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U.S. Equities Mount A Post-Debate Rally

With the first presidential debate now in the books, traders are taking a break from political uncertainty. U.S. equities are up big on the day, led by steep rallies in the leading indices. At the halfway point of the Wall Street session, the DJIA DOW (+500), S&P 500 SPX (+50), and NASDAQ (+167) are all trending to the bull. For now, risk is back on in the American equities markets.

On the economic news front, this morning brought a few metrics worthy of note. Here’s a look at the highlights:

Event                                                                                        Actual                Projected           Previous

ADP Employment Change (Sept.)                                          749K                    650K                  481K

Core Personal Consumption Expenditures (QoQ, Q2)      -0.8%                   -1.0%                  -1.0%

GDP Annualized (Q2)                                                              -31.4%                  -31.7%              -31.7%

The headliner from this group of figures is the rise in job creation. The ADP Employment Change (Sept.) came in almost 100,000 above projections and nearly doubled August’s numbers. This is good news for U.S. labor and signals that the COVID-19 recovery is progressing. In addition, downward revisions to the dismal Q2 GDP and consumption figures are also playing well in today’s market.

Aside from this morning’s economic data, last night’s debate brought a heated exchange between sitting POTUS Donald Trump and challenger Joe Biden. Perhaps the biggest takeaway was dialogue regarding election fraud, paper balloting, and a potentially contested outcome. These are issues that the markets will be following closely as 3 November draws near.

A Post-Debate Rally For The S&P 500

After a sluggish Tuesday, December E-mini S&P 500 futures are driving toward the 3400.00 handle. Bids have hit the market in mass this morning, producing a strong intraday bullish trend.

December E-mini S&P 500 Futures (ES), Daily Chart

Here are two levels to watch going into late-week trade:

  • Resistance(1): Daily SMA, 3391.50
  • Support(1): Bollinger MP, 3335.50

Bottom Line: If we see the post-debate rally continue for U.S. stocks, a scalping opportunity may set up in the December E-mini S&P 500. For the remainder of the session, I’ll have sell orders in the queue from 3390.75. With an initial stop loss at 3393.75, this trade produces 8-12 ticks on a rejection of the Daily SMA.

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Shain Vernier
US Analyst
Shain Vernier has spent over 7 years in the market as a professional futures, options and forex trader. He holds a B.Sc. in Business Finance from the University of Montana. Shain's career includes stretches with several proprietary trading firms in addition to actively managing his own accounts. Before joining FX Leaders, he worked as a market analyst and financial writer.
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