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The S&P Futures Test 1050

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28 October 2009 @ 01:00 pm ET

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The S&P futures are testing their psychological 1050 level after drifting below our important 1^st tier uptrend line. Our 1^st tier runs through October lows, meaning we could potentially be in for a near-term retracement towards 1010 and the highly psychological 1000 zone. U.S. equities are reacting negatively to more disappointing economic data. Although Core DGO data beat expectations, the headline DGO number and New Home Sales both printed negatively. Therefore, New Home Sales continue to trail behind the recovery in Existing Home Sales data. This trend indicates buyers are likely snapping up homes in short sale or foreclosure instead of buying a new home. Regardless, the excess supply of housing is declining, albeit at a snail's pace. In addition to today's negatively mixed econ releases, yesterday's CB Consumer Confidence number also came in well below analyst expectations, reflecting recent negative results from UoM data.

However, despite today's pullback in the S&P futures, all eyes will be in tomorrow's Advance GDP data. If Advance GDP can manage to top analyst expectations, this would likely provide a boost to U.S. equities and help the S&P stabilize. On the other hand, a negative showing from Advance GDP could just place further downward pressure on the S&P futures and actualize a retest of previous October lows. Meanwhile, the EUR/USD and AUD/USD are experiencing a sizable pullback as well, indicating an investor retreat from riskier investment vehicles.

Technically speaking, it will be interesting to see how much gravitational pull 1050 will have on the futures. Beneath present levels, the S&P futures have 9/28 and October lows serving as technical cushions along with the highly psychological 1000 level.

Price: 1048.75

Resistances: 1070.5, 1076, 1082.25, 1088.75, 1094.5

Supports: 1048, 1040.75, 1030.5, 1025.75, 1014.25

Psychological: 1050, 1075, 1000