The S&P futures are recovering nicely from Friday's sizable retracement on large volume in the wake of rising investor uncertainty. The S&P futures slammed beneath Wednesday lows, yet managed to avoid a retest October lows by a narrow margin. Investors are testing the waters again this morning after the ISM Manufacturing PMI and Pending Home Sales data points came in well above analyst expectations. However, the ISM number isn't too surprising since we've seen outperformance in regional Manufacturing PMI data recently. Exporters and manufacturing businesses likely benefited from October's sizable depreciation of the Dollar. As for the Pending Home Sales number, while encouraging, the positive reading derives its strength predominantly from Existing Home Sales rather than New Home Sales. Hence, the problems that concerned investors on Friday haven't been answered today. Therefore, a downward pressure does remain and investors may wait for more econ data and the monetary policy decisions later this week before making a larger commitment in either direction.
Though U.S. data will be relatively quiet tomorrow, the markets should come to life on Wednesday with the release of ADP Non-Farm Employment Change and ISM Non-Manufacturing PMI data points. Not to mention the FOMC will announce its monetary policy decision later that afternoon, only to be followed by the BoE and ECB on Thursday. There is increasing investor uncertainty surrounding the present monetary stances of the aforementioned central banks. Global economic data has been printing mixed lately and there are signs that serious obstacles remain ahead of the economic recovery. However, before the data turned mixed the BoE was becoming more hawkish and the ECB dovish. Therefore, while investors are expecting the Fed to keep its policy unchanged, it will be interesting to see how the other two behave later this week.
Meanwhile, the S&P futures are fighting to climb back above our 1st tier uptrend line and the psychological 1050 level. However, we've received some heavy sell-side activity lately, and the S&P futures also face our downtrend lines along with 10/29 and 10/27 highs. Therefore, some challenging immediate-term topside technicals are in play. As for the downside, the futures made a fairly negative statement by dropping beneath 10/29 lows on high volume. However, should the S&P futures deteriorate further they have October lows and the highly psychological 1000 area serving as technical cushions.
Supports: 1041, 1036, 1029.5, 1022.5, 1014.25
Resistances: 1053.75, 1061.5, 1069.75, 1075.5, 1082.25
Psychological: 1050, 1075, 1000