S&P Futures Hold Strong Despite Dollar Rally
Thursday, March 18th, 2010Thursday, March 18, 2010
The S&P futures are holding strong despite today’s broad-based rally in the Dollar. EU uncertainty has returned to the forefront with Greece challenging the EU to come up with reasonable measures of financial assistance within a week. If not, Greece has reiterated that it will head to the IMF for help. Germany called Greece’s bluff earlier by publicly contemplating the possibility of the IMF entering the fray. However, Trichet and the ECB advised against allowing Greece to go to the IMF, so it will be interesting to see how the power struggle plays out. Sarkozy recently stated France’s full support for Greece, meaning Germany is the loudest critic among EU members. The ball is now in Germany’s court and we will have to see how the situation plays out. Regardless, investors should keep an eye on activity in the EUR/USD and monitor whether the currency pair’s decline bleeds into the other major Dollar pairs, most notably the Cable and Aussie. Resilience in the S&P futures is admirable and they are still trading well above 1150 and January highs. Hence, the S&P’s uptrend remains intact for the time being. Equities are likely deriving some of their strength from today’s positively mixed data set. Although Unemployment Claims and CPI printed about in line with analyst expectations, the Current Account and Philly Index each topped estimates. Hence, exports and manufacturing are continuing to pick up, a positive sign for America’s economic recovery. However, unemployment remains a drag on the U.S. economy, indicating the Fed could remain hesitant in tightening liquidity any time soon. The data wire will be relatively quiet across the globe, meaning attention could focus in on the EU and further developments in Greece.
Technically speaking, the S&P has made a strong statement by creating topside separation from its psychological 1050 level and January 2010 highs. We have run out of foreseeable downtrend lines, normally a positive technical development. As for the downside, the futures still have our steep uptrend line serving as a technical cushion along with intraday and 3/15 lows. Furthermore, the psychological 1050 level could serve as a solid support should it be tested.
Price: 1163
Resistances: 1167.75
Supports: 1162, 1159.25, 1155.75, 1153, 1150.25
Psychological: 2010 highs, 1150, 1175, 1200
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