E-mini S&P (December) / E-mini NQ (December)
S&P, yesterday’s close: Settled at 5680.00, down 20.25
NQ, yesterday’s close: Settled at 19,580.00, down 95.25
The Federal Reserve cut rates by 50bps yesterday, and when Fed Chair Powell began his press conference, he slammed his hand on the podium and shouted, “Go big, or go home.” I say that facetiously, of course, he did not say that, but he spent the next hour justifying what many consider an unusually large rate cut if the economy is broadly healthy. In Powell’s words, “I don’t see anything in the economy right now that suggests the likelihood of a recession or downturn.” The Fed’s key interest rate was 5.25-5.50%, while Core PCE, its preferred inflation indicator, has been running below 3% for eight straight months, and the 2-year Treasury yield is hovering just above 3.5%. The reality is the Fed is again behind the curve and should have cut 25bps back in July. If the committee’s intent is to cause a recession, then they leave interest rates 2% above these two benchmarks.
Yesterday’s Fed cut ended the session in what felt like a bloodbath. However, other than the ugly tail, there was not true damage to the critical floor that was developing. This is now rare major four-star support in the E-mini S&P at 5674.25-5680 and in the E-mini NQ at 19,525-19,580. Price action did not stay suppressed for long and we saw buoyancy as soon as the overnight session opened. With a complete 180 turn, the bulls are in the driver’s seat while above what is now rare major four-star support at....
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