Tariff Shock Sends E-mini S&P and NQ Tumbling Below Key Levels

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

S&P, yesterday’s close: Settled at 5860.75, down 102.50

NQ, yesterday’s close: Settled at 20,468.25, down 451.25

E-mini S&P and E-mini NQ futures slipped sharply into the close yesterday, trading to a new low after President Trump confirmed tariffs on Canada, Mexico and China will be implemented today. And implemented they were, 25% on imports from Canada and Mexico and 20% on imports from China, up from 10%. Overnight, Canada imposed 25% tariffs on $107 billion of U.S. goods, and China slapped 15% measures on goods, including many U.S. agricultural products. Mexico said it will announce tariffs on the U.S. Sunday. While equity markets are under pressure in lieu of these announcements, and market participants may have hoped for watered-down measures, this was very telegraphed. Furthermore, sentiment and PMI readings, along with the Atlanta Fed GDPNow, which forecasts growth to shrink by -2.8% in Q1, are already extrapolating the impact.

E-mini S&P futures have stuck their nose below the 200-day moving average, but hanging around the level that comes in at 5837 today. As price action battles, hitting a low early this morning of 5812, it is also very notable that 5811.50 is the .382 retracement from the December high back to the August low. Around that level also has 5809, the overnight low into the January 13th session, and the intraday of that session at 5813 and the reversal low in which in never looked back at 5816.50; these levels converge to create rare major four-star support. The E-mini NQ is trading below its 200-day moving average at 20,660, which aligns at the .382 retracement which was broken and will now act as a critical area of resistance in which price action must regain. It is now go-time with the E-mini S&P testing its aforementioned major four-star support and the E-mini NQ testing its at….

WTI Crude Oil Futures (April)

Yesterday’s Settlement: 68.37, down -1.39 [-1.99%]

Crude markets were rocked yesterday by OPEC+’s announcement that April output hikes will go ahead as planned. Following the announcement, Crude Oil fell sharply.

The OPEC+ announcement caught traders off guard. As the group did not outwardly deny the rumors that the April hikes would be delayed when they surfaced two to three weeks ago, a big chunk of the market took it as affirmation that the delays were, in fact, the truth.

The group will increase production by 138k bpd in April and will gradually increase production by a total of 2.2mln bpd by September of 2026. The April output hike may not be enough to fix the global inventory situation in a month, but the additional barrels will help.

Elsewhere, tariffs were placed on Mexico and Canada, with Canadian energy getting hit with a 10% tariff. I haven’t seen any word of exemptions for Mexican crude. China’s additional 10% tariff also went into place.

Canada and China retaliated with their own tariff package last night, while Mexico’s is to come on Sunday. China’s tariffs were largely targeted at U.S. crops.

News also broke late in the day that the Trump administration was looking for ways to ease sanctions on Russia as they look to end the war. This is another fairly bearish headline catalyst traders should be aware of.

Today, April Futures are lower by -0.83 [-1.21%] to 67.54

Global commodity markets are trading risk-off as markets try to digest the tit-for-tat tariffs. One bright spot in this morning’s trade is that U.S. Diesel is trading higher driving up the board crack spread.

There are rumblings of the Israel – Hamas war restarting, as Israel has made comments over the past two days about their uneasiness in extending a ceasefire.

Globally, markets are trading risk-off, with equities and commodities trading mostly lower with bonds higher. Precious metals are holding their bid on the flight to safety.

Howard Lutnick reiterated this morning that these tariffs are tied to the flow of fentanyl, and they could be repealed if the flow stops.

Technical Analysis:

Well, our hope of a settlement above our longer-term pivot zone of 70.03-70.35*** and some hope of the chart showing repair were dashed quickly yesterday. The OPEC+ headline was unexpected, driving crude down immediately to our major three-star support level of 67.60-68.00***. Markets traded through this level on thin volume early this morning but the zone is holding for now.

This market is awash in bearish headlines right now, and judging how these tariffs play out is borderline impossible.

A week ago, we would have loved to have a shot at this buy level, but with all the new headline risks out there, our confidence is not as strong. It is a low confidence buy level with all the headwinds we’re facing this week.

For intraday trading our pivot and point of balance is our three-star level of….

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Originally Posted Tariff Shock Sends E-mini S&P and NQ Tumbling Below Key Levels