S&P Daily Commentary for 4.21.09

The S&P futures have really taken a turn for the worst due to the combination of the realization of nationalization combined with disappointing earnings from corporate bell weathers.

The words `credit crisis' are re-entering headlines sans the word `solution'. The futures are struggling with our 2nd tier downtrend line as investors search the market for positives. Though it's safe to say the uptrend isn't lost with April 8 lows and 800 intact, the S&P is certainly flirting with dangerous territory.

The most disconcerting development in the earnings season would have to be the uncomfortable rise in non-performing loans on bank balance sheets. Rising unemployment coupled with a lower consumption rate is taking its toll on the revenues of small businesses and large corporations alike.

Furthermore, the foreclosure rate returned to the spotlight last month, meaning capital concerns could return to financials. BAC, C, and WFC took crisis like hits yesterday and the negative momentum is carrying over into Tuesday's session of C and BAC both off by over 5% at the open.

The S&P's correlations tell the story with crude falling like a rock. The Cable and EUR/USD have made their respective declines while USD/JPY's uptrend hangs on by a thread.

Additionally, gold and the 30 Year Treasury futures have made substantial gains even though they have not made any game-changing moves trend-wise. Therefore, the S&P futures have hit a noteworthy stumbling block and how they perform over the rest of the week will be telling for the uptrend.

Unfortunately, for those betting on an economic turnaround, the celebratory wine has turned sour and we are looking at a negative stance for the near-term. Whether the U. S. government can wave its magic wand again to repair equities is unknown.

The trend of equities will likely come down to how investors digest the results from the much-anticipated stress tests. The U. S. won't release any noteworthy data until tomorrow's Home Price Index.

Fundamentally, we find supports of 825.50, 819.25, 813.50, 804.50, and 799.25. To the topside, we see resistances of 829.50, 834.75, 840.25, 844.75, and 853. The S&P futures are currently trading at 827.75

Copyright 2009 FastBrokers, Latest Forex News and Analysis for Forex, Bullion and Commodity Traders

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