E-mini S&P 500 (June)
Yesterday’s close: Settled at 2787.50, up 12.50
Fundamentals: U.S benchmarks once again constructively held technical support though yesterday’s session and this coupled with the anticipation of President Trump’s guidelines for reopening America kept a steady bid under risk-assets through the last hour. Then something else happened, news that Gilead’s Covid-19 drug shows effectiveness and the tape melted higher. The E-mini S&P 500 futures contract rallied as much as 3.5%. Upbeat headlines from the White House on steps to allow states to normalize in phases added strength. Make no mistake though, the Gilead news was a perfectly timed headline and one who’s merits are under question. Gilead stock was up 12% afterhours, but reports have called the evidence anecdotal and the company released a statement saying, "The totality of the data needs to be analyzed in order to draw any conclusions from the trial." One focal point under question is the response to the drug across a severity scale of the virus in the patient.
Economic data from China was front and center last night. First quarter GDP year over year was worse than expectations at -6.8% (vs -6.5%), but the read across the board was arguably not too bad with March Industrial Production faring better than expected at -1.1% versus -7.3%. Still, Industrial Production plunged 13.5% in February and is still down -8.4% in March YTD. Fixed Asset Investment and Retail Sales both were worse than expectations.
On the earnings front, Procter & Gamble posted strong numbers as consumers raced to stock up ahead of shutdowns. Much of this was expected and the stock is essentially unchanged after trimming guidance. Schlumberger on the other hand is +6.5% pre-market despite losing $8.09 billion or $5.32 a share. The relief rally is fueled by better results excluding onetime charges ($0.25 vs $0.24) as it tracks a broadly stronger market open.
Technicals: We remain Neutral in Bias as we find it difficult to define our expectations for the next 3-5%; we see neither value buying at these levels nor fading such strength given how constructive supports have held. There are tradable opportunities and key resistance had budded against the March 6, the Friday before Saudi Arabia announced a price war. More strongly though is the support building from previous resistance at 2846-2854.25; this is creating a formidable floor, one in which the bears must pierce today. Our momentum indicator is rising sharply but for now aligns to create key support at 2829.75-2832 with the post-bell electronic melt up close. For the E-mini Nasdaq 100 futures, there’s a landmark major 3-star support at 9000-9038. We love the law of round numbers for the NQ, but here it aligns with decisive volume late February and a failed gasp for air on March 3. We envision a battleground at 8895.25 through the session and a wave of weakness could easily trade down to major three-star support at 8692.50-8734.25 to cover yesterday’s closing gap while maintaining its intermediate-term uptrend.
Resistance: 2887.75**, 2907.25**, 2930-2953.75****
Support: 2846-2854.25***, 2829.75-2832**, 2787.50***, 2750-2759.25***
Resistance: 9000-9038***, 9200-9239.25***
Support: 8815-8842.50**, 8692.50-8734.25***, 8591.75-8605**, 8466.75-8495***