The S&P futures appear to have finally broken free of 1100 after a month long struggle with the key psychological barrier. The S&P futures are climbing to fresh 2009 highs despite a wave of negatively mixed U.S. econ data once again. Although the headline Retail Sales number beat analyst expectations by 4 basis points, the Core figure disappointed expectations. As a result, it appears auto sales picked up while the remainder of retail sales struggled under of pressure of a historically high unemployment rate. In addition to the mixed retail sales data, both the Empire Index and Business Inventories printed well short of analyst expectations. These negative data releases tag onto Friday's discouraging UoM reading. The positive reaction of the S&P futures to negatively mixed data flows over the past two sessions is a bit puzzling, and could stem from an improvement in weekly Unemployment Claims along with a weakening Dollar. The U.S. will release another set of key data points tomorrow, including PPI, TIC Long-Term Purchases, Industrial Production, and the Capacity Utilization Rate. We will be paying particularly close attention to the TIC data to see whether foreign purchases of U.S. Treasuries stayed positive.
Meanwhile, the combination of rising gold and a falling Dollar seem to be propelling U.S. equities higher due to correlative forces. Gold continues to set new all-time highs while topside barriers in both the EUR/USD and GBP/USD wear thin. Additionally, the AUD/USD is looking to break out to fresh 2009 highs of its own. The devaluation of the Dollar is making U.S. goods and services cheaper abroad, thereby increasing revenue for U.S. corporations and lifting the S&P futures in the process. That being said, investors should keep an eye on the EUR/USD and GBP/USD as both major Dollar crosses face their previous monthly highs. A topside breakout in these currency pairs could indicate further upward movements in the S&P futures due to their positive correlation.
Technically speaking, we're presently unable to place any near-term topside technicals on the S&P futures due to a lack of perspective. However, a retracement towards 1100 wouldn't be out of the ordinary considering the psychological influence the level has had over the past month. As for the downside, the S&P futures have several uptrend lines serving as technical cushions along with 11/13, 11/09, and 11/05 lows. Additionally, the 1100 level could begin to work in the S&P's favor should it be tested.
Supports: 1098.75, 1091.75, 1082.5, 1075.75, 1064
Psychological: 1100, Previous 2009 Highs, 1075