While yesterday's FOMC meeting turned out relatively as expected, it did send fireworks into the U.S. equity markets. The S&P 500 futures initially rallied to a new high for this week but then reversed as the press conference began, continuing the trend of new lows late in the day following rate hike meetings. This now leaves the S&P 500 lower for six of the seven meetings since Powell became chair this year. On top of it all was a 3.3 billion to sell market-on-close imbalance as the ESZ18 dumped down from a weekly high to a weekly low in an outside reversal day.
The relevant questions to ask are what comes next, and how much of the selling yesterday resulted from end-of-the-quarter money flows. Overnight, the U.S. equity futures have been very quiet and stock markets in Asia closed for the most part moderately lower, while in Europe, the stock indices are currently modestly higher.
Today will be another day of economic reports. Two important reports on the schedule are Jobless Claims at 8:30 a.m. EST and the Pending Home Sales Index at 10:00 a.m. This day also marks the T+2 for money to flow out of stocks today in order to be made available for the first day of the new quarter. So, while the overnight trade has been quiet for the ESZ18, we think today could offer interesting opportunities.
While we remain dip buyers, we are still careful today and will only enter trades with smaller size. We think a break beneath 2908 would lead to 2900 and possibly 2888-2892, with last week’s low of 2882 being important as well.
To the upside, the important levels begin at 2918, where bears must keep a lid on this market in order to maintain any kind of momentum. A move above that level would open the door to 2927.50, which was the 2:00 print as the FOMC statement was released and marks the price level where yesterday's volatility began.
Today’s Economic Calendar:
- Weekly Bill Settlement
- Durable Goods Orders 8:30 AM ET
- GDP 8:30 AM ET
- International Trade in Goods 8:30 AM ET
- Jobless Claims 8:30 AM ET
- Corporate Profits 8:30 AM ET
- Retail Inventories [Advance] 8:30 AM ET
- Wholesale Inventories [Advance] 8:30 AM ET
- Pending Home Sales Index 10:00 AM ET
- EIA Natural Gas Report 10:30 AM ET
- Kansas City Fed Manufacturing Index 11:00 AM ET
- 3-Month Bill Announcement 11:00 AM ET
- 6-Month Bill Announcement 11:00 AM ET
- 7-Yr Note Auction 1:00 PM ET
- Robert Kaplan Speaks 2:00 PM ET
- Farm Prices 3:00 PM ET
- Jerome Powell Speaks 4:30 PM ET
- Fed Balance Sheet 4:30 PM ET
- Money Supply 4:30 PM ET