E-mini S&P (December)
Yesterday’s close: Settled at 3134.50, down 11.50
Fundamentals: Major U.S benchmarks have pulled back as much as 1% amid a healthy consolidation in front of a gauntlet of events. U.S and China trade relations are the underlying catalyst but there are a number of themes from Wednesday’s Fed meeting to economic data and drama in Washington that have kept Friday’s post-Nonfarm rally in check. In fact, simply coming out of the weekend has many times poured cold water over a Nonfarm melt-up. Is this surprising to us? Certainly not. Although we would not want to pick a top, we cautioned yesterday for bulls to be patient saying it is not uncommon to see such and guess what? Major three-star support was achieved perfectly early this morning.
We have insisted for a month now that what matters most to this market is the December 15th tariffs. Although achieving an interim “Phase One” trade deal is important, it takes a back seat to an announcement of fresh tariffs. Today, the market has gotten what it wants, news that the December 15th tariffs. Barring any stipulations yet to make headlines, the bulls are handedly in the driver’s seat and eyeing fresh records. Let’s also not forget the first half of the session preceding a Fed meeting can typically pave a path of least resistance higher – the Fed Drift.
Technicals: Major three-star support was achieved at 3117.75-3119.75 in the S&P and 8309-8320.75 in the NQ. Give such coupled with the December 15th tariff news, there is no reason, for now, to not think U.S benchmarks markets won't gasp for air above the previous record highs. In our typical fashion, we do not want to encourage our clients to blindly chase price action. Overhead, there is now trend line resistance associated with the record, Friday’s high and the high on the open yesterday that comes in at 3147.50-3151. The first key support in the S&P held beautifully intraday yesterday at 3131.75-3132.50. Remember, the intraday chart does not show this weak overnight action. We will look for this level to be support once again and now it is a .382 from the quick spike post-tariff news; the tape is immediate-term bullish above here. For the NQ, the first key support aligns multiple levels with our momentum indicator, the tape is bullish above here. If the market falls and takes out those major three-star supports that held early this morning, this could quickly lead to precipitous selling.
Resistance: 3147.50-3151**, 3158**, 3165-3180***
Support: 3131.75-3132.50**, 3117.75-3119.75***, 3100.50-3103.25**, 3088.50-3091***
Resistance: 8400-8427.25**, 8453-8458.75**, 8500-8527***
Support: 8346.75-8368**, 8297-8309.25***, 8255-8262.50**, 8161.25-8168.25***