E-mini S&P (March)
Yesterday’s close: Settled at 3239.50, down 54.00
Fundamentals: U.S benchmarks are ping-ponging between technical levels. Investors and traders alike are showing caution awaiting further developments on the Coronavirus and it’s too soon to know the impact. We mentioned here yesterday that China accounted for one-third of the world’s GDP in 2019; industrials, commodities, and tech have all taken a hit due to the fear of demand interruptions. The death toll has now topped 100 and with more than 4,500 confirmed cases. The nation announced a travel ban to Hong Kong in the middle of the Lunar New Year. Given the holiday, regional markets have been closed and this has probably helped abate some potential panic.
Domestically, it is certainly not far-reaching to believe some pressures in U.S benchmarks have been due to Democratic presidential candidate Bernie Sanders surging in the polls for the parties nomination as well as it becoming a bit more likely witnesses could be called in the impeachment trial of President Trump. We’ve said it here before and we will say it again; the stock market likes President Trump. Markets do not like uncertainty and things are less certain in Washington.
The economic and earnings calendars are jammed packed today. At a time with a cloud of uncertainty hanging over the manufacturing sector, Durable Goods is due at 7:30 am CT. Case Shiller Home Price Index is out at 8:00 am and a pivotal Consumer Confidence read follows at 9:00 am CT. Regional Fed Manufacturing surveys have been nothing to write home about and Richmond is out at 9:00 and followed Dallas Fed Services at 9:30.
On the earnings front, 3M and Pfizer both missed estimates and are down nearly 2% premarket. United Technologies and Lockheed Martin each beat estimates. Although these are four big names among many others reporting before the bell, the big report is after the close with Apple. Starbucks, eBay, AMD and others are also due.
Technicals: Yesterday, we had a wide range of first key resistance in the S&P and this acted as a ceiling over the last 24 hours. We broke this out and major three-star resistance first comes in at 3269.75-3273. Price action is also responding against support where multiple technical indicators including a trend line from the December 3rd low now align with yesterday’s settlement to create a major three-star level and line in the sand; above here the market can begin repair. Still, even if the tape can chew through first and second resistances, Friday’s settlement brings a line in the sand defining this wave of weakness. We think there is value at, and just above major three-star support and the NQ has responded against this similar technical area at 8907.25-8925. At the same time, it also faces a tough task of overhead resistance at 9077-9081.50 and then above at 9120-9144.25. For now, we view the tape attempting to repair while holding out above our momentum indicators set as Pivots at 3250 in the S&P and 8992 in the NQ; we will hold a cautiously optimistic Bias below.
Resistance: 3260.25**, 3269.75-3273***, 3280.50**, 3293.50***, 3301.25-3304***
Support: 3235.75-3239.75***, 3204***, 3172.50-3181****