While the S&P 500 futures have remained within the prior two weeks' range this week, yesterday, price moved from the top of that range to the bottom of that range.
Meanwhile, the benchmark 10-Year Treasury Note's yield reached its highest levels since July of 2011, which is causing some concern, and yesterday, J.P. Morgan bank downgraded Chinese stocks from overweight to neutral, which also was a modest signal of caution.
Adding to the confusion was that yesterday crude oil futures traded to the highest levels since November of 2014.
However, Fed Chair Powell delivered a speech Wednesday, and as noted by J.P. Morgan, when he speaks, the U.S. stock markets lose money.
U.S. stocks dumped late in the session, and then in the overnight trade, they made news lows as Asia closed noticeably lower across the board. Europe is still trading moderately lower this morning two hours before the New York open.
The calendar today offers several items of interest, but none that we believe will be market-moving. Instead, all eyes will be on tomorrow’s non-farm payroll numbers at 8:30 a.m. EST, and we expect the S&P 500 (ESZ18) to range until that time.
With the S&P’s trading so close to the bottom of the range, we believe that patterns suggest a potential reversal of recent price action on NFP day. This means in a week such as this one when stocks have moved lower, the NFP Friday will often be higher. This is not a rule but an observation, and the amount of attention we give to this pattern will depend upon how today’s price action plays out.
If the ESZ18 breaks beneath the overnight low of 2913.00, we would see that as an open door down to last week’s 2907.50 low, which would give bulls the opportunity to buy. If that fails, then we would next look to 2900, followed by key lower levels from 2888 to 2892 and then 2882.
To the upside, the objective would be 2929, which could offer some resistance, then 2935, 2941, and finally the 2947 all-time high.
Today’s Economic Calendar:
- Weekly Bill Settlement
- Challenger Job-Cut Report 7:30 AM ET
- Randal Quarles Speaks 8:15 AM ET
- Jobless Claims 8:30 AM ET
- Factory Orders 10:00 AM ET
- EIA Natural Gas Report 10:30 AM ET
- 4-Week Bill Announcement 11:00 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
- 3-Yr Note Announcement 11:00 AM ET
- 10-Yr Note Announcement 11:00 AM ET
- 30-Yr Bond Announcement 11:00 AM ET
- Treasury STRIPS 3:00 PM ET
- Fed Balance Sheet 4:30 PM ET
- Money Supply 4:30 PM ET
Friday’s Economic Calendar:
- Employment Situation 8:30 AM ET
- International Trade 8:30 AM ET
- Robert Kaplan Speaks 12:30 PM ET
- Raphael Bostic Speaks 12:30 PM ET
- Baker-Hughes Rig Count 1:00 PM ET
- Consumer Credit 3:00 PM ET