The S&P Futures Head Higher Amid Broad-Based Dollar Weakness

By IBTimes Staff Reporter | November 09 2009 12:53 PM

Investors are ignoring Friday's disappointing unemployment data and have sent the S&P futures well beyond our downtrend line. Hence, investors appear to be opting for the topside following Friday's erratic session. Today's topside breakout in equities further signifies the S&P's increasing reliance on the path of the Dollar. The Dollar is experiencing a broad-based selloff today after the G20 released a statement saying global central banks will maintain stimulus measures and historically loose monetary policies. The Dollar's downward trajectory is boosting the S&P futures higher sans noteworthy U.S. eocn data. Speaking of the Dollar, the GBP/USD has popped past all of our previous downtrend lines while the EUR/USD tests its highly psychological 1.50 level. Hence, investors should keep an eye on the EUR/USD since a breakout beyond 1.50 and October highs could help the S&P futures head towards their previous 2009 highs. In addition to the Greenback's weakness, we also notice that gold has broken through its psychological $1100/oz level. This is yet another key topside movement for gold, supportive of further weakness in the Dollar and consequently stronger U.S. equities.

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Meanwhile, the U.S. will be relatively quiet on the data front following a busy week. Investors won't receive much from the U.S. until Thursday's weekly Unemployment Claims data. Hence, the S&P's immediate-term performance may become increasingly reliant upon movements in the Dollar. Since the U.S. will be taking a timeout from data, focus will shift to the Far East. China will be printing a wave of data late Tuesday EST, including Industrial Production, CPI, PPI, and Fixed Asset Investment. Any outperformance in China's econ data could help fuel a S&P retest of 1100.

Technically speaking, although the S&P futures have darted beyond our downtrend line, they still have to deal with previous 2009 highs and the psychological 1100 level. Therefore, a couple key topside technicals do remain before the S&P has the opportunity to experience a more protracted breakout. As for the downside, the S&P futures have multiple uptrend lines service as technical cushions now along with 11/06, 11/05, and 11/03 lows. Furthermore, the psychological 1050 level should service as a reliable support should it be tested.

Price: 1079.50

Resistances: 1079.5, 1083.5, 1089, 1094.5, 1098.75

Supports: 1073.25, 1063, 1056.5, 1047.5, 1043.25

Psychological: 1100, 2009 Highs, 1050