The S&P opened with a bit of a bid posting a 1128.50 high before clearing a path now down to at least 1111.25, and then once Europe kicked in we have now made another attempt upward, however resistance begins now at 1124.25, and the “heavy” starts at 1126.75, so I am expecting this area to rebuke, and send us down toward the lows again yet today. If we are persistent about testing or trading 1127.50 area, then that shows there is some interest in a bid down here, and we should try to hold into the 1130 handle. If we do get sent back downward as anticipated, 1119.75 is support, but 1116.25 I
think is the support that if taken out then cast us back into a weak state.

The S&P had the weekend to digest all the action in the markets last week, and since the open on Sunday night, there has been a good bid to things, basically willing to trade above the 1127.50 magnet. It was Europe that had the soft open, reshuffling the deck and taking us down to the 1115 area, and then has been bid the rest of the evening into the morning, and we once again are pressing higher. Over night technically the futures have a heavy line at 1144 area, however being persistent about trading higher, is beginning to wear that heavy effect away. 1148.00 is a good magnet and I am not expecting the futures to open above there, rather they will have to mount that fight once open with the cash market. If we press below 1145.50 on the open, that level being the .382 retracement, will have to be re-proven during the cash market, otherwise looked at as resistance again. The first support area if we back off some this morning is 1136.50. The main target below initially is 1127.50, if we turn over and look downward, that is our first target.

The S&P has slipped as low as 1126.50, overnight, after opening about 14 handles lower, and mounting a small 10 pointer, but then traded lower again through the Europe session even though the European stocks are basically trying to hang around unchanged. This morning the futures traded down to 1126.50, and now through the mid-morning we will be in a downward current, looking to fade an up move if there is one and then a test of the lows again, it would take straight away buying off the open to challenge that climate. If we get an upward attempt, the first area of concern will be 1145,
and then if above there the 1162-64 area is the next resistance. There is not a lot of description down lower here, 1132.25 would be the first test, but if we are making new lows, 1122 ultimately maybe the best early test for a low.

The S&P spent the return day off the Labor Day holiday putting the equity markets in your face, and driving them up out of a hole, even though watching Europe get the week started you were thinking that the downward trend had resumed, at least technically that is what I was looking at. It worked over all the resistance and sell points, and continues to shove it back up to the daily line again, which today resides at 1178.50, and once again, which side we close on will be the technical bias for direction. It would appear that we are basically trading in a 25 handle range from 1163 area as the downside boundary, and 1187.50 as the upper boundary. If we keep marching and get above the upper boundary, then the next main magnet and area of note is 1194 to 1196.00. I believe the odds favor some kind of turn down here this morning, at least one gut check, but beware, like I have been saying the technicals have not been being obeyed yet, but if it begins, 1170 to 1168.50 will be the first test level.

The S&P on Friday closed right near the low of the week after we rounded out on the bounce just in front of the 1130 area, closing out back below the daily line at 1169.25. Over the holiday however Europe and issues abroad have pulled the S&P futures down to the .618 retrace back to the low of 1077 at 1136.00 area, but have bounced a bit toward the U.S. open and are trading around the ½ way back retracement at 1153.50. On the upside, 1154.50 is the start of a “heavy” level this morning, and I am watching 1157.50 as a line in the sand, by which if we get above, we can continue the repair
work back toward Friday’s low of 1168.50. If we cannot manage 1157.50, the “minimum”, then the futures remain vulnerable. 1162.50 is the magnet overhead, and if we flirt here or get above, then the gap to 1168.50 should get closed. Off the open, 1152.00 to 1153.50 is what the futures need to open north of to get that possible buying spree initially, but under 1152.00 on the open and we may skip that part of the morning. 1145 is the first support to watch, from there it is 1140.50 to 1141.00 area.

The S&P has a fair amount of data coming out this morning, featuring the on going claims number along with productivity/costs, construction spending and the ISM manufacturing number. So the landscape may shift just a bit but this morning lays out like this. For starters it should be noted that the fixed income seems well intentioned to hold their daily support lines, which keeps them bullish, and thus implying a tough road ahead for the equities. The S&P daily line is down at 1190, quite a bit away, however if you look at the chart below, you can see that the Dax is under and looks content under its daily line, so that’s two “no” votes on equities holding. Given that atmosphere, this morning 1207.25 is
the lower magnet and support initially. 1205.50 is support below there, however if we get below 1205.50, then the task of hoding up becomes much more difficult. Under 1201.75 confirms the weakness. On the upside, it starts at 1215.75, which is resistance and then 1216.25, only above here do we become enthused, with 1218.50 as resistance and then an upside release level at 1222.50, above there we are bullish. Thus 1215.75 and how we act there will indicate what type of upside we are looking at, for we just argued how the atmosphere is not conducive for a rally, and we are vulnerable for a turn down. I would also note that we should see a “narrowing” now of the gap between the Dax and the Spoo, so one has to come up, or one has to go down. [5785 daily resistance line]… Dax above there or S&P below 1190……

The S&P futures are maintaining well above their daily support line, and two closes above brings the odds that we are going to hold up here go up dramatically. The line for that close today is at 1182.00. To get there however the S&P futures would need to pass through the downward escape hatch level at 1191.25, below there and things begin to pick up speed on the downside. Above there and we flirt with tangling back up at the high. Longer term it should also be noted that our long term buoy of 1242 before the month end will most likely not happen, but it sets up far an easy “one-timer” close and then back up given that we just have to close higher by the end of September. I mention this because this is the
long term outlook, one of bottom is in, and we continue back to our all time highs, verses sideways to lower trade that lasts form the next 5-6 years. I believe that the technicals indicate that if we can re-join that longer trend and not have to break loose to that latter scenario, that this could be the beginning of a much larger overall rally over the next 30 years. One that takes you and I into our golden years. Today we have a smaller battle at 1203.50 to 1204.00, and this area may act heavy
initially. However there is a more predominate “buoy” effect bid that emerges at 1297-98 area, this is the level of maintenance to keep a bullish tone this morning. Production under there toward the escape hatch leaves the futures vulnerable. On the upside, 1207.25 is the overnight volume champ, that magnet may be resistance now, but above there and we move toward the high at 1210.00.