Yesterday, when we suggested that a break in the S&P 500 futures below 2530 would quickly lead to pricing heading down to 2500 and then possibly 2450, we had no idea how rapidly that would occur. After initially rallying on the FOMC announcement, the U.S. stock markets tanked with the large-cap S&P 500, midcap S&P 400, DJIA and Russell 2000 all trading new 52-week lows. The Nasdaq finally joined them, closing in negative territory for 2018.
Our concern was that a weak stock market would cause portfolio managers to finally throw in the towel. For the moment, it’s clear that bears control the price action, and we are looking for technical patterns to sell stock rallies.
We highlighted FedEx as the stock to watch yesterday, and it closed down more than 10%. In addition, an announcement yesterday that Facebook was being hit by a lawsuit resulted in the stock closing down 7.3%.
Today, we are watching a few levels on the E-mini S&P 500 (ESH19). There is a double dop in the overnight session at the 2518 area marked by the green line on the chart that we see as minor resistance going into today’s open.
We see more likely resistance at the blue area on the chart from 2530 - 2533.50 followed by stronger resistance in the orange zone from 2578 to 2591.50.
To the downside, the picture is a little less clear since the S&Ps are working through areas with no recent trading history. However, should 2500 create a ceiling, we do have a lower price target at 2434 and then potentially at 2360.
Today’s economic calendar:
- Weekly Bill Settlement
- Jobless Claims 8:30 AM ET
- Philadelphia Fed Business Outlook Survey 8:30 AM ET
- Leading Indicators 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
- 2-Yr FRN Note Announcement 11:00 AM ET
- 2-Yr Note Announcement 11:00 AM ET
- 5-Yr Note Announcement 11:00 AM ET
- 7-Yr Note Announcement 11:00 AM ET
- 4-Week Bill Auction 11:30 AM ET
- 8-Week Bill Auction 11:30 AM ET
- 5-Yr TIPS Auction 1:00 PM ET
- Fed Balance Sheet 4:30 PM ET
- Money Supply 4:30 PM ET