The S&P futures are weakening a bit today after failing to challenge previous 2009 highs. The futures are continuing their recent path of relative inactivity compared to movements we witnessed during the Autumn. Investors are digesting today’s mixed U.S. economic data. While PPI printed 10 basis points hotter than analyst expectations, the Empire Index and TIC Long-Term Purchases data points registered disconcerting declines. On the other hand, Industrial Production and the Capacity Utilization Rate both printed stronger than anticipated. Today’s mixed data set is stabilizing the Dollar, yielding a slight weakness after the Greenback’s strong run since the beginning of December. A dip in the Dollar combined with a little pop in gold is normally a positive development for U.S. equities due to correlative forces, and will likely keep the S&P futures above our 3rd and 4th tier uptrend lines.
Meanwhile, investors will shift their focus to tomorrow’s news wire, beginning with EU Flash PMI data along followed by the UK’s Claimant Count Change. As the trading session progresses, investors will also receive the EU’s PMI data along with U.S. Building Permits and CPI. Last but not least, the Fed will announce its monetary policy decision. Although the Fed is likely to keep its monetary policy unchanged, investors will be honing in on the Fed’s statement to see whether it shifts its stance from a loose monetary policy for the foreseeable future. Any shift in the Fed’s monetary stance, particularly to the hawkish side, could yield further strength in the Dollar and weigh down on U.S. equities. On the other hand, if the Fed keeps its monetary policy intact and reassures investors of the continuance of its loose monetary policy despite recent improvements in unemployment and consumption data, then the Dollar could bounce and equities strengthen. That being said, investors may want to monitor activity in the FX markets as currencies react to tomorrow’s events. Any large movements in the Dollar could have an impact on the S&P futures.
Technically speaking, the S&P futures still have multiple uptrend lines serving as technical cushions along 12/11, 12/8, and 11/26 lows. Furthermore, the highly psychological 1100 level could continue to play a key role as it has for the past month. As for the topside, the S&P futures face technical barriers in the form of previous 2009 highs.
Resistances: 1111, 1112.75, 1115.5, 1117.75, 1119.5
Supports: 1107.75, 1106, 1103.5, 1100, 1096
Psychological: 1100, 1075, 2009 Highs and December Lows