S&P and NQ Futures Test Key Support as Three Black Crows Pattern Emerges

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

S&P, yesterday’s close: Settled at 6692.25, down 22.75

NQ, yesterday’s close: Settled at 24,739.25, down 88.00

E-mini S&P and E-mini NQ futures edged lower again yesterday and are set to open in the red this morning. Price action is closing in on the gap settlements from last Wednesday’s Fed meeting, a significant area of support, at 6658.75 in the E-mini S&P and 24,465 in the E-mini NQ.

On the economic calendar, the second look at Q2 GDP was revised significantly higher, to 3.8% from 3.3%. GDP Sales surged to 7.5%, revised from 6.8%, and Core PCE Prices edged up to 2.6% from 2.5%. In addition, Durable Goods Orders for August was a blowout print at +2.9% versus -0.3% expected, and weekly Initial Jobless Claims dropped to 218k from 232k last week, while 233k was expected. The slate has lifted the U.S. Dollar and rates.

Given a lower open this morning, today would mark the third long red candle in a row, known as a Three Black Crows pattern, marking the end of an uptrend. Although we do not expect a large-scale correction, a pullback of 3-5% would be a healthy move. E-mini S&P and E-mini NQ futures bounced off yesterday’s low into settlement, and that late range provides a line in the sand resistance. For the E-mini S&P this is 6692.25 and then 6701.75-6705.75; a move out above here will reignite the bullish momentum trade. For the E-mini NQ this is at 24,698-24,740 and then 24,780-24,793. The lower price action this morning has now checked that 6658.75 level. The stage is set for profit-taking and a healthy pullback. Continued price action below our Pivot and point of balance, as well as this 6658.75 mark, opens the door to a test of…