A Slow, Erosive Pattern Remains in Place Today | RJO Futures

May 12, 2017 8:54AM CDT

The general erosion in equity prices looks to be extended today as the overnight news flow failed to definitively improve sentiment. Surprisingly, an uptick in German GDP results this morning failed to shift the market’s away from a choppy to lower track, as that data points to a continued recovery in Europe. Clearly, ongoing carnage in the US retail sector is resulting in a risk off vibe that risk off vibe is being accentuated by the political sniping in Washington. Fortunately, however, the high tech sector is providing a cushion to the market but technical action overnight (even in the leading mini NASDAQ) is negative and the path of least resistance is pointing down to start today. Earning announcements will include ArcelorMittal before the Wall Street opening.

S&P 500: As previously indicated, an extending pattern of lower highs on the charts and the inability to embrace positive economic results (because good data prompts chatter of a June hike by the Fed) leaves the path of least resistance today pointing downward. A downtrend channel resistance in the June E-mini S&P is seen this morning at 2392.40 and a critical pivot point support zone is seen at 2379.00. Traders should watch the reaction in stocks to US retail sales closely to see if positive data results in a dip in prices as that will signal a trade focused trade focused on next month’s Fed rate decision instead of a trade focused on growth and earnings. If good data has become bad for stock prices then equities might be expected to bounce later this morning off the University of Michigan consumer sentiment readings.  The next downside target is 2372.82 while the next area of resistance is around 2399.12 and 24399.12 and 2405.31. First support hits today at 2382.88 and below there at 2372.82.


Jun '17 Emini S&P 500 Daily Chart

Jun '17 Emini S&P 500 Daily Chart

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