S&P e-mini Futures Comments: Back to the Future

This past week the equity markets could be nicknamed "going back to the future". The earnings season is now underway and several companies are beating market expectations. The July Empire State Manufacturing Survey index was the best in a year nearing zero at -0.55 from the June report of -9.41. As the index moves into positive territory, it implies an expansion of manufacturing in the NY area.

The S&P futures (basis Sept) topped out on 6/11/09 and spent the next several weeks moving lower. On 6/16/09 we received a longer term sell signal for this market. On 7/11/09 the market found a bottom and we received a longer term buy signal on 7/15/09. Some have questioned whether this past week is a short covering rally as it has moved up on light volume. We believe the market has legs to hold itself, but may find some consolidation before moving forward.

There is an initial resistance in the 942 to 947 range. If this level is broken the next level of resistance is 952 to 957.

If the market should consolidate we believe there is support in the 934 to 930 area. The next level of support is 926 to 923.