E-mini S&P (September) / NQ (Sept)
S&P, yesterday’s close: Settled at 4251.25, down 67.25
NQ, yesterday’s close: Settled at 14,540.75, down 129.75
Fundamentals: What a healthy pullback! The market absolutely needs this and a bit more. Although healthy, there are realistic fears and one very bad word that describes those fears, stagflation. Is the economy heading towards a period of high inflation and low growth? It is too early to say such has been avoided, but for now we expect economic activity to be surprisingly strong in the second half of the year. However, ongoing Covid worries and a surge in cases due to the stronger Delta Variant, not only in the U.S. but abroad, can slow those growth prospects. In comes the selling, or profit taking, we have seen since late last week; market participants are pricing in the what ifs. What if the economy tightens up due to virus fears and planned growth or activity is pushed out to 2022? For now, we believe those fears are approaching a pinnacle, but the news flow can certainly monger.
Technicals: Price action in each the S&P and NQ has rebounded from yesterday’s healthy selling, but in our minds it has yet to neutralize. We look to resistance aligning with Friday’s settlements as a place where the repair can begin. Also, given such an elevated market, a decisive move through these resistances can spark a quick move back to record highs. For the S&P this is major three-star resistance at 4318.50-4323.25 and for the NQ this is 14,655-14,670. Although the S&P is still 1% from the mark, the NQ tested its overnight. We believe the first hour of trade will be telling. For now, each is holding above our momentum indicators which are denoted as our Pivots and points of balance at 4262.50 in the S&P and 14,575 in the NQ; steady action above here is supportive for a rebound day. Lastly, the S&P tested and held a trend line from the March low by a thread yesterday on settlement, this is major three-star support at 4245.50-4251.25; a close below here today will encourage added selling.
Resistance: 4279.25-4285.25**, 4304.25**, 4318.50-4323.25***, 4332-4234***, 4345-4347**, 4365.75-4370.25***
Support: 4245.50-4251.25***, 4224-4231***, 4211.75-4213.75***, 4202.25**, 4153-4159***
Resistance: 14,655-14,670***, 14,720**, 14,783-14,785**, 14,865-14,891**, 14,946-15,000****
Support: 14,445-14,502***, 14,339***, 14,197-14,263****
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