E-mini S&P 500 Futures (June): Settled at 3118.25, up 56.25
E-mini Nasdaq-100 Futures (June): Settled at 9961.50, up 173
U.S. equity benchmarks shook off a brief bat with reinvigorated volatility yesterday morning. After a blowout MoM May Retail Sales read, price action in the S&P 500 surged to its high of the session (YoY was -6.1%). As the morning unfolded, less enthusiastic Industrial Production, reports of Beijing shutting schools due to Covid-19 reemerging, and comments from Federal Reserve Chair Jerome Powell that the committee will in fact taper measures when the economy stabilizes all caused a violent 100 point swing. Still, the trend is up, and call option open interest continues to bloat. Combined with unprecedented central bank measures, this creates a path of least resistance higher and price action snapped back to its midpoint just as quick. The European open early this morning brought another wave of buying and U.S. benchmarks are all pointing higher at the onset of U.S. hours.
Yesterday’s gains were broad, nearly the entire S&P 500 was in the green. Today, Building Permits and Housing Starts were below expectations. The EIA’s weekly crude oil inventory data was out at 9:30 a.m. CT. Fed Chair Powell’s second day of his semiannual Congressional Testimony begins at 11:00 am CT. Yesterday, he echoed his comments from last week; there’s a long road ahead. However, he was acknowledged the worst is likely behind us, but for the same reason it sparks a conversation on reducing such unprecedented measures. Last week, we said this is a conversation that could gain traction in August, after the Fed’s next meeting and ahead of the September one.
Lastly, traders must keep an ear to the ground on the geopolitical front. Tensions between China and India in a border dispute have escalated and there are casualties. Also, North Korea is attempting to provoke South Korea with threats after blowing up a mutual building at the border.
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