There Will Be Winners

E-mini S&P (September) / E-mini NQ (September)

• S&P, yesterday’s close: Settled 5266.25, up 48.75
• NQ, yesterday’s close: Settled at 18,179.00, up 165.75

Price action is on the mend overnight, despite E-mini S&P futures trading more than 100 points from yesterday’s session high. Fundamentally, market participants are navigating through narrative changes outside of the levered Japanese Yen unwind; the impact of a slowing economy, steady earnings, and Fed rate cuts. For us, we do not believe much has changed, and yesterday’s earnings report from SMCI is an echo chamber of such. There will be winners and losers as the economy shifts, competition becomes stark, and spending tightens; the result is tighter margins in some pockets, and SMCI is a prime example -14% overnight. However, there are winners; NVDA is +2% on the heels of SMCI because the spending flows upstream. Another example is META, which, despite increased spending, forecast improved margins. While we do not want to spend the entire morning diving into the fundamentals of the tech landscape, one can quickly see what separates the leadership.

Yesterday’s early strength led E-mini S&P futures into a test of major three-star support at 5338-5342. This level has been adjusted slightly to 5342-5349.75 to align with the .382 retracement from the Sunday overnight low back to the record high. Above there is rare major four-star resistance aligning with Friday’s settlement. It will be critical to see how the market receives these levels and we must see a close above which in order to begin repair. For the E-mini NQ, we have a large pocket of rare major four-star resistance at….

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