E-mini Futures Steady After Holiday Decline – Key Support in Focus

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

S&P, yesterday’s close: Settled at 5958.75, down 68.25

NQ, yesterday’s close: Settled at 21,416.25, down 282.25

It is the final day of the year. We typically look at the first two weeks of the New Year as bringing a choppy and indecisive direction that makes little sense, but instead, I just described the last two weeks. As we look ahead, we remain optimistic about the stock market, and arguably more so than we were two weeks ago with the E-mini S&P and E-mini NQ trading at record highs. At that moment, rates had risen back to their post-election highs and uncertainty surrounded how Fed Chair Powell and company would communicate a slower pace of rate cuts. Welp, the band aid was ripped off and the E-mini S&P fell 3% on the Fed’s announcement. To make matters worse, rates and the U.S. Dollar barged to new local highs although Fed Fund futures had already priced in the Fed’s Dot Plot shift. Let’s review the post-Fed scorecard, flush in stocks, check, VIX surging past 20 and settling in, check, Fear & Greed Index hitting Extreme Fear, check, 5% 10-year talk, check, U.S. Dollar optimism flourishing, check. With this already playing out, it means the market has had its cleansing. We could also get into the light at the end of the tunnel we see in rates and the U.S. Dollar, but that could take a while, so we will simply say that tops and bottoms often happen at turn of the calendar year in these asset classes. Our fear would have been a deeper correction in stocks and risk assets if those boxes were not checked and the E-mini S&P skipped delightfully into the yearend at record highs.

E-mini S&P and E-mini NQ futures stabilized through the European close yesterday, but failed to hold their best levels through the U.S. closing bell. However, a firm tape overnight has left yesterday’s settlements to align as strong support for today’s session. Ultimately, we will use our Pivot and point of balance as a guide, continued price action at and above…

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