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

S&P, yesterday’s close: Settled at 5561.25, up 57.25

NQ, yesterday’s close: Settled at 19,271.00, up 407.00

E-mini S&P and E-mini NQ futures roared higher in the second half of the day. The move came after a precipitous drop upon the opening bell that retested Friday’s low. We have been searching for leadership all week, and NVDA stepped to the plate with a monster 8% day. In fact, indices were at session lows when a fireside chat between NVDA CEO Jensen Huang and Goldman Sachs CEO David Solomon at a Goldman Conference concluded. At that moment, the tape turned sharply. During that conversation, Huang reiterated the ‘incredible’ demand for the company’s Blackwell Chip, confirmed shipping in the fourth quarter, and added that customer relations are ‘tense’ due to shortages. In summary, this was the shot of the AI narrative the market needed, and leadership was reinvigorated.

We do believe that early weakness in stocks was due to a weak CPI report in components like food and energy that invited recession fears, whereas strength in Shelter eroded recent progress. Shelter is 36% of CPI and rose at the highest m/m pace since April.

Make no mistake, markets are certainly not in the clear with a Federal Reserve policy decision next week and the Presidential election less than two months out. Furthermore, today is critical with an ECB policy decision at 7:15 am CT and press conference at 9:15 am CT, coupled with the August PPI report and weekly Initial Jobless Claims from the U.S. at 7:30 am CT. Remember, producer prices are a leading indicator of consumer prices.

The E-mini S&P posted nearly 2.5 million contracts traded both yesterday and Friday, the most since August 5th. We view the volume that exchanged hands and double bottom between both days as a very significant turning point in the market. We have also been vocal that in the post-August 5th rebound a reverberation of volatility is expected to take place in the aftermath and the last week and a half was just that. Now, there must be a strong finish to the week to package it all up. We have increased our Bullish Bias and listed many support levels in the details below, but none more significant in keeping yesterday’s roaring rally intact than major three-star support in the E-mini S&P at….

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