The second quarter earnings season isn’t working very well for US stocks. The big hitters like Caterpillar and 3M followed IBM in reporting earnings that disappointed the Street and murdered the stock price. The Dow traded below the opening price for the year, and dragged the S&P and the index futures (ES) down with it.

The S&P500 mini-futures (ES) spent most of the day in red numbers, pushed down by brutal earnings reports and the good-news-is-bad-news influence of dramatically lower Jobless Claims – the lowest in 42 years, at least until they are revised later. Good employment numbers mean the Fed may go ahead and raise interest rates in September, which is bad news for the market. Yeah, it’s nuts.  

The exception to the bloodbath was Amazon, which announced a totally unexpected profit. That helped hold the ES just barely above its major key support zone and after the usual 3 pm price ramp, the futures closed at 2098.50, or 9.50 points below the previous close. That’s a little disquieting, but so far we are still interpreting the recent decline as a short-term correction.

Today

Today 2093.75 will be a very important line for the ES. To turn back to the upside the ES needs to close above that level today. Closing near or below it will probably lead the futures lower next week. Today 2113.75-14.50 will be first intraday resistance zone. A move above it will be bullish, and could lead ES to back up to 2121.75-23.50 or higher.

The very short-term indicators are getting oversold again. We should expect yesterday’s low (2091.50) will hold up today.

Major support levels for Friday: 2095-92.50, 2085-88.75, 2062-64;
major resistance levels: 2128.50-29.50, 2134.50-36.50 and none

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Chart: S&P500 mini-futures (ESU5) July 23, 2015