Morning Express

E-mini S&P (June)

Yesterday’s close: Settled at 2867.25, down 1.75

Fundamentals: U.S benchmarks are firm this morning, gaining ground across the board. The S&P traded to a seven and a half week high ahead of the bell yesterday but some of the largest stocks led a wave of profit taking ahead of earnings. The S&P returned all premarket gains and the NQ finished -1.2%. Who could blame investors and traders shoring up positions ahead of a treacherous economic calendar? As we noted here yesterday, the S&P has gained one third of its value since the depths of zero demand on March 23rd. Alphabet delivered a solid report after the bell yesterday and the stock has gained as much as 10% afterhours. Although earnings missed and revenues beat, one could argue a fear of dissipating ad revenue was already priced. Executives delivered the contrary, despite a sharp drop in ad revenue for March, this has not carried over into April. Furthermore, the company noted increased engagement during lockdowns across its software platforms. At $1330 premarket, the stock is at a critical technical level.

Boeing (BA), Mastercard (MA), GE (GE), Northrop Grumman (NOC) and more report ahead of the bell this morning. After the close, we look to Microsoft (MSFT), Facebook (FB) and Tesla (TSLA). All three gave up ground yesterday but have been buoyed by the good news from.

In between a slew of earnings, we have a jam-packed economic calendar. This morning we get the first look at Q1 GDP at 7:30 am CT. Although the bulk of the quarter only began to see a ripple effect from the start of the Coronavirus outbreak in China and lockdowns in the U.S did not begin until mid-March, the numbers are expected to shed some light on the damage. Expectations are for a contraction of 4.0% and Q2 is expected to be much worse. Pending Home Sales are due at 9:00 am CT and EIA Crude Inventories are released at 9:30.

All eyes are on the Federal Reserve who concludes a two-day policy meeting at 1:00 pm CT. They are not expected to adjust interest rates and their statement should give some economic feedback. Investors and traders will be on the lookout for any clarity or modifications to the Fed’s QE and liquidity programs. However, its Fed Chair Powell’s press conference at 1:30 pm CT that is likely to be the main event and where we could get the most insight. Although it’s too early and the economic situation too uncertain for the Fed to plan an endgame or commit to any substantial dialing back of stimulus measures, an impossible task to imagine down the road, we will be on the lookout for any attempt to water-down their “whatever it takes” narrative. Remember, they have announced an unwind of some bond purchases already. Given that markets are stable and there is hope of normalization, any step forward today also gives them more rope upon a worsening situation. A seed planted now may be better fit than a seed planted further down that road.

Technicals: Price action is consolidating higher after a very health hold of yesterday’s low close. Our momentum indicators align with other technicals to create our Pivots, levels that we view as a battleground through the open.  

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