E-mini S&P (June)
Yesterday’s close: Settled at 2733, up 20.00
Fundamentals: Major U.S benchmarks are edging higher into the morning and priming for technical breakouts as fundamental developments continue to favor higher prices. On the heels of the U.S and China calling off the trade war, China announced it will lower import duties on automobiles to 15% from 20-25% and on auto parts to 6%. This is not only a token step in the right direction, this is a direct impact to the bottom line; Ford, GM and Tesla are all up about 1%. Adding to the overnight groundwork is a softer tape in the Dollar; this comes on technical momentum from yesterday’s reversal and an upbeat Monthly Report from the largest economy in the Eurozone, Germany. The U.S economic calendar brings a breather today, but tomorrow is jam-packed with crucial PMI reads from both the U.S and Eurozone as well as inflation data from Britain, U.S Housing Starts and the FOMC Minutes from the meeting earlier in the month. Today, Facebook CEO Zuckerberg will face the EU Parliament to answer questions on the data breech. Additionally, Russia and Japan have pointed to tariffs on their steel and aluminum exports totaling about $1B and have said they could impose the same. Keep these two topics on your radar in what otherwise appears to be a quiet news cycle, remember, it’s the sessions that appear most quiet that sometimes bring the volatility.
Technicals: The S&P achieved the bare minimum we asked of it yesterday; a close above 2729.50-2731. Price action this morning is elevated against yesterday’s high of 2739.25. Last week’s high was 2741.25 and we have first key resistance at 2744-2745.25. While a close above here will confirm a bull flag breakout, price action is not in the clear with a gap from March 16th and major three-star resistance at 2756. The S&P must maintain a close above 2729.50-2731 or faces a potential wave of profit taking. Similarly, the NQ faces resistance at the round number and last week’s high of 7013.50 and a close above here will signal a bull flag breakout. Gaps are just as important here and yesterday’s hold at 6882 was quite the buy opportunity, something we were pulling the trigger on at our trade desk. The gap from March 16th in the NQ comes in at 7044. The Russell 2000 is in a melt-up, trading to a new all-time high for the fifth session and surpassing resistance at 1641.8; a close above here will continue to confirm the immediate bullish path.
Bias: Bullish/Neutral
Resistance: 2744-2745.25**, 2756***
Pivot: 2729.50-2731
Support: 2724.25-2725.75*, 2719.50**, 2711-2713**, 2696.50-2700.50**, 2683.75-2688.50**
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