The S&P 500 eked out a gain on Monday, running its winning streak to eight straight sessions. The drive for nine is on today, but much like yesterday, the futures market is leaning in a way that suggests the cash market is going to open on a modestly lower note.
Currently, the S&P futures are down seven points and are trading 0.3% below fair value. The Nasdaq 100 futures are down 19 points and the Dow Jones Industrial Average futures are down 63 points, which leaves them 0.2 % and 0.3% below fair value, respectively.
There are a few headlines that will get some attribution for the negative bias.
The Trump Administration is proposing a plan to implement tariffs on ~$11 billion of EU goods as a countermeasure for the subsidies the EU provides Airbus; Pentair (PNR) is warning of a considerable Q1 EPS shortfall and has slashed its FY19 EPS guidance, citing the adverse cold and wet weather and inventory building in key distribution channels; and American Airlines (AAL) has tempered its Q1 unit revenue growth outlook to flat to up 1.0% from flat to up 2.0%, citing the government shutdown and the grounding of its 737 MAX fleet.
These items don't have a positive hue to them, yet it may be safe to say that the softness in the futures market is tied up mostly in an expectation that the market is due to take a breather.
It took a short breath yesterday before rebounding in afternoon action, staying true to an inclination to buy on dips. Accordingly, there isn't a useful purpose in trying to pass along an opening indication as anything more than it is.
The market is due for a pullback. Does that mean it will experience one soon? Not necessarily. Markets can stay overbought (and oversold) longer than you might think, but with the run the market has been on, it should not be a surprise to see a pullback occur.
The only question is, what will the trigger be for a pullback?
Will it be an earnings disappointment, a geopolitical shock, a negative development on the trade front, a decision pertaining to monetary policy, or simply some technically-driven price action?
There are a lot of potential excuses in the incubation chamber, but to this point, the market has been finding more excuses to trade up than to trade down.
The latter point notwithstanding, price action could be the tell in the very near term as the S&P 500 continues to flirt unsuccessfully with the 2900 mark, which is seen as the gateway to challenging the prior all-time high reached last September.
Fittingly, there are a lot of news catalysts lingering on the near horizon that will help dictate the course of trading matters over the remainder of the week and whether the 2900 level serves as a point of key resistance in this uptrend or pivots to a level of support in the bid to make a run at the all-time high.