S&P and NQ Futures Test Support After ISM Miss and Tech Weakness

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

S&P, yesterday’s close: Settled at 6325.25, down 30.75

NQ, yesterday’s close: Settled at 23,132.00, down 164.50

E-mini S&P and E-mini NQ futures failed at a critical area of resistance after ISM Services showed signs of stagflation. The headline print held expansionary territory at 50.1, but was shy of the 51.5 expected, while Prices expanded at the fastest pace since November 2022 at 69.9, and faster than the 66.5 expected. As the session unfolded, index price action fought waves of selling to hang in constructively, given this one-two-two punch: a systematic failure at resistance, coupled with the headline stagflation fears. After the bell, AMD’s earnings underwhelmed on slower-than-expected sales tied to China restrictions, and mixed reviews on its outlook. Still, E-mini S&P futures nearly recovered all the ISM losses overnight, trading to a high of 6358.25. I do believe this is notable, as it defines resiliency within the broader market. E-mini NQ futures recovered as much as half the losses, while the E-mini Dow and E-mini Russell traded to higher highs than yesterday morning. The stage is set. Does the tech trade remain soft? Can the broader market rally without tech? Is it the small-caps time to shine? One thing we do know is that this builds anticipation into next week’s CPI report.

The overhead line in the sand is very well-defined at major three-star resistance in the E-mini S&P at 6374.25-6381, aligning last Thursday’s settlement with the .618 Fibonacci retracement; a close out above here is likely to garner additional buyers and encourage a retest of the high. Given today’s firming tape exudes resiliency, our Pivot and point of balance will be critical in confirming that such firmness holds, with those levels coming in at….