E-mini S&P (June)
Yesterday’s close: Settled at 2867.25, down 1.75
Fundamentals: U.S benchmarks are firm this morning, gaining ground across the board. The E-mini S&P 500 futures contract traded to a 7 ½ week high ahead of the bell yesterday but some of the largest stocks led a wave of profit taking ahead of earnings. The S&P 500 returned all pre-market gains and the E-mini Nasdaq-100 futures contract finished -1.2%. Who could blame investors and traders shoring up positions ahead of a treacherous economic calendar? As we noted here yesterday, the S&P 500 has gained one third of its value since the depths of zero demand on March 23. Alphabet delivered a solid report after the bell yesterday and the stock has gained as much as 10% after hours. Although earnings missed and revenues beat, one could argue a fear of dissipating ad revenue was already priced. Executives delivered the contrary, despite a sharp drop in ad revenue for March, this hasn’t carried over into April. Furthermore, the company noted increased engagement during lockdowns across its software platforms. At $1330 pre-market, the stock is at a critical technical level. Boeing, Mastercard, GE, Northrop Grumman and more report ahead of the bell this morning. After the close, we look to Microsoft, Facebook and Tesla.
In between a slew of earnings, we have a jam-packed economic calendar. This morning we got the first look at Q1 GDP at 7:30 am CT. Although the bulk of the quarter only began to see a ripple effect from the start of the coronavirus outbreak in China and lockdowns in the U.S did not begin until mid-March, the numbers are expected to shed some light on the damage. Expectations are for a contraction of 4.0% and Q2 is expected to be much worse. Pending Home Sales are due at 9:00 am CT and EIA Crude Inventories are released at 9:30.
All eyes are on the Federal Reserve which concludes a 2-day policy meeting at 1:00 pm CT. They aren’t expected to adjust interest rates and their statement should give some economic feedback. Investors and traders will be on the lookout for any clarity or modifications to the Fed’s QE and liquidity programs. However, it’s Fed Chair Jerome Powell’s press conference at 1:30 pm CT that is likely to be the main event and where we could get the most insight. Although it’s too early and the economic situation too uncertain for the Fed to plan an endgame or commit to any substantial dialing back of stimulus measures, an impossible task to imagine down the road, we will be on the lookout for any attempt to water-down their “whatever it takes” narrative. Remember, they have announced an unwind of some bond purchases already. Given that markets are stable and there is hope of normalization, any step forward today also gives them more rope upon a worsening situation. A seed planted now may be better fit than a seed planted further down that road.
Technicals: Price action is consolidating higher after a very health hold of yesterday’s low close. Our momentum indicators align with other technicals to create our pivots, levels that we view as a battleground through the open. Overhead resistance in the S&P 500 aligns with the 2907.25 level we’ve had for weeks, but above there’s a rare major 4-star resistance, a level that everyone is eyeing, at 2930-2953.75. For the Nasdaq-100 contract, first key resistance comes in at 8877-8898 and strong major 3-star resistance, which has staved off waves of buying since April 17, comes in at 9000-9038. Yesterday’s settlement price in the Nasdaq-100 comes in as major 3-star support and a break below there will get the ball rolling later.
Resistance: 2907.25-2912.25**, 2930-2953.75****
Support: 2867.25**, 2847-2851**, 2829.50***, 2806.50-2811.75***
Resistance: 8877-8898**, 9000-9038***, 9200-9239.25***
Support: 8755*, 8692-8719.75***, 8654.50*, 8583**, 8498.25-8511.75***