The S&P futures are logging solid gains today and are trading back above the 1100 mark once again as negative psychological forces begin to wane. Although weekly Unemployment Claims printed 9k above analyst expectations, they are still well below the psychological 500k level. Additionally, the U.S. released data revealing that the Trade Balance has narrowed, printing $4 billion above analyst expectations. Today's rise in the Trade Balance is a positive development for the U.S. economy since it shows America has not made an abrupt return to the consumption behavior that helped get the nation into this mess, notably a massive trade deficit funded by debt. Meanwhile, Australia released employment data which was much stronger than analyst expectations. Hence, the Australia's impressive economic recovery continues, implying that its central bank may be comfortable with raising rates again at its next policy meeting should global fundamentals cooperate between now and then. Australia's encouraging employment figures have contributed to the broad-based depreciation of the Dollar as investors return to the risk-trade. A weakening Dollar is adding onto positive U.S. econ data, helping lift the futures back above the 1100 threshold.
That being said, the EUR/USD, GBP/USD, and gold are still lodged in their new downtrends as investors await China's econ data during tomorrow's Asia trading session. Disappointing econ data from China could reverse today's stabilization in the FX markets, weighing down on U.S. equities in the process. However, encouraging figures from China could give a little boost to the risk trade and allow investors to snap up riskier investment classes, dumping the Dollar and picking up U.S. equities. In all, investors should keep a sharp eye on the EUR/USD and GBP/USD since they are trading near some technical supports which could determine whether December's selloff extends into Christmas. As for the S&P futures, today's movement back above 1100 is a positive sign due to the technical significance to the level. Not only will investors be reaction to tonight's Chinese econ data, but also tomorrow's Retail Sales and UoM Consumer Sentiment Figures. The recent improvement in U.S. unemployment has encouraged investors that the worst may be behind us. Hence, positive consumption data could lead investors to believe that the overall economy may be turning a corner. However, what remains to be seen is how the Dollar would react to such news since the Greenback appreciated last Friday on the employment data because investors speculated that the Fed will tighten sooner than expected. Therefore, the remainder of the week could end up being a very interesting 24-48 hours.
Technically speaking, the S&P futures have multiple uptrend lines serving as technical cushions along 12/09 and 11/26 lows. Furthermore, the highly psychological 1100 level could continue to play a key role as it has for the past month. As for the topside, the S&P futures face technical barriers in the form of 12/07, 12/03, and previous 2009 highs.
Resistances: 1104.75, 1107, 1110.25, 1115.5, 1107, 1119.25
Supports: 1100.25, 1098, 1095.25, 1093, 1088.25, 1085
Psychological: 1100, 1075, 2009 Highs and November Lows
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