The S&P 500 mini futures (ESH5) got the oversold bounce we were predicting yesterday, thanks to what has become the “new normal” – an unofficial and sometimes covert intervention from the Federal Reserve anytime the market shows signs of faltering.

Yesterday it was a closed-door presentation by Fed Chair Janet Yellen to a group of congressional Democrats indicating that there will be no “immediate” increase in interest rates.

The US equity market, which had been trading lower, promptly reversed course and started a strong move up that recovered almost all of Wednesday’s losses. The large-cap cash index (SPX) closed at 2017.35, and the futures (ESH5) closed at 2019.00, in both cases, the high for the day.

This process of jawboning the market higher after disappointing Federal Open Market Committee meetings has become standard operating procedure for the U.S. Federal Reserve. The Fed’s actions suggest it now has two linked objectives: keep interest rates down – even a small increase in rates would bankrupt the world’s largest debtor, the U.S. Government – and keep the stock market up.

Today

This is the last day of the month, and the people who manage other people’s money try hard to end the month on a positive note, because in many cases performance bonuses are based on the last day of the month closing price. This end-of-month “window dressing” has a bullish effect and may well move the market higher today.

There is a GDP report due in the morning and a good outcome may help hold the market up. We’ll be watching the 2023-2026 area on the futures. If the price moves above that zone it could continue up to 2038-39.

However, if the markets fails to follow through on Thursday’s advance, we may see a move back down to 2008-2009. If that area fails to hold, the decline could continue to 2000-1998.

  • Major resistance:  2056.50-55.50, 2078-79.50, 2086.50-89
  • Major support:  1985-84.50, 1972-70, 1961-62, 1950-45, 1943.75-36

S&P500 mini futures intra-day chart: ESH5, Jan. 29, 2015, 5-minute bars

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