Tax Plan Impact

Outlook: Global stock markets were mostly higher Thursday as investors tried to gauge the impact of the sweeping tax reform plan. Trump and congressional Republicans proposed a $5 trillion tax plan, calling it much-needed relief for the middle class and a boost for the economy. The proposal would deeply cut taxes for corporations from the current 35 percent to 25 percent and simplify the tax system, while nearly doubling the standard deduction used by most Americans. One of the proposals was for a one-off low tax rate for firms repatriating overseas profits. That pushed up the greenback as it could lead to a phase of dollar buying. The final picture of the tax plan is unclear.

/ES Value: YVAH 2509 YPOC 2504.50 YVAL 2498

Plan: Yesterday /ES market left a bullish bimodal profile (PBT 2515.75 and LIS 2501.50) Watching the big picture, we're moving within 2485-2509 auction range, drawing a bimodal (LIS-CLVN 2497). Overnight is balanced moving within yesterday's value, so we've 2 options:

A) If market remains above CLVN 2497 with cash volume rising, try to be a buyer leaning on 2498-2501.50 towards YVAH 2509 and PBT 2511.50 Failure to take out ONH early is signal of weakness.

B) If market moves below CLVN 2497 with cash volume falling, try to be a seller leaning on 2497-2495.50 towards edges 2489-2485. Failure to breakdown ONL 2494.25 early is signal of a strength.

Tips: Normal Auction after a 'D' breakout, usually draw a bimodal 'B' first, to end at trimodal 'E'. Yesterday, market got balance from last low 2485 towards 2509 so back to fill the holes, makes sense. On the bigger picture (composite) that range shows a bimodal with CLVN 2497 as line in the sand. So, market could test 2497 again, to fill and confirm balance or reject before drawing a trimodal 'E'.

Today's Economic Calendar

08:30 AM GDP Q2
08:30 AM Initial Jobless Claims
09:45 AM Fed's George speech
09:45 AM Bloomberg Consumer Comfort Index
10:30 AM EIA Natural Gas Inventory
11:00 AM Kansas City Fed Mfg Survey
01:00 AM 7-Year Note Auction

Link for Updates

Disclaimer: All information on this outlook is for educational purposes only and is not intended to provide financial advice.

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