Sharp Pullback After 20-Year Auction Flop—Time to Reset?
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E-mini S&P (June) / E-mini NQ (June)
S&P, yesterday’s close: Settled at 5861.25, down 98.50
NQ, yesterday’s close: Settled at 21,156.75, down 290.50
E-mini S&P and E-mini NQ futures took a sharp leg lower after the U.S. 20-year auction flopped at noon CT. The 30-year Bond futures hit a new contract low, and the lowest since November 1, 2023, with a yield stretching as high as 5.15%. The U.S. 10-year Note futures are a bit more contained, holding above the April 11th low, with yield exceeding 4.6% overnight. As the long-end worsened, it’s notably the shorter-end to the belly that has been contained. There is a 10-year TIPS auction today at noon CT that is likely to get some attention because of yesterday. However, after Initial Jobless Claims came in better at 227k versus 230k, the major focus this morning on the economic calendar will be flash PMIs for May at 8:45 am CT.
E-mini S&P and E-min NQ futures have some repair to work through today in order to resume the recent bull trend, and therefore, we have neutralized our slightly Bullish Bias. At the end of the day, this is a healthy pullback, and we have called for a need to digest the recent run. What matters from here is that it stays constructive and does not become chaotic. The CBOE VIX came off last Friday’s low of 17.15, trading as high as 22.07 this morning, covering the May 9th gap. Importantly, yesterday was the expiration of the CBOE monthly VIX options. We will be watching our pivot and point of balance through today’s session and if the E-mini S&P can stay above 5861.25-5865.75, it will encourage a back and fill to major three-star resistance at 5905-5912.25, from which a close above is needed to only begin repairing the damage. If the sellers hold the driver’s seat we have a wave of major three-star supports below, with the first coming in at…
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