The S&P futures are sitting just below 1000 with bulls begging to see how the futures fare at 1000+. The S&P seems eager and ready for the challenge, yet it should be a challenge nonetheless if psychological precedents hold true. Investors are energized by the better than expected manufacturing data points from around the globe, including America’s ISM manufacturing PMI. The ISM manufacturing PMI number continues to dig out of the depths of its contraction, almost reaching growth (48.9). Global stimulus packages and a depreciating Greenback are improving the outlook of manufacturers, planting the seeds of an economic recovery.

Speaking of the Greenback, the Dollar has depreciated heavily against both the Euro and Pound over the last two trading sessions. Both the EUR/USD and GBP/USD have set new 2009 highs today, making technical bullish breakouts to the upside. Meanwhile, gold has pushed past $950/oz and crude $70/bbl. Therefore, all of the S&P’s correlations are helping pull the futures past 1000 as investors are encouraged by all of the positive signs across the board. 2nd quarter earnings fared better than expected while economic data outpaces skeptic expectations.

Economic data is just getting warmed up. The U. S. will release pending home sales data along with price and personal income numbers tomorrow. Britain will also release its Halifax HPI along with construction PMI. Therefore, market volatility should increase as the week progresses, especially considering the BOE and ECB will announce their monetary policy decisions on Thursday. If economic data between now and then outperforms, we’d expect both central banks to stand pat on their alternative liquidity measures. If events unfold favorably over the next few days, the S&P may be able to overcome the highly psychological 1000 zone sooner than anticipated. However, mixed results would likely mire the S&P futures in a 1000 trading area.

Even if the S&P futures should clear 1000 today, we don’t expect the psychological level to give in so easily. We’d expect a retracement and some consolidation nearby considering its psychological significance. Furthermore, U. S. equities have been on a tear lately, and a little pop above 1000 could be an opportune time for investors to lock in some profits. Regardless, the S&P and its correlations are making a strong statement and the uptrend is clearly intact.

Present Price: 998.25

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