S&P Post Solid Gains Out of the Gate

The S&P futures are performing nicely Monday morning as they attempt to create separation between price and our near-term downtrend lines.  The S&P futures could have a little upward mobility today should they clear our 1st tier resistance.  The next pit-stop would likely be near our 3rd tier uptrend line and our 935.5 resistance.  We are uncertain where the S&P is getting its positive momentum from today other than China’s sudden reaffirmation that it plans no immediate, large-scale exit from the Dollar.  This rhetoric is a complete reversal from last week’s call for a new global monetary standard.  Sifting through the confusion, it seems China is saying it’s sticking with the Dollar for the near-term, yet is planning to diversify its longer-term reserve composition.

Regardless, China’s newest statement is having a stabilizing effect on U.S. Treasuries, which is comforting to inventors.  Speaking of Treasuries, the 30 Year T-Bond futures have posted encouraging gains over the past 10 days in reaction to substantial demand at recent auctions.  As a result, yields have declined to more respectable levels, temporarily easing investor concerns surrounding the impact of rising rates on a fragile U.S. economy.  Therefore, rising/stable Treasury prices are having a positive impact on equities, a 360 from the pre-crisis days.

Putting this week’s positive start aside, the real game changer will be the flood of economic data beginning with tomorrow’s consumer confidence and Chicago PMI data points along with Japan’s Tankan manufacturing index.  Investors are still attempting to gauge where the economic recovery stands while trying to set a bar for future corporate performance.  Although current moment lies in the bulls’ corner, there’s a new downward force holding down price.  Hence, the markets may continue their relative sideways movements until investors get more concrete economic data and corporate earnings.  With important economic data on the way, the ingredients are on the table for investors to finally make a new directional commitment.  We recognize the same indecisiveness in the GBP/USD, EUR/USD, USD/JPY, gold and crude.  Therefore, we will monitor the performance of the S&P’s correlations for any directional indication.

Present Price: 922.25

Resistances: 923, 931, 935.5, 941.5, 947

Supports: 918.75, 910.75, 902, 895.25, 888.75

Psychological: 900

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