Looking to the Futures

The S&P 500 could not hold onto early gains on Monday following its best week of the year. Tesla and cryptocurrency stocks both continue to rally off of the hope that both will benefit from a Trump presidency. Economic news was light on Monday in observance of Veterans Day, but markets are looking to Wednesday’s US consumer price report for October. Earnings season continues to show positive results for S&P 500 companies. Chip stocks sold off on Monday pushing markets off their all-time highs. Global bond yields were mixed to start the week.

Last week's gains saw markets continuously set all-time highs on hopes that President-elect Trump reduce regulations and boost corporate profits with tax cuts. Tesla led last week's rally, trading 26% higher on the week after Elon Musk showed significant support for Trump. Tesla closed up another 8% on Monday. Cryptocurrency-related stocks surged following the presidential election with COIN closing 23% higher to start the week. Bitcoin started the week rallying over +9% to hit all-time highs. 

Economic news was light to start the week but will be picking up tomorrow and Friday. Markets are highly anticipating the US Consumer Price report for October announcement on Wednesday. October CPI is expected to increase +2.6% y/y, higher than the +2.4% y/y in September. October Core CPI, which excludes food and energy, is expected to go unchanged staying at 3.3% y/y. October retail sales will be announced Friday with expectations of an increase of +0.3% m/m.

Earning season is coming to a close with companies showing notable growth. Of the 85% of companies in the S&P 500 to announce Q3 earnings, 75% have beat estimates. Companies in the S&P 500 have reported an average an increase of +8.4% y/y in Q3 quarterly earnings, according to Bloomberg Intelligence.

Chip stocks weighed on the Nasdaq yesterday after Reuters reported that the U.S. instructed Taiwan Semiconductor Manufacturing Company not to send advanced artificial intelligence chips to China. TSM closed almost -4% lower on Monday. 

US 10-year Treasury notes traded lower today after Minneapolis Fed President Kashkari said a strong US economy and higher productivity growth could lead to fewer interest rate cuts in the coming months. Cash Treasury markets were closed for the Veterans Day holiday. The 10-year German bund yield dropped -3.5 bp to 2.332% and the 10-year UK gilt yield increase +0.5 bp to 4.440%.

Looking at the daily chart for the E-Mini S&P 500 December Futures (/ESZ24) contract we can see the significant buying pressure from last week. The contract consistently traded off the 50-Day Simple Moving Average and surged to all-time highs after the election, crossing the 20-Day SMA level. 

Hightower’s Daily Technical Summary shows resistance levels at 6052.50 and 6071.75 with support levels at 6002.50 and 5971.25.

According to the CFTC Commitment of Traders report released November 5^th asset managers have decreased their long position by -44,864 contracts and increased their short position by +7,948 contracts. Managed money traders are net long 994,877 contracts. 

The 14-Day Relative Strength Index at 67.97% indicates that the S&P 500 is moving into overbought territory. 

NFIB Small Business Optimism 6:00 AM ET