The S&P futures are creeping higher after Weekly Unemployment Claims registered an encouraging drop to 512K. However, the claims data comes with mixed signals since productivity surged and labor costs plummeted. Therefore, employers are getting much more out of their workers for a reduced cost. This could drag on the employment market since companies will likely higher at a slower, more cautious rate. Regardless, the decline in claims is encouraging, and sets the stage for tomorrow's headline Unemployment Rate and Services Employment Change data releases. Analysts are expected the Unemployment Rate to print at 9.9%, just shy of the psychological 10% level. Any reading at or above 10% could deal a negative psychological blow to equities, and vice versa. Therefore, tomorrow's wave of unemployment data could be a market mover.
Meanwhile, the Fed kept its monetary policy unchanged as anticipated since unemployment hasn't improved enough for the central bank to feel comfortable with tightening liquidity. On a positive note, the BoE increased its liquidity package by 25 billion Pounds vs. 50 billion expected. The GBP/USD is receiving a nice boost in reaction to the tighter than expected monetary policy from the BoE. On the other hand, the ECB kept its policy unchanged, and will likely make investors wait another month before outlining their plan for reducing their alternative liquidity measures. The ECB's decision deals a slight blow to confidence since analysts were hoping the ECB would take a step forward today rather than standing pat. Today's early morning rally in the EUR/USD has halted in reaction to the decision, and could limit immediate term gains in the S&P until we receive tomorrow's wave of data.
Meanwhile, the S&P futures have popped back above their psychological 1050 level and our 1st tier uptrend line, and it appears they may try to make a run towards our 2nd tier downtrend line. Furthermore, investors should keep in mind that gold experienced a large topside breakout earlier this week. The precious metal is usually negatively correlated with the Dollar and positively correlated with the S&P futures. Therefore, gold's breakout could be hinting at a similar movement in U.S. equities. However, a downward momentum remains in the market, signified by our 2nd tier downtrend line and the pop in sell-side volume equities received on Friday. Therefore, the S&P futures are currently at a crossroads and investors should actively monitor the markets for any significant technical shift in either the S&P futures or their correlations.
Resistances: 1054.75, 1062.5, 1069.75, 1077, 1083.25
Resistances: 1044.75, 1036, 1029.25, 1022.5, 1014.25
Psychological: 1050, 1075, 1000