There is a small hangover from yesterdays bull party. The Nasdaq is not leading the downside in the futures, however, so the selling does not appear to be serious at this juncture. The two days in front of a three-day holiday weekend tend to be bullish. If Wednesday is a strong down day, the market weakness typically continues into Thursday morning. Thus, based on seasonality only, the markets would drift lower today into tomorrow, then start to recover by tomorrow afternoon with Friday buoyant as well.
Yesterday, copper and commodities provided the bull fuel. Today, the dollar is stronger, so copper and commodities are in reverse. Watch JJC 44.70 and CRB 313.00 levels. CRB is currently fighting for that level as this is typed. A loss of these levels will usher in broad market weakness and give back of yesterday's gains.
The SPX pushed up and thru the 10/27/11 October high yesterday at 1292.66 providing entertaining drama. For today's action, if the SPX touches 1296.50, the bull party will be in full force again and the broad markets will accelerate higher. If the market bears can retrace yesterday and drop down thru the 1281 level, the bears can do some serious damage to the markets. The 12-month MA is 1281.25 reinforcing the importance of this support level.
Keeping it simple, CRB 313.00 and JJC 44.70 will dictate broad market direction. SPX 1296.50 and the bulls win today. SPX 1281 and the bears win, in perhaps a very substantial way, since a market move lower may be quite strong. A move thru 1282-1292 is sideways action.
The S&P's are set to open about four point lower, so using the 1292 starting point that places the SPX at about 1288. Bears will need more than that, seven points more. The Oil Inventories at 10:30 AM are important, likewise the 10-Year Note Auction at 1 PM and Beige Book at 2 PM.
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