Looking to the Futures

Since the end of April, the S&P has spent most of the year reaching new highs. But more recently the E-mini futures (ESZ25) have started to pull back from the previous high of 6953.75 set on October 30th and are now trading around 6740. Much of the uncertainty circles around the Fed as rumors build that the target rate will remain unchanged in the upcoming meeting on December 10th. 

Federal Reserve's Vice Chair Philip Jefferson delivered the Economic Outlook and Monetary Policy speech on November 17th. Suggesting that "inflation is running at a rate similar to that of a year ago, a bit below 3 percent, indicating that progress toward our 2 percent target has stalled. This lack of progress appears to be due to tariff effects, with signs that inflation excluding the effects of tariffs may be continuing to make progress toward 2 percent." 

The FOMC meeting minutes were released on Wednesday November 19th which showed mixed results of a further reduction in the target rate at the December meeting. CNBC reported, "Several participants assessed that a further lowering of the target range for the federal funds rate could well be appropriate in December if the economy evolved about as they expected over the coming intermeeting period" the minutes started. "Many participants suggested that, under their economic outlooks, it would likely be appropriate to keep the target range unchanged for the rest of the year."

With concerns that inflation will remain suborn above 2%, further rate cuts may cause inflation to become entrenched. The CME's FedWatch tool now shows a 33.8% probability of lowering rates by 25 basis points, shifting expectations to remain at the current level of 375-400. Just one month ago, the FedWatch tool signaled a 93.7% probability of lowering the target rate. 

Nasdaq futures have pulled back as well after hitting 26399 on October 20th. Concerns over AI spending are weighing heavy on the index, causing a sell-off in tech stocks. However, the index may get a boost after the long anticipated Nvidia earnings came out yesterday after market close. The AI giant posted stronger than expected earnings and forecast. CEO Jensen Haung stated that sales for the current generation GPU are "off the charts". Nvidia closed on Wednesday at 186.52 and reached 198.60 within the hour after the closing of the regular session. 

MBA Mortgage Applications composite index was down 5.2% for the week ending on November 14th, the purchase index came in -2.3% and the refinance index came in -7.3%. Housing starts and permits are still delayed.  

Chart of the /ESZ25 futures on a daily aggregation. Currently trading at 6650.5 We can see the pullback from the previous high at 6953.75. Since then, the S&P first dropped below the 20-day simple moving average and shortly after crossed below the 50. 200-day moving average comes in at 6187.14. RSI is giving a relatively weak reading, coming in at 39.4053. 

The Hightower report indicates that the short-term trend is negative as the close remains below the 9-day moving average. The next downside target is now at 6524.82 and the next area of resistance is around 6685.12 and 6754.31 while the first supports hits today at 6570.38 and below there at 6524.82. 
 

Jobless Claims 8:30 AM ET

Philly Fed Mfg. Index 8:30 AM ET

Fed’s Hammack Speaks 8:45 AM ET

Existing Home Sales 10:00 AM ET

Leading Economic Indicators 10:00 AM ET

Natural Gas Inventories 10:30 AM ET

Kansas City Fed Mfg. Index 11:00 AM ET

Fed’s Goolsbee Speaks 1:40 PM ET

New futures products are available to trade with a futures-approved account on all thinkorswim platforms: 

• Ripple (/XRP)
• Micro Ripple (/MXP)
• Micro Corn (/MZC)
• Micro Wheat (/MZW)
• Micro Soybean (/MZS)
• Micro Soybean Oil Futures (/MZL)
• Micro Soybean Meal Futures (/MZM)
• 1 OZ Gold (/1OZ)
• Solana (/SOL)
• Micro Solana (/MSL)

Visit the Schwab.com Futures Markets page to explore the wide variety of futures contracts available for trading through Charles Schwab Futures and Forex LLC.