The S&P futures are struggling with June lows today as they begin to test the bottom-end of an important trading zone. Investors seem to be ignoring the positive ISM non
-manufacturing PMI number for the most part as they instead focus on the pullbacks in all of the S&P’s major positive correlations. Last week’s sign of an incessant, heightened level of unemployment is painting a bleak picture over just about everything right now.

That could be cured by an optimistic earnings season, which begins Tuesday with Dow bellweather Alcoa. However, today’s movements in crude, the GBP/USD, EUR/USD, USD/JPY, and gold signal the market is in a vulnerable position. Hence, it seems investors are preparing for the worst come earnings season. Therefore, we’ll have to see how equities react to earnings as they begin to trickle in.

Despite the negative sentiment and downward pressure, the S&P futures still have some bottom-end defenses, most notably May lows. Although, should May lows give way and the S&P’s correlations make similar technical setbacks, investors could witness the near-term downturn pick up speed. Meanwhile, we notice the S&P futures are giving way to our 1st tier uptrend line with our two near-term downtrend lines bearing overhead.

Therefore, we’re certainly inclined to be more negative than positive as far as outlook is concerned. For the meantime, investors should take notice of where volume is centered not only in the S&P futures, but in crude, gold, treasuries, and the Dollar as well. Any large movements backed by significant volume in either the S&P or its correlations could signal a substantial pullback.

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