The S&P futures are trading off of intraday highs after briefly setting new 2009 highs. However, the psychological 1100 level is proving to be a tough technical barrier once again, resulting in present hesitation. Investors are reacting positively to an encouraging wave of econ data from both Japan and China. Japan's Core Machinery Orders data came in much higher than analyst expectations (10.5% vs 3.4% expected), signaling a pickup in Japanese manufacturing production. As for China, Industrial Production, Retail Sales, and Trade Balance data all outperformed while pricing data disappointed slightly to the downside. The improvement in China's Trade Balance and Retail Sales data points are very encouraging developments. The boost in China's trade surplus shows exports are picking up since Retail Sales rose by 16.2%. The rise in export demand implies that global rates of consumption may be improving. As a result, investors are showing a preference for more risk-oriented investment vehicles, sending the S&P futures to 1100 in succession. In addition to positive econ data from the Far East, multiple statements from Fed officials supported the present assumption that the central bank will keep its monetary policy loose for the foreseeable future. The concept of a continuation of cheap corporate funding could improve corporate performance, thereby applying an upward momentum to U.S. equities.
Meanwhile, Australia's Unemployment data late Wednesday EST could move the FX markets a bit, thereby impacting the S&P futures due to correlative forces. Should Australia's job data print better than expected, investors may anticipate further rate cuts in the near-term, thereby weakening the Dollar and providing a positive catalyst to Thursday's equity trading session. The U.S. will release weekly Unemployment Claims data tomorrow, and any reading below 500K could have a psychological impact on equities.
Technically speaking, the psychological 1100 level is our final topside barrier for the near-term besides our 3rd tier uptrend line. As for the downside, we've created a new 2nd tier uptrend line to complement our 1st tier uptrend line. Additionally, the S&P futures find technical cushions in the form of 11/10 and 11/09 lows along with the psychological 1075 level. Meanwhile, investors should keep a close eye on the EUR/USD's interaction with 1.50 and its October highs. Any sizable breakout above these two technical barriers could imply a similar movement in the S&P futures due to their positive correlation.
Resistances: 1098.75, 1100, 1102.5
Supports: 1089.5, 1082.5, 1074.75, 1067.25, 1062
Psychological: 1100, 2009 Highs, 1075