Sep
6
2010

 

S&P Futures Hover Around 1100

The S&P futures are hovering around their highly psychological 1100 as investors celebrate Labor Day following an impressive week in equity markets.  A stronger than expected non-farm payrolls figure topped off an encouraging turnaround in sentiment with the S&P futures rallying solidly from our key long-term uptrend line.  A pick-up in M&A activity along with signs of life in the employment market have rejuvenated bulls who were beaten down by a dreary month of economic data.  That being said, considering headwinds do remain in the global economy it would be wise to exhibit a cautious optimism as we monitor whether August lows are a lasting bottom or just temporary relief.  Interest rates in Greece are back at levels prior to the EU’s emergency rescue package and stress test results, meaning fiscal fears could once again creep back into the marketplace.  However, it’s clear that the Federal Reserve and other central banks are ready to act should global fundamentals signal a double dip is approaching.  Additionally, it’s probably safe to assume the government would enter the fray with a new stimulus package if matters took a turn for the worse.  That being said, there is a psychological cushion in place over the medium-term to help mitigate near-term losses in reaction to negative economic data.  Regardless, investors should still pay particularly close attention to upcoming data releases to see whether we’ve hit bottom in the present fundamental slowdown from recovery heights.  Meanwhile, investors are awaiting details of Obama’s plan to help give a jolt to the labor market and economy as a whole.  Hence, psychological forces could come back into play over the coming days.  Speaking of which, the RBA and BOJ both have monetary policy decisions on tap for tomorrow and a more positive outlook from the RBA could help lift the risk trade as the S&P futures battle 1100.  
    
Price: 1104
Psychological: 1000
 
 
 

 
Posted by: Matthew Myers

 

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