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

S&P, last week’s close: Settled at 6055.50, down 5.25 on Friday and 43.50 on the week

NQ, yesterday’s close: Settled at 21,795.75, up 144.50 on Friday and 139.00 on the week

E-mini NQ futures were buoyant on Friday, setting and closing at a fresh record high. The E-mini S&P and E-mini Dow struggled to find positive territory and were a better depiction of even tech’s breadth. A blowout earnings report from AVGO, +24%, was just about the only thing anchoring the E-mini NQ to higher prices; although TSLA’s breakout continued, adding another 4.3%, NVDA and AMD each finished down more than -2%, the Mag 7 was broadly lower, and software struggled with IGV -1%.

We are at the onset of a critical week. The Federal Reserve’s policy decision is due Wednesday at 1:00 pm CT. According to the CME FedWatch Tool, there is a 97.1% probability the bank will cut 25bps. Today, we get fresh NY Empire State Manufacturing at 7:30 am CT and flash PMIs at 8:45 am CT, all for December. Tomorrow brings Retail Sales for November.

Despite the fresh record high for the E-mini NQ and constructive pullback in the E-mini S&P, the E-mini Dow shed -1.9% last week and has fallen -3% from its peak. Similarly, the E-mini Russell 2000 struggled, slipping -2.6% last week and -5.6% from its high. Although neither of the two indices is broken, they have clearly struggled since tech’s rotation. Of the Mag 7, only NVDA and MSFT have yet to set a fresh high. This brings us back to tech’s breadth Friday and the failure of names like NVDA and AMD to follow in bullish flows into the sixth-largest name in the QQQ and the third-largest in the SMH. We are certainly not bearish, but this breadth could exude some exhaustion, setting the stage for near-term outperformance in the E-mini Dow and E-mini Russell. However, higher rates have been a headwind to small caps, and that ascent will have to pause to open the door for such.

We remain more Bullish in Bias, but acknowledge the risk associated with this week fundamentally and technically with triple witching Friday. Remember, we do not use the new month contract until Tuesday of roll week.

E-mini NQ futures settled right at our rare major four-star resistance at 21,793-21,820. Price action cleared it early Friday but settled in through close and is attempting to hold out above there again this morning. As for the E-min S&P, it has worked to build a nice base out above the November highs through last week, and this solidified two areas of major three-star support to watch closely as this week unfolds at..

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