S&P 500 futures trading higher this morning

Wed, Sep 9 2009, 05:35 GMT
by Per-Erik Karlsson

Market comment

S&P 500 futures trading higher this morning and seems like 1030 is key resistance level that needs to be taken out to open for a rally towards the yearly high at 1038.75. Gold is continuing the recent bullish momentum and trading above 1000 this morning, have Feb09 high at 1007 as near resistance here and expect some selling ahead of this level. Our risk appetite parameter EURJPY is also moving higher in sync with stocks, trading above the 133 level this morning and there is plenty of upside potential is this cross in our opinion as long as S&P holds above 980. We think there is potential for a move towards the 139 key resistance level in the coming month. We don’t think the change of ruling party in Japan will bring any kind of positive support for JPY and expect the huge public debt to also bring problems for the JPY down the road. Japan’s public debt is at 170% of the GDP (highest among the industrialized world). Another problem is the aging population, which does not bode well for growth going forward either. We still favor weaker USD and JPY towards year end and we continue to like AUD, CAD and NOK. As mentioned yesterday, Nat Gas made a reversal Friday. Now we are waiting for a “test” on the daily chart to enter long. We are also noting that the money supply has increased rapidly last months in the US and could well bring serious inflation down the line and pressure the USD (See link to article below). We also keep an eye on Crude oil as it should rally if USD sells off and a break above 70 USD per barrel is bullish. Key resistance remains 75.

Some interesting news stories:

Technical’s

Euro: Key support remains at 1.40, with minor support at 1.4189 (weekly low). Still expect 1.40 to hold as long as S&P stays above 970. See resistance at 1.4350 and key break out level is 1.4450.

Cable: Technically still long term bullish potential above 1.60. Resistance at 1.6623 and 1.67 today.
While EURGBP is above 0.87, it is likely GBP will struggle to stage any type of strong rally above 1.67 unless Euro totally takes off above 1.45, so should underperform Euro.

USDJPY: Weak below 94 with support down at 92.28 and 91.74. Favor weaker JPY in the longer run and Friday’s reversal opens for a test of 94 near term as long as 92 support holds.

Swissy: Testing below 1.06 this morning with support at 1.0540 and resistance up at 1.0910. Several weak daily bars towards the end of last week could signal a possible break below 1.0540 might be on the cards as Euro is above 1.4350 as well this morning, could get pulled higher by Euro.

AUDUSD: Broke above the key resistance at 0.8550 yesterday, which opens for a test of 0.8814. Key support is now at 0.8241 today.

USDCAD: The falling trend line going back to 9th of March, coming in at 1.1110 held last week and strong Canadian payrolls have since support CAD. Looks like it will test 1.0633 (August low) near term.

EURJPY: Strong support down at the 132 to 133 support zone. Looks bullish as long as S&P 500 stays above 970 and key support in the EURJPY at 132. Looking for 139 later this year.

GBPJPY: GBP struggling vs. Euro this morning and still expect GBP to underperform Euro for the rest of the year. Especially as long as EURGBP trades above 0.87. However GBPJPY should still be dominantly driven by risk appetite in FX, so we favor higher levels over the next weeks. Support down at 149 (last week’s low).

AUDJPY: Key pivot point is 76.65 and basically medium term bullish outlook intact above this level.

Our outlook

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