E-mini S&P and NQ Extend Gains on US-China Truce Ahead of Fed Decision

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

S&P, last week’s close: Settled at 6827.00, up 52.00 on Friday and 124.50 on the week

NQ, last week’s close: Settled at 25,509.25, up 255.25 on Friday and 522.75 on the week

E-mini S&P and E-mini NQ futures gapped higher last night on news of the U.S.-China trade truce. China delayed its rare earths export curbs by one year and agreed to buy U.S. soybeans, and President Trump will not impose an additional 100% tariff. On one hand, the agreement is being celebrated by the U.S. this morning and provides diplomatic wins for both sides that could last for at least a year. On the other hand, details remain loose, and issues such as national security and the trade balance remain unresolved.

This positive news will take us into Wednesday’s Federal Reserve rate decision, where the bank is expected to cut rates by 25bps with a 96.7% probability, according to the CME FedWatch Tool. Earnings season is all in full throttle, with reports from META, MSFT, and GOOG on Wednesday after the close, and from AMZN and AAPL on Thursday.

On Friday, we said the day would be defined by CPI, “and if price action can muscle to fresh records, we want to see a clear breakout on a weekly basis defined by a settlement above major three-star resistance at 6823 in the E-mini S&P.” After a settlement in the E-mini S&P at 6827, the gap higher higher last night hit our next resistance level as we did not have one until 6876.50. Price action is the E-mini NQ is also testing our next key resistance at 25,866. If price actin acts constructively at these levels through the opening bell, we could see a tailwind to test our next major upside targets at…

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