Yesterday we said that we expected U.S. equity futures to pull back modestly this week as mid-month rebalancing takes place. Following the FOMC statement yesterday, there was a drop and the S&P 500 futures (ES) closed with its first down day of the month; however, we are looking for a little bit more of a pullback. If it doesn’t come this week, then we would expect it to come by the end of the month.
The chart shows hourly candlesticks for the entire month of June. Last week’s close was at 2782.75, and the ESU18 is currently trading a couple handles beneath that level. In the overnight session, the ES was weak, trading down to 2772.25, which was a 23.25 handle pullback from this week’s high. Ordinarily, in an environment like we have right now - summertime, low volume, and tight ranges - we would buy the 20-handle pullbacks; but we missed this one overnight.
We are looking for a likely retest of the overnight low of 2772.25 this morning as a potential buy spot. If that fails, a relevant lower level would be the 2766.75 low from last Friday’s regular session. The first upper target would be last week’s 2782.75 close, and then we would hold some into next week, looking for this week's 2796.00 high and then on to 2800.
Today’s calendar features the 8:30 Jobless Claims number, and tomorrow the 9:15 and 10:00 numbers will be the headline releases. Next week opens the first two sessions with a quiet economic calendar, although it does feature housing numbers both on Monday and Tuesday.
Again, our ideal picture is a modest pullback today and/or tomorrow that we would buy into next week, since “Mutual Fund Mondays” have performed well lately. Technically speaking, our upside objectives are modest, but we do believe that the buying to front run July earnings could help push the upside beyond 2800.
Today’s Economic Calendar:
- Weekly Bill Settlement
- Jobless Claims 8:30 AM ET
- Retail Sales 8:30 AM ET
- Import and Export Prices 8:30 AM ET
- Bloomberg Consumer Comfort Index 9:45 AM ET
- Business Inventories 10:00 AM ET
- EIA Natural Gas Report 10:30 AM ET
- 3-Month Bill Announcement 11:00 AM ET
- 6-Month Bill Announcement 11:00 AM ET
- 52-Week Bill Announcement 11:00 AM ET
- 30-Yr TIPS Announcement 11:00 AM ET
- Fed Balance Sheet 4:30 PM ET
- Money Supply 4:30 PM ET
- Friday’s Economic Calendar:
- Quadruple Witching
- 3-Yr Note Settlement
- 10-Yr Note Settlement
- 30-Yr Bond Settlement
- Empire State Mfg Survey 8:30 AM ET
- Industrial Production 9:15 AM ET
- Consumer Sentiment 10:00 AM ET
- Baker-Hughes Rig Count 1:00 PM ET
- Robert Kaplan Speaks 1:30 PM ET
- Treasury International Capital 4:00 PM ET