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.

The S&P futures had a nice pop after the “hurricane hype” from the media sat back, and once again Obama calling for a “historical” storm, cannot get anything right, and it was a storm with a bunch a rain, the world didn’t shudder, and you know what, we are all getting pretty sick and tired of all the nonsense. Why do I say this, some think it is because I try to inject my rhetoric into the discussion, but I do not do that, what I do achieve is giving you the “mood” of what “the” market is, the instruments between the Bonds and the Spoos that show the world what the hell is really going on, not he ankle biting
peons like the ones that come on CNBC off the open. And what I am saying is the adults are about to take over the discussion, because nobody could tolerate the nonsense that goes on day to day now as our president is in full campaign mode, and the networks have a lot of explaining to do to make this guy look as though he was nothing but a big mistake. And I am assuming they will be using every waking moment to do that, that is why we get all this “noise” in our news, like everything being “historical”. So the adults are about to take over, and this means a bullish gig is coming. Today the first
step was made by crossing the daily resistance line down at 1176.50, we need to close above there, and then maintain above there and the down trend will be declared dead. Inside today, the low since Europe opened has been 1185.00, but the main support starts at 1183.75 down to 1180.75, that is the pivot to lower pricing, above 1180.75 and we maintain a bullish tone. There is “buoy” support all along this area now, so it may be tough to stay below 1180, with buoy’s through 1178.00, but that is the challenge area. Above, new highs above 1189 puts us on path to go to 1194.50 initial, but 1196.25 magnet is the target. 1198.50 resistance is the last before the 1200 handle. The charts below show that the question remains, can the European Equities get with this, and how far can the spreads between stretch before we have to capitulate if they do not come up with us.

The S&P futures are holding up well, they have been as high as 1176.75, within a tick of the daily resistance line at 1177 today, and then backed off a bit. The line is a heavy marker, however it may be penetrated and it will more be the question of do we close above or below that line, and tomorrow, does it come right back, thus giving the “one-timer”, and we resume lower, or consecutive higher closes going forward and the downturn is over. The first level above of consequence is 1183.50 to 1184.00. Above that is the 1186.75 resistance which is the .786 retrace, and may have the juice to turn things back around back under the daily line. If we trade lower, we will be pitched into a buy signal most likely on the first attempt down, mainly at 1169.00, and then 1163.00.

The S&P futures in the scheme of things is holding up well in a downward bias environment, and the daily resistance line, the line by which if we can close above and stay above extinguishes the down trend and puts us on a course of “healing”. This morning, after being as high as 1161.75, we have settled back a bit, and now we are heavy basically at 1150 and buoy type support at 1147.00. So in initially we are in a bit of a struggle, however we are favoring the upside yet, even though an overall turn-over and downward resumption may be in the cards. 1170.25 is the .618 retrace back to the high, and 1173.00 is good resistance and just above there is our target of the daily resistance line which resides today at 1175.50. There is not a tremendous bias really looking into the open, but it will be difficult to get below 1147 to 1144 this morning, that area is the stronger buoy, 1161.50 then 1168.00 are the two upside tests.

The S&P futures came within a couple of handles of its daily resistance line yesterday which we were expecting a turn down, and then the Dax overnight selling has locked that thought in and we are back in our turn down. This morning we
are looking to sell a pullback, and look to play the short side. This area down here from 1167 to 1169.50 is like a
magnet, and it is which side of that we will key off of. If above respect that we have had a fairly steep decline, and we did not originate, so there is a possibility that we can retrace back up a bit before having to sell-off again. The first area is around 1174.00, and then 1182.50. 1186.50 is the upper magnet area for today, that would be what w e would want
to sell in front of, above there and forget the short gig. Under 1167.00 is 1157.25, the .382 back to the 1077 low. It should be noted that the key pivot, the level that confirms we most likely match or take the low out is 1126.50. So expect a “heavy” trade out of the gates, but when the initial smoke clears, we should be below the 1167 level, or be cautious of an obnoxious updraft.