The S&P futures are stabilizing even though the headline ADP Non-Farm Employment Change number came in shy of analyst expectations. However, the number still showed a solid improvement from August’s revised reading of -360k. It seems today’s disappointing data was already priced in yesterday. The S&P futures experienced a sizable pullback on a spike in sell-side volume despite the fact that Pending Home Sales and ISM Manufacturing PMI data blew past analyst expectations. We also saw a modest improvement in China’s Manufacturing PMI.

However, weak data from Britain combined with a sell-off in some key financials triggered profit-taking while reigniting investor uncertainty regarding the durability of the present global economic recovery. The pullback amid improving U. S. and Chinese economic data tells us the present weakness in U. S. equities is a combination of profit-taking and psychology. Analysts are voicing their resounding belief that the S&P futures are in for a large correction. While not an incorrect evaluation, the rush of negative outlooks is taking its toll on investor psyche. Speaking of psychology, the S&P futures are back at 1000, and the trading zone won’t be taken lightly. Investors may carry on with the theme of consolidation today in anticipation of tomorrow’s stream of economic events.

The U. S. will release its ISM Non-Manufacturing PMI and weekly Unemployment Claims data along with key British numbers and an ECB monetary policy decision. Meanwhile, the GBP/USD, EUR/USD, and USD/JPY are trading around important psychological and technical levels of their own, indicating the importance of the moment. Bears are looking for any kind of concrete validation to send the S&P futures tumbling since many believe equities are overvalued. In addition to the FX markets, crude future are trading well below their highly psychological $70/bbl while breaking beneath our key 1st tier uptrend line in the process. Lastly, gold is experiencing a large movement to the topside today, and it appears investors are snapping up the precious metal as they head for cover. Therefore, the behavior of the S&P’s correlations does not bode well for the near-term outlook for U. S. equities. Additionally, yesterday’s burst in sell-side action in the S&P futures is certainly a cause for concern, hinting at an extended leg down.

Fortunately for bulls, the S&P has built up quite a strong technical support system during its ascent. The S&P futures created a dense trading zone between July 29th lows and August 14th highs. Therefore, the S&P futures have a hard-fought trajectory to the downside between1000-970. However, if the S&P futures drop between 970 a more protracted sell-off could ensue. As for the topside, the S&P futures must brave beyond August 14th highs and our 1st tier uptrend line. Meanwhile, investors should keep a close eye on the Dollar and its reaction to upcoming economic data in order to gain more insight as to the S&P’s near-term direction.

Price: 999

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