The S and P futures are consolidating with the battle heating up between the bulls and the bears. We continue to receive mixed data from the U. S., preventing investors from committing fully to the concept of an economic recovery.
The theme at present is improvement in manufacturing coupled with a collapsing housing market while producer and consumer prices trend downwards. Although analysts predict the true economic recovery will begin with a turnaround in housing, the fact that all of the data coming from the U. S. isn’t overwhelmingly negative is a relief.
The positive that really sticks out from our screen is the upturn in weekly Unemployment Claims. Although any number over 600k is horrible to say the least, an improvement is welcomed. However, the negatives swirling around the bulls are preventing U. S. equities from skyrocketing.
Therefore, if the consolidation lasts for much longer, the S and P futures run the risk of losing their upward momentum. Conversely, the longer the futures consolidate, the further away our 3rd tier downtrend drifts.
Our correlations are signaling a game-changing move approaching, particularly crude futures and the EUR/USD. Both investment vehicles will be experiencing multiple inflection points soon, implying a return to high volatility.
We’ve seen volume pick up in the S and P futures over the past couple sessions, so we would not be surprised to see a large move in the coming days. We maintain our positive outlook on the S and P futures trend wise unless the collapse below our 2nd and 3rd tier downtrend lines.
Additionally, the futures still have the highly psychological 800 level on their side. Fundamentally, we find supports of 845.25, 839.75, 834.75, 829.5, and 825. To the topside, we see resistances of 850.5, 856.25, 867.75, and 871.5. The S and P futures are currently trading at 850.50.
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