I woke up freezing and half dreaming of Cairns and Yallingup. I know most of you are all too hot, though, and probably in the air-conditioning. On the screens, one standout is the AUD/USD and the AUD/JPY -- both canaries in the trade war cavern are struggling a bit. The US is reported to be planning a formal extradition request the Huawei CFO detained in Canada. What next?
US SPX futures contract is being handled for the last 36 hours like a just-boiled egg. ESH19 positioning is net short -- but keep in mind that although many traders feel that the ETH futures do matter, the overnight contract trades at a small fraction of the volume of a regular trading session. That does not mean that it does not give great clues for what the market is 'thinking', though; and they certainly have offered traders insight thorough last week. By the way, the ES is electronic; those terms are a hangover from when the daytime session was mostly open outcry and from bigger contracts.
The ES profile has wobbled a bit since the Sunday night's open and that is not entirely unexpected based on Friday's strong close and the long, market profile from Friday's session that takes the shape of a P. Also consider Friday's big run in the DAX which came up against the trend line based on September 2011 and anchored at February 2016. Asian indices softened on China GDP data Sunday and this helped facilitate the weakness going into Mondays ES session, which ended at midday. With the Asian indices off again now it is contributing to that weak action going into Tuesday's session. The European open will put some influence on the US futures.
Weekly SPX levels: Note, that support/resistance mentioned is based on technicals, futures and SPX positioning. That positioning can change later this AM as we go into the new week. Other things matter too...like politicians' tweets. Central to this week's interest is SPX 2600 -- that needs to be maintained. 2585 is an area of support if 2600 wobbles. On the upside, 2650 is central to the bullish interest as of Friday's close. ES futures are about there at the moment. Those levels will become more specific as the week progresses and news flow begins again. Many bulls are also targeting 2700 at this point.
WSJ reported on Monday that sources in Beijing imply that they are determined for now not to bring out the big guns as far as stimulus to deal with last year's GDP and this year's expected economic downturn. Of course everything is relative but their sourcing is usually very good.
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