The S&P futures are holding strong above their highly psychological 1100 level despite another wave of negatively mixed data. Industrial Production, PPI, and Capacity Utilization rate data all printed weaker than expected. Possibly the most discouraging figure is the -0.6% Core PPI reading (minus food and energy). The -0.6% Core PPI number shows the Fed's alternative liquidity measures are not fully countering deflationary pressures. Today's downturn in PPI further supports the presumption that the Fed will maintain a loose monetary stance for the foreseeable future. The continuation of dovish monetary policy implies further weakness in the Dollar and more attractive funding for corporations, thereby improving near-term corporate performance. As a result, the S&P futures are continuing to cast aside cautionary economic data reports.
The silver lining in today's data flow is the better than expected TIC Long-Term Purchases number. The positive TIC number suggests foreign interest remains for ballooning U.S. Treasury auctions. Therefore, the Fed apparently has the international monetary support to continue its loose monetary policy for the time being. The U.S. will release more heavily weighted data tomorrow, including CPI and Building Permits along with Housing Starts and weekly Crude Inventories. Therefore, markets could remain active for the next 24-48 hours.
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, the psychological 1100 area continues to play a key role considering it has been a strong technical barrier for the past month. On a positive note, the S&P futures have avoided a sizable retracement below 1100 following yesterday's breakthrough. Meanwhile, the S&P futures have multiple uptrend lines serving as technical cushions along with the psychological 1100 level and 11/13, 11/09, and 11/05 lows.
Supports: 1098.75, 1089.5, 1082.5, 1071.25, 1061.75, 1056.5
Psychological: 1100, Previous 2009 Highs, 1075