E-mini S&P Futures (September)
Last week’s close: Settled at 2919.75, down 20.25 on Friday and down 12.75 on the week
Fundamentals: U.S benchmarks are pointing lower to start the week with a number of factors weighing on sentiment. The U.S-China trade war and a weaker Yuan are the usual suspects. Today, protesters in Hong Kong took to the airport causing all remaining flights out to be canceled. Unrest and violence within the heart of the city is growing and expanding, increasing the pressure on Beijing to respond; the world is watching. Italy is also under the microscope after Deputy Prime Minister Salvini called for immediate elections citing that the Lega and Five Star Movement coalition no longer have a majority in parliament. There is ongoing friction between the two parties and Salvini’s Lega is leading the polls as he does not want to leave the Euro. The Lega filed a no-confidence motion they hope to move on this week.
The Chinese Yuan touched a new low against the U.S Dollar to start the week and this of late has been a barometer to the broader market. Upon weakening, it encourages selling. When stable, the market rallies. Goldman Sachs though did not do the trade war narrative any favors over the weekend. They lowered their growth forecast in Q4 by 20-bps to 1.8% and cited mounting uncertainty and eroding sentiment due to the trade war that ultimately increases the likeliness of a recession.
Today’s economic calendar is quiet, and tomorrow will bring a crucial wave. German ZEW Economic Sentiment data is released early and expected to worsen to the lowest level since December 2011. Core CPI will be the highlight and analysts anticipate this inflation gauge to remain stable.
Technicals: Our major three-star resistance levels in both the S&P and NQ withheld a test overnight and each of the last two sessions. For the S&P this is 2932.50-2944.25 and the NQ this is 7702.25-7735.75. Price action is off sharply trekking to new swing lows. First key support in the S&P comes in at 2899-2901.75 and sustained price action below here will pave a path of leas resistance down to 2870.50-2877.75. However, a move back above the 100-day moving average at 2910.25 will work to neutralize the early weakness. Major three-star resistance though comes in at 2918.75-2919.75 and aligns Friday’s settlement with our momentum indicator. Similarly, the NQ has first key resistance at 7652.25-7660.25; this aligns Friday’s settlement, our momentum indicator and the 100-day moving average. It would be very bullish for price action to move and close out above these levels for both the S&P and NQ over the next two days as it lays strong groundwork for a potential bull-flag pattern. We remain Neutral in Bias and as we said all last week, this can be traded from both sides but follow the momentum for the larger swings; its ok to be wrong, just a matter of how long you stay wrong.
Resistance: 2918.75-2919.75***, 2932.50-2944.25***, 2952-2955**, 2969.50***
Support: 2899-2901.75**, 2891.50**, 2870.50-2877.75***, 2858.25**, 2819.25-2823.25***
Resistance: 7652.25-7660.25**, 7702.25-7735.75***, 7806-7815.25**, 7856.50**
Support: 7596.75*, 7542.25-7553.25***, 7481.50-7493.75**, 7420.75*, 7385.25-7396.75***