S&P Futures Update for July 2, 2012

The market rallied over 2.5% Friday on the news of European leaders agreeing to relax conditions on emergency loans for Spanish banks and possible help for Italy - to stem the region’s debt crisis. Economists are now expecting the ECB will lower its benchmark interest rate by at least 25 basis points to a record low of 0.75 percent on July 5. 

The weekly chart above gives us the best perspective on trade location. We are bracketed within a large balance area within no confirmed excess at the highs. We closed the Quarter with an Outside Week. The market tested the low of this balance at 1255.50 and got rejected - the destination trade now becomes the opposite end of this balance which are the March 2012 highs. Our immediate upside weekly reference is 1363.75.  The 1365 area is resistance as that was the last high before the market broke to the upside in March. Lets look at the Profiles next - 

Friday's profile looks pretty stretched with several anomalies and a POC that did not rise with Price i.e. the market may have gotten too long. The large 18.50 handle gap is to be treated as Excess and will probably take a couple of attempts before it is filled. Our immediate reference for Monday is the late day Spike. Do we Open in or out of balance relative to the Spike? The base of the of Spike - 1353.25 is short term support.

Global Purchasing Managers' Manufacturing Index (PMI) day begins tonight. PMI day is the day (always at the beginning of the month) when PMI manufacturing reports come out for all the world's big economies, from China to Europe to Brazil. Last month's PMI day confirmed that basically the entire world is slowing. This next round of data will be critical to indicate whether things have deteriorated or stabilized.

S&P Morning Update for June 29, 2012

As I stated in my post last night - the market got too short in the day time frame which gave way to a late afternoon rally. Coupled with the positive news from EU leaders - the market has gapped up 20+ handles in the overnite session. Large gaps such as these do not usually get filled the same day (unless there is some extreme negative news). In addition, the day may turn into a rotational day as the market absorbs the news. 

On the upside your best reference is a series of close highs - 1352.50 - 1355.50 and 1357 - the high of the larger balance area. On the downside you have 1331.75 - the high of the lower balance area. 

We have Chicago PMI at 9:45 am EST and Consumer Sentiment at 9:55 am EST. More often than not there is some adjustment to the overnite inventory - which is all long - at the Open. I would wait for the market to set up before entering a trade.