S&P Futures Slide with Consumer Confidence

The S&P futures are heading south Tuesday morning after CB consumer confidence came in roughly 10% below analyst expectations.  Lower consumer confidence shows the unemployment data investors will receive later this week could be weak as well.  Investors are setting aside the slight improvements in home prices and Chicago PMI since the CB number was so far off.  The S&P futures have dropped back between our downtrend lines, while the uptrend has suffered a substantial setback.  However, the futures should hold above the highly psychological 900 level and/or our 1st and 2nd tier uptrend lines as investors will likely prevent a technically significant selloff before seeing how tomorrow’s data fares.  Tomorrow the U.S. will release the ADP non-farm employment change, ISM manufacturing PMI, and pending home sales.  Hence, we believe investors could be in for a volatile week.

The S&P’s correlations are logging more substantial declines today in reaction to the mixed economic data from around the globe.  Not only did America’s consumer confidence come in light, but Britain’s GDP and current account data also failed to meet analyst expectations.  The Dollar is strengthening across the board with the Cable and EUR/USD registering substantial losses.  Meanwhile, both crude and gold are in the midst of large down-bars on climbing volume with investors trading the news.  Hence, a dent has been made in the market’s uptrend and the concept of a global economic recovery has encountered another setback.

Investors haven’t been able to fully commit to the concept of a quick economic recovery, resulting in the sideways activity in the S&P futures over the past two months.  Investors find themselves at a crossroads with the first half of the trading year coming to a close today.  Our 1st and 2nd tier uptrend and downtrend lines are approaching their respective inflection points, magnifying the significance of the moment trend-wise.  With plentiful economic data surfacing and earnings season on the way, we feel something’s gotta give.  We maintain our neutral outlook on the S&P until investors can commit to a direction as opposed to the flip-flopping as of late.

Present Price: 912.75

Resistances:  918.75, 923, 931, 935.5, 941.5

Supports: 910.75, 902, 895, 888.75, 881.5

Psychological: 900

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