The S&P futures are playing around with 2009 highs as investors digest U.S. data while looking ahead to the wave of Chinese economic data coming this evening EST. Weekly Unemployment Claims registered a modest decline and the Trade Balance widened. The decline in the Trade Balance is fairly significant since it is the largest deficit in the past 6 months. The rise in imports obviously outpaced the gain in exports, indicative of an improvement in U.S. consumption. The rise in the Trade Balance's deficit is particularly encouraging considering the recent depreciation of the Dollar. However, investors aren't reading too far into the data since its uncertain how consumption will fair post-cash for clunkers. Meanwhile, the Dollar and gold are consolidating ahead of the important Chinese economic data approaching. Since China has been the engine of the global economic recovery, investors will be paying particularly close attention to Industrial Production to see if China's economy is in fact cooling off as some analysts speculate. We believe China's economic data will turn out well due to the indicators provided by recent activity in the Dollar and gold.
The EUR/USD, GBP/USD and gold have all experienced key technical breakouts to the topside following a summer full of erratic consolidation. We believe investors have finally chosen a direction for the next leg. The depreciation of the Dollar couple with a breakout in gold is normally a positive sign for the S&P futures due to correlations. Therefore, all signs are pointing to an optimistic turn of events on the horizon, and China's upcoming economic data may serve as the trigger. However, any setback in China's economic data could ignite uncertainty and result in a pullback in U.S. equities. Meanwhile, crude futures are experiencing multiple inflection points as they wait for investors to make a more solid directional commitment.
The S&P futures are gradually separating themselves from 1000 once again, a positive development psychological. However, the futures still need a follow through on substantial buy-side volume to escape the strong gravitational pool of the highly psychological 1000 level. Investors should make a late night of it and keep an eye on the wires for China's economic data for we could be in for a volatile 24-48 hours.
Resistances: 1036.25, 1039
Supports: 1028.5, 1023.5, 1020.5, 1014, 1010.5