed President Mester speaks at 4:30 pm.
Technicals: Price action broke to a new low on the week in both the S&P and NQ but has steadily recovered since. Major three-star support at 2892.50-2896 in the S&P and 7598.50-7622 in the NQ were both briefly violated and will remain pivotal intraday; sustained price action below here will encourage additional waves of selling. The recovery has been met by the first key resistance aligning with yesterday’s settlement in the S&P ... Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook, actionable bias and proprietary levels for the S&P, NQ, Crude Oil, and Gold emailed out each morning.