Below is a sample of our Daily Commentary. To get this comment, and our daily coverage of 15 additional markets and trade ideas, visit futures-research.com for your free 2 week trial!
Typically the S&P doesn’t seem to perform impressively in the wake of a consolidation that follows a key high. In looking at the action in equities this week, it would seem like the market has lost a bit of upside momentum and that could be troubling a portion of the bull camp. In fact, while the US and international data flow over the last 24 hours has been supportive of the bull case, one gets the sense that the market is either running low on buying fuel, or that there is some lingering doubt about the double dip recession fear. With almost every economist on the talk show circuit being asked, what shape the recovery will take, it is clear that many anticipate recovery, but that most are still skeptical. In fact, with favorable economic news seen from the German IFo and the trade generally expecting positive readings from the US later this morning, the macro economic outlook would seem to be clearly favoring the bull camp. However, overnight equity markets showed a noted up tick in volatility, before posting only minimal gains. Therefore, the market is behaving somewhat suspect into the US Wednesday trade action. With weakness in oil sector stocks yesterday and choppy to lower action being seen in some commodity stocks a portion of the bullish bias in the market is extracted and that could make the US scheduled news flow today even more critical. In short, the market needs all the help it can get from the numbers just to avoid some back and fill profit taking action.
S&P 500: With a series of closes in the September S&P around the 1025.70 level it would appear as if the market is in the midst of a pause. In other words, the market seems to be in need of some retrenchment before another leg higher is seen. In fact, if the bull camp were poised to push prices even higher today, we would have expected overnight data from the German Ifo to have put prices in a more definitive upward track. Initial support in the September S&P is seen at 1018.40 but we suspect that level will fail to hold in the afternoon action.
DOW: While the September Mini Dow has retained a pattern of higher lows, we fear for a noted correction in the aftermath of the news flow this morning. Certainly the market can continue to feed higher off positive momentum and the upcoming data, but traders should be on the alert for more bearish talk about market valuations from a noted economist later in the trading session today. In fact, a number of noted economists think that the market is in effect on a “sugar high” or simply running too far ahead of reality. Therefore, we suspect that prices will attempt another push up today and that profit taking action could end up dominating before the close. Initial resistance and perhaps a morning target in the September Mini Dow is seen at 9,576, with afternoon support and a potential target seen down at 9,430.
NASDAQ: While the market would seem to have plenty of bullish fundamental stories to support ongoing gains on the charts, we just get the sense that the market is starting to see the gradual recovery theme as a bit stale. In fact, without a rise above yesterday’s high of 1655.50 in the early trade today, we suspect that the September Nasdaq will return to consolidation support of 1627. In conclusion, we think the bulls need a perfect storm of data and auction demand to push stocks to another higher close today.
TODAY’S MARKET IDEAS: The bulls would appear to need better than expected US data today to keep the upward tilt in place.
