E-mini S&P (March)
Last week’s close: Settled at 3235.50, down 23.50 on Friday and down 2.00 on the week
Fundamentals: U.S benchmarks are set to open lower due to mounting uncertainties in the Middle East. Price action digested the killing of Iranian General Soleimani Friday and quickly recovered from session lows despite Iran’s promise to retaliate. Over the weekend, the country said it would no longer abide by the 2015 nuclear deal, thus applying no limits to enriched uranium. Iraq’s Parliament on Sunday approved a resolution to expel all U.S troops from the country. President Trump responded to Iraq by threatening sanctions if troops are forced to leave. He also made it clear that the U.S will respond to any retaliation by Iran. Bloomberg reported Saudi Crown Prince Mohammed bin Salman as instructing his younger brother, Depute Defense Minister Khalid bin Salman, to travel to Washington to calm the situation.
Good news on the U.S and China trade front though as China finally confirmed it will send top negotiator Vice Premier Liu He to sign the “Phase One” trade deal. Last week, President Trump said the two sides would ink the deal on January 15th, but China was silent until now.
Amid the geopolitics, this will be a crucial week for economic data. NY Fed President Williams said yesterday that low global interest rates are here to stay. Final December Services and Composite PMI reads from Europe came in better than expected this morning. Today is quieter before Eurozone CPI, U.S Factory Orders and ISM Non-Manufacturing all tomorrow. Nonfarm Payroll is due Friday.
Technicals: Price action is sharply lower and testing key levels of support in each the S&P and NQ. First, Friday’s quick recovery moved through our resistance levels briefly but not decisively before failing to close out above them. The tape is lower from Friday’s settlement which creates major three-star resistance in the S&P at 3235.50 and in the NQ at 8810; moves into the green today that hold through close could set the table for higher price action into tomorrow’s data. Our momentum indicators come in as our Pivot levels today and sustained price action below here will keep the door open for continued waves of selling. Although price action bled through first key support levels overnight, they are working to buoy the tape. However, a failure to respond through the first hour after the open will create a direct test to our major three-star supports just below.
Resistance: 3235.50***, 3246.25-3248.50**, 3254***, 3259-3264**, 3295-3300***
Support: 3210.75-3213**, 3200-3204.25***, 3188.25-3190***, 3167.25-3175.25***
Resistance: 8810***, 8841.50-8861.75**, 8891.75-8919.75***, 8995.50***
Support: 8735.25**, 8673.50-8691.25***, 8632.50**, 8593.25***, 8521-8547.75***