E-mini NQ Breakout Momentum Faces CPI Test Amid Cyclical Tailwinds

It’s a Breakout!

Bill Baruch joined the CNBC Halftime Report to talk the NQ breakout, Bitcoin, Tesla, Gold, and more. 

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

S&P, last week’s close: Settled at 6099.00, up 10.25 on Friday and 47.50 on the week

NQ, last week’s close: Settled at 21,656.75, up 183.50 on Friday and 663.25 on the week

E-mini NQ futures closed out a phenomenal week with a strong session on Friday; tech continued to outpace and confirmed the bullish breakout of an ascending triangle pattern on a weekly closing basis. We drove home this theme heavily last week and believe it could be just getting started. However, a consolidation day for the narrative would be normal, meaning a rotation rather than a sell-off. The E-mini Russell shed -1.35% last week, and the E-mini Dow was -0.77%, whereas the E-mini NQ gained 3.16%. The two cyclically driven indices are still in an uptrend. Friday’s Nonfarm Payroll report did not show a collapsing economy, and the 10-year yield is 32bps from its recent peak. With the E-mini Russell testing support from its late November surge and the 21-day moving average, it sets the stage for a rebound ahead of Wednesday’s closely watched inflation report (CPI).

Furthermore, on the heels of abysmal inflation data last night, China’s Politburo announced a policy shift in which fiscal policy will be more proactive and monetary policy will be “moderately loose”. The communist nation was very clear overnight that it wants to reinvigorate consumption in the first official change in its policy verbiage since responding to the Great Financial Crisis in 2010. Commodities are seeing a boost into the onset of U.S. hours, which can typically bring a cyclical tailwind.

E-mini NQ futures are in a breakout while above what is now rare major four-star support at 21,341-21,392. Although we do not believe a sharp pullback is imminent, it is important to understand this as the line in the sand. To the upside, the index closed above rare major four-star resistance at 21,566-21,569 on Friday and this will stand as our Pivot and point of balance today. That for the E-mini S&P will be settlement at 6099. Price action constructively trading at and above here should usher in higher prices. With a near-term target in the E-mini NQ of…

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