Futures Market Blog

S&P Daily Commentary for 2.26.09

The S&P futures ended a volatile session on a low note Wednesday after President Obama discouraged investors by implying increased government oversight of financial institutions.  Furthermore, Existing Home Sales data was discouraging, showing the housing market has yet to bottom out.  Therefore, despite the psychological initiatives via government stimulus and reassurances from Fed Chairman Bernanke, critical data continues to paint a bleak economic picture.  Encouragingly, the banks and auto manufacturers are stabilizing a bit, easing fears of bankruptcies.  The U.S. will release more key economic data today including New Home Sales, Durable Goods Orders, and weekly Unemployment Claims.  Around the globe, investors will be keeping a keen ear on what Trichet and King have to say about the European and British economies, respectively.  Additionally, Japan will release a slew of economic data in the evening, showing us just how bad the Japanese economy is.  As a result, Thursday could provide more than enough evidence to heighten volatility over the next two trading sessions.  Correlation wise, Crude futures are breaking out while the 30 Year is flirting with the idea of falling below February lows.  Therefore, the correlations are creating a situation where the S&P futures could see a nice pop to the upside with a possible retest of the psychological 800 level.  However, conditions remain highly sensitive and could swing one way or another at the drop of a coin.  Our downtrend line is still bearing down on the S&P futures with the uptrend line well out of reach.  Therefore, we have no circumstantial evidence to alter our negative outlook on U.S. equities.  Fundamentally, we maintain our resistance of 774 with fresh 2nd tier and top-end hanging at 782 and 789.75, respectively.  To the downside, we hold our support of 766.25, with 2nd tier and bottom-end supports resting at 760.25 and 754.25, respectively.  The S&P futures are currently trading at 771.25.