By Fast Brokers – The S&P Futures have bounced back above the psychological 1100 level as the Dollar weakens across the board. The futures took a slight hit yesterday due to the combination of a strengthening Dollar and a negative response to Citibank’s fundraising share sale. Investors responded to the Fed’s more optimistic outlook on the economy by snapping up the Greenback, inflicting sizable damage upon the EUR/USD and GBP/USD. That being said, the S&P futures held up relatively well considering the extent of the Dollar’s pop since the two investment vehicles are negatively correlated. However, should the Dollar’s bull run continue, then U.S. equities may be dragged lower since investors will anticipate a decline in a demand for U.S. goods. Speaking of manufacturing, the Philly Fed Manufacturing Index topped analyst expectations yesterday, an encouraging development since the Empire Index printed well below analyst estimates earlier this week. However, weekly Unemployment Claims did register 14k higher than anticipated. Regardless, we don’t view the increase in weekly Unemployment Claims as a major development at this point in time since the data point’s medium-term slope is still negative. Meanwhile, we are entering a holiday shortened week, meaning next week’s trading could be slow because investors will likely take off early for Christmas. We do have a few important data points dropping throughout the week though, including Final GDP and Existing Home Sales on Tuesday. For the time being, investors should continue to monitor activity in the EUR/USD and GBP/USD to determine whether the Dollar can stabilize. Some key uptrend lines were sacrificed yesterday, meaning the Dollar could be in for further strength over the medium-term, seemingly a negative catalyst for U.S. equities.
Technically speaking, the S&P futures are still locked into their medium-term uptrend after setting consecutive higher lows (11/2, 11/26, 12/9, 12/17). Furthermore, the futures have the highly psychological 1100 level serving as a technical cushion along with our 1st and 2nd tier uptrend lines. As for the topside, the S&P futures face technical barriers in the form of 12/13 and previous 2009 highs.
Price: 1103.75
Resistances: 1105.5, 1110, 1112, 1115.5, 1119.25
Supports: 1102.75, 1107.75, 1100, 1097.5, 1095.75, 1092.25, 1088
Psychological: 1100, 1075, 2009 Highs and December Lows
Market Commentary provided by Fast Brokers.
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