The S&P futures are floating sideways despite large sell-offs in crude and gold along with a broad appreciation of the Greenback. One would have expected a sizable pullback in the S&P in conjunction with the recent downturn in its correlations.

Additionally, U. S. equities have been on a tear lately, so profit taking would be readily accepted by analysts. Hence, the S&P’s resilience is quite impressive with bulls holding strong ahead of the Beige Book at 2pm EST. Today’s better than expected core durable goods orders number is helping counter the negative headline DGO number. Additionally, investors allowed yesterday’s rise in the HPI to offset the decline in CB consumer confidence. The mixed eco. data messages are a saving grace for a 970 S&P in reaction to the better than expected 2nd quarter earnings season.

However, the large downturns in the S&P’s correlations are disconcerting, and we would not be surprised to witness some profit taking towards our 1st tier uptrend line. On the other hand, the S&P could just be building up a new base in preparation for its assault on the highly psychological 1000 level.

As we stated in our previous analysis, 1000 should prove to be tougher than 9000 if it is tested. Therefore, any immediate-term upward movements in the S&P futures could be limited due to their proximity to 1000. With the 2nd quarter earnings season filling out, the S&P futures would likely need an important clarification via economic data to push past 1000. As for the downside, the S&P has our 1st and 2nd tier uptrend lines to rely upon along with the psychological 950 level. Meanwhile, investors should keep a close eye on the S&P’s correlations. The correlations are in a vulnerable position, and any further deterioration could tip the S&P south.

Present Price: 971.50

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