Market Overview – Morning Express
Market Overview – Morning Express
E-mini S&P (September) / NQ (September)
S&P, last week’s close: Settled 5652.50, up 58.50 on Friday and 74.25 on the week
NQ, last week’s close: Settled at 19,790.75, up 212.50 on Friday and 185.00 on the week
Fed Chair Powell delivered his keynote speech at Jackson Hole Friday morning. As expected, he gave the nod to a path of interest rate cuts beginning at the September meeting but emphasized the pace is to be determined and data-dependent. Most importantly, there appears to be a transition from an inflation-dependent to a labor-dependent policy trajectory. This was notable in his comments that “confidence has grown inflation is on a sustainable path to 2%,” and “it is unmistakable the labor market is cooling, and further cooling is unwelcome.”
Equity markets, led by small caps (E-mini Russell 2000), had a phenomenal finish to the week. The E-mini S&P and E-mini NQ finished strongly, but merely recovered Thursday’s loss, whereas the E-mini Russell broke out, gaining 3.1% and trading into the highest level since August 1st. It is also gearing to be the last of the big four indices to recover its July 31st close, as the E-mini Dow achieved such on Friday. Speaking of July 31st, stock indices finished that session strongly on the heels of the Fed’s policy meeting but could not hold a bid through the intraday open the following day, before reversing sharply. We are certainly not calling for a repeat of August 1-5, but one must wonder, with Fed Chair Powell merely delivering what was expected, can markets hold this bid. For example, according to the CME Group’s FedWatch Tool, there is a 76.4% probability the Fed will cut rates four times this year, up from 66% before Powell on Friday.
The E-mini S&P settled Friday right at major three-star resistance, a level now defined as our Pivot and point of balance, detailed below. Tech was the laggard on Friday, with the E-mini NQ again failing at the critical 19,925 mark during Fed Chair Powell’s speech. In fact, it may take NVDA’s earnings after the bell Wednesday to clear it. This rare major four-star resistance level, along with strong resistance in the E-mini S&P at 5661.75-5665.25 and 5672.75, will be most crucial as the week gets underway. To the downside, a break below major three-star support in the S&P and NQ at 5632.25-5637.25 and 19,578-19,618 is likely to encourage additional selling.
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Bias: Neutral
Resistance: 5661.75-5665.25**, 5672.75***, 5717.25-5721.25****
Pivot: 5652.50-5655.25
Support: 5632.25-5637.25***, 5618.50-5624**, 5614.25**, 5599.25-5603.25****, 5593.25-5594.50***, 5573.50-5582.75***, 5558.50-5560.25**, 5547.50-5551.75***, 5526.75-5536.50***
NQ (September)
Resistance: 19,783-19,790**, 19,832-19,867***, 19,904-19,925****, 19,981-19,995*, 20,025-20,085**, 20,150-20,180***, 20,355-20,371**
Pivot: 19,750-19,770
Support: 19,705**, 19,664-19,680**, 19,578-19,618***, 19,529-19,544**, 19,462-19,495***, 19,394**
Crude Oil (October)
Last week’s close: Settled at 74.83, up 1.82 on Friday and down 0.71 on the week
Crude Oil rose sharply overnight after an Israeli strike on Hezbollah targets in Southern Lebanon, and Libya’s eastern government said it will halt exports.
The two events, while unrelated, are the main cause for the sharply higher trade in Crude Oil this morning. Libya’s eastern government’s choice to halt oil production and exports was the result of a continued political tussle over the country’s central bank. Israel sent over 100 warplanes to strike thousands of Hezbollah missile launchers on Sunday – a flare-up in tensions amidst continued ceasefire talks. Furthermore, Hamas said yesterday “that U.S. talk of an imminent ceasefire deal is false and serves election purposes.”
Libya was set to export 1 million bpd of crude oil in August. A retraction of Libyan barrels from the export markets may cause ripple effects this week as geopolitical tensions continue to flare and OPEC continues mulling their planned production increases.
WTI Crude Oil futures are trading out above 76.75, the 50% retracement from the August 5th low back to the July 5th high. Previous resistance now defines support at 75.36-75.73 and again below there at 74.52-74.85, aligning with Friday’s settlement. Theis defines a clear blueprint for the bulls to hold the driver’s seat. Still, there is strong overhead resistance lurking at 78.13-78.54, but a move above could encourage forced buying.
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Bias: Bullish/Neutral
Resistance: 78.13-78.54***, 79.85-80.00***
Pivot: 76.75
Support: 75.36-75.73***, 74.52-74.85***, 74.16-74.38***
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