E-mini S&P (December)
Yesterday’s close: Settled at 3091, down 23.25
Fundamentals: Risk-sentiment is snapping back this morning on trade hopes after Bloomberg reported the U.S and China as moving closer to agreeing on the amount of tariffs to roll back. While this assumingly reopens the door to an interim “Phase One” trade deal, what matters most right here, right now, is whether or not the December 15th tariffs get implemented. Although President Trump said he’s willing to delay a trade deal until after the 2020 election, it is certainly not a surprise to see the market react to the slightest bit of optimism; noise or not. Let’s not forget the budding anger in China amid new legislation passed by the U.S House of Representatives to take a more hardline stance on Xinjiang. Bill Baruch joined CNBC’s Worldwide Exchange this morning to discuss the trade landscape, “If things fall apart behind the scenes on a legislation basis, that’s where things could potentially get ugly and hurt trade on the other side.”
Major U.S benchmarks are up 0.5% ahead of the opening bell and the economic calendar boasts better than expected Services PMI from China and the Eurozone. In the U.S, we look to ADP Payrolls at 7:15 am CT, a preview ahead of Nonfarm Payroll Friday and ISM Non-Manufacturing at 9:00 am CT. October’s ISM Non-Manufacturing read beat expectations and was supportive to the market upon such. Knowing what the dismal ISM Manufacturing did on Monday look for a better or worse number today to have a directional impact of such. Fed Governor Quarles is due to speak at 9:00 am CT. Also, President Trump is expected to speak from the NATO conference at 9:30 am CT and we expect to hear comments on trade between the U.S and both China and the EU.
Technicals: Both the ES and NQ are working higher this morning but also face what seemingly should be strong overhead major three-star resistance at 3110.25-3114.25 in the S&P and at 8316-8332.50 in the NQ. With very news-driven tape, these levels matter very much, but even more on a closing basis. For instance, are they taken out and if so does it hold into the close? Given the firm tape and yesterday’s lower settlement, we now have strong major three-star support at 3091-3093 and 8233-8255 aligning multiple technical indicators. Yes, the bulls have an edge today above here and the first test here should bring a good swing buy opportunity barring any dramatic headlines. However, we will hold a slightly Bearish Bias given the damage from Monday into Tuesday morning with a more intermediate-term outlook, but if you were positioned bearishly and did not capitalize yesterday than you are certainly not following our narrative.
Resistance: 3110.25-3114.25***, 3124.25**, 3132.50-3134***, 3149.50**, 3158*, 3165-3180***
Support: 3091-3093***, 3063**, 3032.25-3042.25****