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Global equity markets turned lower during the early morning hours as they turned focus to more corporate earnings and the result of a 2-day FOMC meeting. While shares were modestly higher in Japan, the major global indices turned lower in Europe. It seems that lingering Greek debt default fears as well as disappointing quarterly results from Ericsson, which reported a plunge in quarterly demand have undermined sentiment. The German DAX is showing a smaller loss this morning, perhaps helped by German sentiment data that was up for the 3rd month in a row, as that in turn suggests the German economy might be able to stave off a recession. Last night’s State of the Union address from President Obama offered little lasting support to the stock market, but it was seen by some as a campaign speech. US economic data this morning offers up a look into the housing market, with December Pending Home Sales expected to show a slight decline from the November reading. More importantly is today’s verdict of the 2-day FOMC meeting.

S&P 500: The March S&P continues to dance around a short term equilibrium level at the 1311.00 area, with the last four daily settlements falling inside of an extremely tight 1-point range. This coiling-type action suggests that the market is in search of fresh fundamentals for its next direction. Meanwhile, some traders viewed the recent action as “toppy” and did not want to increase risk after the strong start of 2012, especially in front of a FOMC meeting result later in the session. ConocoPhillips was trading higher in early morning action on the hopes that the company can deliver a strong Q4 earnings report. Expectations are for the company to show an 11.5% increase from the year ago quarter. Yesterday’s mid-day weakness breeched swing low support but was able to end on a strong note. Nonetheless, the short term trend for the March S&P looks tired and due for a correction. Uptrend channel support this morning comes in at 1301.50.

DOW: The March E-mini Dow established a higher high during the early morning hours but has since turned into negative territory. It is possible that some of the early lift in the index came from a 1.0% gain in Boeing shares on reports of new business from Norwegian Air Shuttle. Boeing releases their Q4 earnings before the Wall Street open and are expected to show a nearly 10% decline compared to Q4 2010. United Technologies releases their Q4 earnings this morning, which are expected to show earnings growth of nearly 11.0% compared to Q4 2010. While yesterday’s earnings from Dow components McDonalds, J&J and DuPont came in better than expected, they failed to inspire fresh enthusiasm to the upside. This could be a sign of a market that has become tired and overbought. The intermediate term price trend in the March E-mini Dow points up, with support at 12,553. Confirmation of a move below 12,486 could put the bear camp on top.

NASDAQ: The March NASDAQ registered a new contract high overnight helped by Apple earnings. The company posted record sales and profits on the quarter that were supported by very strong holiday demand for its iPhone and iPad. Shares of Apple were up nearly 7.0% in German trading this morning, and that is a force that should limit weakness in the index this morning. Meanwhile, Yahoo’s Q4 revenues and sales fell short of estimates amid weak advertising demand. There was also a pair of warnings from AMD and Altera Corp yesterday that pointed to weaker tech-related sales prospects ahead. The bulls have the advantage this morning and remain in a short term uptrend pattern. Key swing low support for the March NASDAQ stands at 2419.50.

TODAY’S MARKET IDEAS: The major US indices start on a softer note this morning, with the exception of the NASDAQ which is benefiting from new record high prices in Apple. However, recent low trading volumes, growing level of complacency and overbought technicals suggest that the US indices could be ripe for a correction. There also appears to be change in sector leadership, with recent gainers failing to participate on rallies. Some technicians suggest that the current wave pattern in the S&P 500 is nearing the conclusion of its b-wave rally (off the October low), which suggests that next primary leg in the index is down, potentially targeting the 1050.00 area in the March S&P 500. We would like to see a bit more confirmation of a turn before getting short. Aggressive bears might consider buying out-of-the money puts on strength.

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Global equity markets traded sharply higher during the overnight hours, fueled by stronger than expected Chinese Q4 GDP data. While China GDP came in at the slowest rate in 10 quarters, it was better than expected and was taken as more evidence that their economy was avoiding a “hard-landing”. The positive growth data helped take the focus away from a series of European credit downgrades from Standard and Poor’s last Friday. The bulls gained more upside momentum this morning following a well-subscribed Spanish bill auction and strong German ZEW sentiment readings. The major European indices broke out to their best levels in more than 5 months. The strong overnight and early morning reports fueled gains in the major US indices of nearly 1.0% and that pushed some prices into new highs for their respective moves. US economic data this morning presents January Empire State Manufacturing, which is expected to show a minor improvement and its 3rd month in positive territory.

S&P 500: The March S&P 500 rallied more than 2.25% from the Friday morning low and has broken out into new high ground for the move. Robust Chinese growth data and favorable news out of Europe this morning have more than offset S&P credit downgrades from over the holiday weekend. The positive growth data has offered a lift in mining shares within the index. Looking ahead, the index will get the latest earnings reports from Wells Fargo and Citigroup before the Wall Street open, both of which are expected to show significant improvement from the year ago quarter. The Commitments of Traders Futures and Options report as of January 10th for S&P 500 Stock Index showed non-commercial traders were net short 8,816 contracts, an increase of 21,699, which represents a change from a net long to net short position. Non-commercial and non-reportable traders combined held a net long position of 10,628 contracts, a decrease of 6,469 in their net long position. The spec selling is seen as a negative short term force. Further upside in the index early this week could force new shorts to cover positions. The advance from the mid-December low has reached overbought territory, and that could make it more difficult for the index to continue its upward track. Upside targeting this morning comes in at 1305.00. Swing low support stands at 1272.70.

DOW: The March E-mini Dow forged an upside breakout on the charts and has climbed to its highest level since July 21st. This marks a 250 point rebound from Friday’s low and puts the bull camp back in control. Shares of Alcoa were up around 2.0% in pre-market trade, supported by gains in commodity-related shares. Meanwhile, price momentum indicators have become overbought and that could leave the market vulnerable for a near term correction. The Commitments of Traders Futures and Options report as of January 10th for Dow Jones Index $5 showed non-commercial traders were net long 20,085 contracts, a decrease of 816. Non-commercial and non-reportable traders combined held a net long position of 26,442 contracts, an increase of 749 in their net long position. The short term charts for the March E-mini Dow continue to favor the bulls, with swing low support standing at 12,253. The next resistance level stands at the July high of 12,554.

NASDAQ: The March NASDAQ punched through its October high (2396.50) in early morning action, which leaves 2418.25 as the next upside resistance level. Better than expected GDP data out of China is seen supporting technology shares in the NASDAQ, like Apple which was up more than 1.0% in early German trade. The Commitments of Traders Futures and Options report as of January 10th for NASDAQ Mini showed non-commercial traders were net long 44,339 contracts, an increase of 17,287. Non-commercial and non-reportable traders combined held a net long position of 66,128 contracts, an increase of 19,913 contracts in their net long position. It is possible that net spec long positioning has increased after prices rallied 1.5% since that report window closed. The early edge goes to the bulls, with uptrend channel resistance seen at 2408.00.

TODAY’S MARKET IDEAS: The bull camp has the edge to start this morning, helped by robust Chinese GDP data and upbeat news out of Europe. However, the index has made the upside charge with severely overbought momentum indicators, and that leaves them susceptible to a downside correction. The latest sentiment readings have reached their most optimistic levels since early May, and that is another force reflecting a level of complacency in the market. We see a little more upside in the March S&P 500 toward 1305.00, 12,554 in the March E-mini Dow. Earnings this morning from Wells Fargo and Citigroup that falls short of estimates could serve this overbought market a negative blow.

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Global equity markets have started out on a positive footing overnight in the wake of mostly positive international economic readings and seemingly because of upbeat comments from Chinese leadership. However, the Chinese situation wasn’t overly upbeat, as Chinese officials suggested that softer growth in that country ahead might prompt an easing of policies and some in the trade might have hoped that China was already in an easing posture. On the other hand, world equity markets saw favorable German unemployment readings and for the time being, that seems to have papered over the fears toward Euro zone sovereign debt. Some bulls might be partially off balance as a result of fears of soaring oil prices but to start today that issue seems to be sitting on a back burner. In fact, with Indian equities trading higher, European stocks showing early gains and early indications of a 20 to 23 point higher opening in the US S&P contract, the bull camp looks to have a solid edge to start. Furthermore the trade is also expecting to see something positive from the US scheduled report slate this morning and that might give the bull camp an added measure of bullish psychology.

S&P 500: A huge gap up opening seems to have established a rather lofty ambition by the S&P bulls this morning. With the opening rally posting the highest trade since the October 27th spike high, the bull camp probably needs to see mostly positive US scheduled data just to add to the early gains. In fact, the 1282.40 level might be seen as an extremely critical pivot point in the first two trading sessions of this week. However, the bull camp does seem to have the benefit of several merger/buyout stories overnight but the fear of turmoil in the Middle East might keep some would-be bulls on the sidelines. The Commitments of Traders Futures and Options report as of December 27th for S&P 500 Stock Index showed Non-Commercial traders were net long 8,722 contracts, an increase of 6,998 contracts. The Commercial traders were net short 14,913 contracts, an increase of 2,164 contracts. The Non-reportable traders were net long 6,190 contracts, a decrease of 4,836 contracts. Non-Commercial and Non-reportable combined traders held a net long position of 14,912 contracts. This represents an increase of 2,162 contracts in the net long position held by these traders. The bulls have control as long as the March S&P manages to hold above 1270.00 this morning.

DOW: After some extremely volatile action last week, the March Dow contract looks to start the holiday shortened week on a very positive track. In addition to a small measure of catch up buying action, the Dow might be cheered by the prospect of a more supportive PBOC policy stance ahead and the index is also likely to draft favorably off a quasi risk-on vibe. A key resistance point in the March Dow contract was seemingly violated early this morning at 12,346, with yet another critical pivot point seen up at 12,381. In fact, the bull camp has to feel confident in their position, as long as the March Dow manages to hold above 12,340 through the flow of scheduled US data later this morning. The Commitments of Traders Futures and Options report as of December 27th for Dow Jones Index $5 showed Non-Commercial traders were net long 17,834 contracts, a decrease of 4,223 contracts. The Commercial traders were net short 20,208 contracts, a decrease of 4,030 contracts. The Non-reportable traders were net long 2,373 contracts, an increase of 193 contracts. Non-Commercial and Non-reportable combined traders held a net long position of 20,207 contracts. This represents a decrease of 4,030 contracts in the net long position held by these traders.

NASDAQ: With a big range up extension forged this morning that would seem to confirm the moderately bullish bias from the overnight action will be extended into the US Tuesday trade action. However, the tech sector appears to be catching a ride from big picture macro economic developments instead of from the tech sector news and therefore the bulls have to hope that scheduled US data adds to the bullish vibe later this morning. The Commitments of Traders Futures and Options report as of December 27th for Nasdaq Mini showed Non-Commercial traders were net long 14,628 contracts, a decrease of 7,678 contracts. The Commercial traders were net short 30,195 contracts a decrease of 6,122 contracts. The Non-reportable traders were net long 15,567 contracts, an increase of 1,557 contracts. Non-Commercial and Non-reportable combined traders held a net long position of 30,195 contracts. This represents a decrease of 6,121 contracts in the net long position held by these traders.

TODAY’S MARKET IDEAS: The bulls have control to start but to add markedly to the impressive initial pulse up in prices might require favorable US numbers, more merger and acquisition news and quiet on the Euro debt front into their close later this morning.

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Global equity markets were facing a number of negative headwinds overnight, including an S&P ratings downgrade of 15 banks, some disappointment with the Euro rescue fund efforts and further signs that China might be slowing. After yesterday’s close, S&P lowered their ratings for 15 major global banks by one notch, and that pressured global equity markets in the overnight action. Asian equity markets were considerably lower, led by weakness in the Chinese Shanghai Composite. While there is evidence that export growth to Europe has slowed, this morning’s unexpected move by China’s Central Bank to cut bank reserve requirement ratios has helped to turn the early tone positive. Meanwhile, global equity markets maybe holding up better than might be expected given general disappointment over the latest Euro zone rescue fund developments. Some analysts indicate that the size of the fund has fallen short of the 1-trillion mark, forcing EU ministers to pursue other more creative funding options, like the IMF. Perhaps the trade is hopeful that the EU will eventually do what is necessary and perhaps the trade is simply anticipating favorable private US payroll data this morning, which is expected to show gains to levels not seen since April. The markets also appear to be anticipating a positive read on Chicago ISM and pending home sales figures.

S&P 500: Overnight and early morning action in the December S&P 500 has formed a bullish outside day reversal that reflects a positive shift in sentiment. While the index came under overnight pressure following the S&P ratings downgrade of 15 major global banks, action taken by the PBOC this morning to ease monetary policy has helped to shift the tide in favor of the bulls. Meanwhile, the December S&P 500 showed a level of vulnerability yesterday, held back by underperformance in the financial sector. Shares of Tiffany & Co were down nearly 9.0% yesterday, following weaker than expected earnings and holiday sales warnings. The December S&P 500 is on a bullish track this morning after taking out yesterday’s high (1203.00), which leaves the next level of resistance at last week’s gap of 1209.00 to 1214.00.

DOW: The December E-mini Dow had a gap lower opening Tuesday evening in the wake of a surprise banking sector downgrade from S&P. While this might help explain the relative underperformance of the banking sector during yesterday’s trade, it did pressure shares of Bank of America below $5.00 in after-hours trade. Yesterday’s bankruptcy filing of AMR has the potential to provide an added drag on the shares of Boeing today, and also that could put recent Airbus sales in jeopardy. The short term trend in the December E-mini Dow offers the bull camp the advantage, with 11,615 as resistance. Near term support for the index comes in at 11,436.

NASDAQ: December NASDAQ reversed overnight losses this morning in the wake of China’s Central bank decision to reduce reserve requirement ratios. While this should inject a level of optimism into tech-related shares this morning, there are also positive headlines involving Yahoo. Reports that a private-equity group has offered $16.70 for a minority stake in Yahoo should provide an added lift. That offer is a little more than 6.0% above Tuesday’s settlement price. The bull camp gets the early nod, with resistance at 2245.00, then at the November 21st gap up to 2249.75.

TODAY’S MARKET IDEAS: With the month of November drawing to a close, there is the potential for end-of-month volatility today. Some traders note signs of institutional buying in the futures market, and that is a force that could gain more traction toady and in coming week’s as funds wind down for the year. In the meantime, US equity markets face growing negativity surrounding the European debt crisis (slow on specifics) and slow-growth concerns in India and China. These negative forces have been put at bay to start this morning’s, but they present headwinds to any meaningful upside attempt. This morning’s flow of US economic data is expected to come in positive, and disappointment there could leave the bull drive vulnerable. Given the prevailing intermediate down trending patterns in the December E-mini Dow and S&P 500, we continue to view rallies as selling opportunities.

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The stress level in global equity markets has picked up in early morning action, fueled by growing European debt concerns and a round of disappointing economic data pointing to a tough slog to come. Italian bond yields have rallied back above the 7.0% handle this morning and this morning’s Spanish Bill auction drew yields that were more than 1.0% above October levels and that auction also saw less participation than the prior offering. The higher yields highlight the growing concern that Euro zone leaders have in tackling their debt crisis, not to mention unsustainable debt service costs. Credit spreads in France are also on the rise from mounting fears that French banks hold a significant share of Italy’s 2 trillion in debt. Adding to the weakness this morning was a round of disappointing Euro zone economic data. While Q3 Euro zone GDP matched expectations, the more forward looking German ZEW sentiment gauge came in much weaker than expected and fell to levels not seen since the fall of 2008. This underscores the negative impact that election/debt proceedings in the region have had on investor psychology. Weak European trade early this morning has also pressured US shares, and that is expected to continue into this today’s active US economic data calendar. While the clock ticks on the US Super Committee debt-reduction talks, there appears to be a growing consensus that leaders may pass the buck under the guise of a more definitive change in tax policy. US economic data this morning includes October Producer Prices, October retail sales and September business inventories.

S&P 500: The December S&P 500 enters the early US trading hours off 2.7% from Monday’s high, struggling under the pressure of mounting European debt concerns. An increase in Italian, French, Spanish and Greek borrowing costs highlight the level of concern in the market. These concerns have taken Greek banks shares down by more than 7.0% this morning, hamstrung by disappointing GDP data and mounting concerns whether new leadership can fix the nation’s debt problem. The weak financial backdrop this morning is expected to exert added downside force on the US financial sector. The Commitments of Traders Futures and Options report as of November 8th for S&P 500 Stock Index showed non-commercial traders were net long 12,119 contracts, an increase of 7,692. Non-commercial and non-reportable traders combined held a net long position of 16,986 contracts, down 1,499 contracts on the week. This reflects a selling on strength mentality from speculators, and that is viewed as a negative short term force. After yesterday’s failed attempt to break through the upper end of the recent trading range, the December S&P 500 looks poised for a test of 1224.00, and then at the November low of 1208.00.

DOW: The December E-mini Dow established a lower low during the early morning hours, as it extended the downdraft from yesterday’s high to 220 points. While the index may have drafted a level of support from yesterday from gains in Boeing, Caterpillar and reports that Berkshire took on a more than 5.0% stake in IBM, this morning’s tone has shifted back to Europe. Dow Jones Index components Home Depot and Wal-Mart report their quarterly results prior to the Wall Street open, and that could shed further insight into the health of the US consumer. The Commitments of Traders Futures and Options report as of November 8th for Dow Jones Index $5 showed non-commercial traders were net long 5,712 contracts, a decrease of 1,696. Non-commercial and non-reportable traders combined held a net long position of 8,705 contracts, for a decrease of 2,580 in their net long positioning. This selling pressure took place as the index rallied more than 400 points and that is seen as a negative. The bear camp has control to start this morning, with support entering at 11,910 and then at last week’s low of 11,661.

NASDAQ: The December NASDAQ enters the US trading session with losses of more than 1.0%, pressured by renewed Euro zone debt concerns and fears that global growth could be slowing. Earnings late Monday from Urban Outfitters showed the company falling short of Q3 sales forecasts, and that seems to be offering an added negative this morning. The NASDAQ will be keeping a close watch on Amazon today, as the company begins shipping its $199 Fire designed to capture the lower end of the tablet market. Dell reports their quarterly results after the bell this afternoon and is expected to show a more than 4.0% increase in earnings compared to the year ago quarter. The Commitments of Traders Futures and Options report as of November 8th for NASDAQ Mini showed non-commercial traders were net long 45,021 contracts, a decrease of 9,200. Non-commercial and non-reportable traders combined held a net short position of 1,038 contracts. These traders have gone from a net long to a net short position. The early morning tone in the December NASDAQ is negative, with 200 day moving average support at 2290.50.

TODAY’S MARKET IDEAS: Disappointing German Sentiment readings, Spanish Bill sale and sluggish Euro zone periphery GDP readings fuel the bear earlier this morning. Escalating borrowing costs also reflect a negative vote of confidence on new leadership changes in Italy and Greece. Sentiment is quite negative to start this morning, and it probably takes a bullish result from this morning’s US scheduled data to begin to neutralize the selling. Yesterday’s failed attempt to break through resistance and subsequent downdraft points to a downside test of 11,750 in the December E-mini Dow and 1224 in the December S&P 500.

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Global equity markets are on a higher track this morning supported by more optimism surrounding European debt crisis talks and positive economic data out of Asia. It seems the one item agreed on at this weekend’s EU summit was that the ECB would not backstop EFSF funds. The market still wants to believe that European officials are closer to a deal on bank recapitalization and how to leverage EFSF funds. Flash Purchasing Managers’ data out of China broke a 3-month streak of contraction, and that was seen as a positive that helped to rally base metals and resource related shares early this morning. It also helped the Chinese Shanghai Composite Index broke a 4-day losing streak. Favorable export readings out of Japan, on a boost in demand for automotive parts, also lent a positive early morning tone. Meanwhile, interest rate markets in Europe showed a different reaction to yesterday’s EU summit, with German Bunds reversing early morning losses and rallying to new highs on the session. Perhaps some of that early morning reversal came from disappointing PMI data out of Europe. There was also talk from a major Wall Street firm indicating that the US faced another credit downgrade by year’s end. This morning’s US economic calendar presents the latest read on Chicago Manufacturing, which is expected to show only a fractional gain on the month.

S&P 500: The December S&P 500 is on a higher track this morning as it extends last week’s bullish chart breakout to the upside. It seems that the combination of well-received meetings in Brussels over the weekend, along with friendly economic data out China overnight have given the bulls some early morning firepower. However, anxiety is building ahead of a final decision on the European debt situation on Wednesday. This heightened anxiety is highlighted by an index of Greek bank stocks, which plunged by 15% during the early morning hours, fearing a deeper markdown Greek government bonds held in the private sector (haircuts are now ranging from 40 to 50%).With a little more than 20% of the S&P 500 companies reporting earnings, nearly three-fourths have beaten street estimates. Texas instruments reports their quarterly earnings after the bell today, with EPS expected to show about a 20.0% decline from the year ago quarter. The trade is expected to keep a close eye on the earnings for a read on chip demand ahead of the holiday season. The Commitments of Traders Futures and Options report as of October 18th for S&P 500 stock index showed non-commercial traders were net long 5,749 contracts, an increase of 7,523, which represents a change from a net short to net long position. Non-commercial and non-reportable traders combined held a net short position of 11,737 contracts, a decrease of 6,037 on the week. The bull camp holds the cards to start this morning, looking for more bullish confirmation to extend gains out of the past 2.5 months trading range.

DOW: The December E-mini Dow extended Friday’s gains during the initial morning hours and have reached their highest level since August 2nd. The positive action has helped confirm a technical breakout on the charts above the 2.5 month trading range, which would normally give the all clear for a sustained rally higher. However, the reluctance of a number of momentum indicators to confirm the breakout, Euro zone uncertainty and average trading volumes detract from the bullishness. Caterpillar reports earnings before the Wall Street open and is expected to show a 26% gain in EPS compared to the year ago quarter. Probably even more important will be the company’s forward outlook in the face of growing economic headwinds. Meanwhile, the Commitments of Traders Futures and Options report as of October 18th for Dow Jones Index $5 showed non-commercial traders were net long 8,739 contracts, a decrease of 3,476. Non-commercial and non-reportable traders combined held a net long position of 6,681 contracts, a decrease of 1,200 on the week. It is possible that the speculative selling trend during last week’s congestion was probably the result of profit-taking from the October rally. The early edge goes to the bull camp this morning, with potential upside targeting coming in at 12,097 based on the recent congestion pattern.

NASDAQ: The December NASDAQ established a higher high during the early morning hours and sits just 38 points below last week’s high. In addition to optimism surrounding the EU Summit over the weekend, the NASDAQ could be benefiting from news that Google has been out looking for financial backing for a potential bid for Yahoo. The Commitments of Traders Futures and Options report as of October 18th for Nasdaq Mini showed non-commercial traders were net long 37,971 contracts, an increase of 24,457. Non-commercial and non-reportable traders combined held a net long position of 11,749 contracts, which reflects a shift from a net short to a net long position. While the buying trend of the speculators is seen as a positive force, those figures could be overstated, as the NASDAQ slipped nearly 30 points after the report was conducted. The bulls have the early advantage this morning, with key resistance at 2388.50.

TODAY’S MARKET IDEAS: The December E-mini Dow and S&P 500 have confirmed a close above the recent 2.5 month trading range, which on the surface is bullish. It is a step closer in leaving the October low as an intermediate bottom. However, there still remain a number of unresolved issues overhanging the market: US Economic growth prospects and concrete steps to resolve the European debt crisis. For now, both factors have seen some positive press, but more is needed to justify the higher price levels. Sentiment is beginning to flash bearish warning signals, like a put to call ratio that is reflecting excessive bullish optimism. A key theme to watch in today’s trade is for a noted pick up in fund buying interest now that the major indices have broken out of their respective trading ranges. Volume was average Friday, but for a significant push out of the range probably needs to see greater participation. We maintain a positive short-term bias, but remain suspect over another leg higher at this juncture.

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Progress on the Euro zone debt crisis took two-steps backwards over the weekend, and that has heightened the fear element in the market and pressed global equities lower. While there were modest gains in the Japanese Nikkei following Friday’s rally on Wall Street, European shares came under heavy selling pressure Monday morning. The combination of German Chancellor Angela Merkel losing a regional election over the weekend and minimal progress among EU leaders at a 2-day meeting in Poland has compromised sentiment. It also appears that global financial markets were dealt another blow to confidence with Greece’s Prime Minister canceling his visit to the US. Some viewed the cancelled meeting as a sign that the debt crisis might be worse than expected. Meanwhile, the bottom line is that the European debt situation has not improved and there are still no concrete plans to deal with the crisis. Two catalysts this week worthy of shifting sentiment, include a meeting among BRIC leaders later this week to discuss euro zone support and a 2-day FOMC meeting that could result in new stimulus measures to bolster the struggling US economy. President Obama is expected to introduce his new deficit reduction plan today to help finance his new jobs bill. The package is expected to go to the Super-Committee, but so far new tax proposals on the wealthy, inspired by Warren Buffett have been met with mixed emotions.

S&P 500: The December S&P 500 starts in the red this morning as it appears to be ending last week’s five-day winning streak. The December S&P 500 rallied slightly more than 8.0% from last week’s low to Friday’s close to challenge the August 31st high. We think it takes something rather significant to power beyond the August 31st high of 1223.00. European bank shares came under heavy selling pressure this morning, led by SocGen and UBS. UBS indicated that they have covered all of the positions highlighted in the unauthorized trading losses, but they seem to have come with a larger price tag approaching $2.3 billion. Commodity related shares are under pressure this morning, seemingly in response to a lack of progress in Europe over the weekend that triggered concerns of slowing commodity demand. The Commitments of Traders Futures and Options report as of September 13th for S&P 500 showed non-commercial traders were net short 51,648 contracts, an increase of 2,702. The commercial traders were net long 69,419 contracts, an increase of 11,168. Non-commercial and non-reportable traders combined held a net short position of 69,417 contracts, an increase of 11,165 contracts in their positioning. This is just 1,000 contracts less than the fall 2007 extreme and could be nearing extremely oversold territory. Meanwhile, the 4.0% rally in the S&P 500 since the report window closed, could be the result of squeezing those new shorts out of the market. For this morning, the December S&P 500 has support below at 1182.50.

DOW: The December E-mini Dow had a gap lower open Sunday evening and has slipped back to the 11,250 area. Dow stocks received a lift last week on reports that United Technologies was tapping into the credit markets for as much is $20 billion. There also appears to be chatter that United Technologies may be considering the acquisition of aircraft supplier, Goodrich, which some viewed as a positive. However, fears of a spreading European debt contagion and lack of control by European officials has drastically shifted sentiment this morning in favor of the bear camp. The Commitments of Traders Futures and Options report as of September 13th for Dow Jones Index $5 showed non-commercial traders were net long 11,244 contracts, a decrease of 344. The Commercial traders were net short 9,783 contracts, an increase of 1,099. Non-commercial and non-reportable traders combined held a net long position of 9,783 contracts. This represents an increase of 1,099 in the net long position held by these traders. The technical action in the December E-mini Dow favors the bear camp, with near-term targeting below at 11,250. There is gap resistance above the market at 11,351 to 11,444.

NASDAQ: The December NASDAQ has taken a negative turn below Friday’s low this morning and is down nearly 2% from Friday’s high. This comes in the wake of last week’s five-day trough to peak rally of 9.0%. While most of the early morning action has been driven by a risk-off attitude stemming from the euro zone debt crisis, there is a chance that shares of Netflix could recover from last week’s 26.3% slide. Netflix is expected to split its business into two units, separating streaming movies from the DVD mail service. The Commitments of Traders Futures and Options report as of September 13th for NASDAQ Mini showed non-commercial traders were net long 9,927 contracts, an increase of 456. Non-commercial and non-reportable traders combined held a net long position of 34,441 contracts, an increase of 950 on the week. The bears have the early edge in the December NASDAQ, with support below at 2248.50 and then at 2239.25.

TODAY’S MARKET IDEAS: US equity markets begin the new week under pressure, largely in response to fresh Euro zone debt concerns and risk of the contagion spreading across the global market place. There is an apparent safety bid present in debt markets, and after last week’s gains pushed markets into short term overbought territory, suggests that more near term downside is possible. The December S&P 500 has a support shelf below at 1182.50, and if violated has the potential for a slide targeting 1155.00 level. The December S&P 500 has resistance above at the August 31-September 1 high trade from 1204.00 to 1219.00. This corresponds to 11,591-11,474 in the December E-mini Dow. We remain suspect that US indices can continue their march higher without a fresh positive news development.

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Global equity markets have taken a negative turn during the initial morning hours, weighed down by a round of soft European economic data. The Japanese Nikkei extended its winning streak with a rally and close back above the 9,000 level. While PMI data out of China showed a level of improvement an unexpected decline in export orders sparked concerns over softening global demand. Global slowdown fears were amplified by German PMI Manufacturing data that fell by more than expected. Manufacturing activity in Europe also slipped for the first time in two years in August. While there seemed to be a level of optimism in the US markets yesterday, an active economic calendar this morning has the potential to bring recession fears back into focus. This also comes at a time when global markets try to handicap the Fed’s next move. There is an active flow of US economic data this morning, with Weekly Jobless Claims expected to show a fractional decline compared to last week. US equity markets will be closely following the results of the August ISM Manufacturing figures that are expected to slip below the 50 level and to show the first decline in two years.

S&P 500: While it seems that the September S&P 500 has begun to take weak economic readings better, they still face the latest bout of data for the month of August. After a bout of sluggish European Manufacturing data this morning, the market faces US Manufacturing PMI figures, which are expected to slip below the 50-level for the first time in 2 years. The soft manufacturing trend from overnight has weighed on commodity markets like crude oil and copper, and that is likely to be a negative for those related shares this morning. While bank stocks were higher in London following reports that the government would hold-off on new regulations until the next election (2015), US markets reacted to a surprise leadership change at the Bank of New York. The September S&P 500 showed positive technical action with its move above 1219.00, but it was unable to close above that level. The early edge goes to the bear camp, with the potential for more downside targeting 1199.80.

DOW: The September E-mini Dow rallied to its best level since August 4th yesterday, which marked an 8-day advance of nearly 1,000 points. The index has come under a level of pressure this morning following a dose of weak economic readings across the Atlantic, and that has tamped down M&A news that IBM was acquiring a Canada-based risk analytics firm for about $400 million. The Dow also seems to be coming to grips with yesterday’s decision by the US Department of Justice to block the merger between AT&T and T-Mobile. The early edge goes to the bear camp, with the potential for a further slide to correct the recent advance. Short term targets on the down side today stand at 11,415.

NASDAQ: The September NASDAQ has come under a modest selling pressure during the early morning hours. This comes in the wake of an impressive 12.1% rally off the August 22nd low that might have gotten ahead of itself in the short term. While the market has gone on to price in the prospects of more stimulus measures from the Fed, yesterday’s round of improved economic data may have detracted from that view. Shares of the NASDAQ are also reacting to reports late Wednesday from Novellus that cut Q3 revenue targets in the wake of continued weakness in PC demand. The early bias in the September NASDAQ is down, with short term support coming in at 2221.00 and 2201.00.

TODAY’S MARKET IDEAS: US equity markets have embraced prospects for more stimulus measures from the Fed and a marginal improvement in yesterday’s economic readings. But improvement in economic data has the potential to sway the Fed to delay pursuing more QE. Soft European economic readings this morning and expectations that data in the US will also be soft provides the bear camp with the early advantage. US equity markets have also become short term overbought and vulnerable to the downside. We see potential for the markets to correct this week’s gains ahead of Friday’s Non-Farm Payroll data, which leaves downside targeting in the September E-mini Dow at 11,450, and 1195.00 in the September S&P 500.

This content originated from - The Hightower Report.

World equity markets enter the US trading session under pressure, following a Moody’s downgrade of Japan’s sovereign debt rating, weak German confidence readings and uncertainty surrounding the Fed’s next step. Shares of the Japanese Nikkei slipped more than 1.0% overnight on the one-notch downgrade to its credit rating. Market sentiment took another negative blow in the wake of a much weaker than expected German (Ifo) Consumer Confidence reading, which casts doubts of a speedy recovery in the region. The primary equity market focus for the coming days is locked in on Friday’s Jackson Hole meeting. The latest round of disappointing US economic data has provided added hope for more stimulus measures to revive the struggling US economy. For now, it seems that the market expects Fed Chairman Bernanke to introduce some form of help to the market, perhaps extending the duration of debt on its balance sheet, but not necessarily QE3. These hopes are vulnerable to disappointment if the Fed fails to deliver. Economic data this morning includes Durable Goods Orders, which are expected to show a level of improvement in July.

S&P 500: The September S&P 500 rallied as much as 50 points from Monday’s low to the overnight high, but seems to have lost some of that upside momentum. While growing hopes for added support for the US economy from the Fed at Friday’s Jackson Hole gathering provided the early lift, it may take more concrete action to actually inspire a more sustainable rally. Meanwhile, BHP Billiton reported record earnings, nearly a 90% increase in yearly profits and raised their full-year profit outlook above street estimates. The positive results could be offering a level of support under the S&P 500 this morning and that could present a positive for related mining shares within the index. The short term charts turned friendly for the bull camp with yesterday’s upside break action above 1153.00. This leaves the bulls with a slight advantage for more upside today. Downside support comes in at 1140.00.

DOW: The September E-mini Dow established a higher high during the initial morning hours, as it extended late day gains from Tuesday. However, the September E-mini Dow came under selling pressure overnight following more capital funding concerns for Bank of America, with some insiders indicating that the company may need an extra $50 billion in coming weeks to meet new global capital standards. While a number of cyclical and defensive names in the Dow Jones Index garnered support during Tuesday’s session, it might be difficult for the market to attract that support again this morning. There is a shelf of support beneath the market at the 11,020 level. A decline below this level on the downside puts the edge in favor of the bears for a deeper slide targeting 10,860.

NASDAQ: The September NASDAQ broke up out of its recent congestion pattern, but failed to follow through during the overnight and early morning hours. While it is possible that the market is consolidating yesterday’s nearly 4.0% gains, we think that it takes something more definitive to propel tech shares higher. Shares of Micro Technology slipped 1.0% in overnight action, and that may be an indication for more profit-taking ahead after yesterday’s gain. The September NASDAQ has short term support below at 2070.00, with stiff resistance above 2170.00.

TODAY’S MARKET IDEAS: US equity markets showed impressive upside action during Tuesday’s trade, but that was not enough to turn the short term trend in favor of the bulls. Sentiment within the market appears to have priced in a recession and has begun to price in prospects for another form of QE, but it probably takes steady improvement of economic data to offer more upside. This morning’s economic readings on July Durable Goods Orders are expected to improve from their June reading, but more disappointment there could send the major indices in search for the Monday’s lows. Perhaps it takes another test of the August lows before the market can embark on any meaningful rally attempt.

This content originated from - The Hightower Report.

One of the worst US economic fears came to fruition over the weekend when S&P Ratings lowered their credit rating on US debt from AAA to AA+. While this is the first time that such a rating downgrade has happened, there remains a great deal of demand for US Treasuries in a world of few alternatives that have the liquidity and safety. Global equity markets reacted negatively to the downgrade as well as to fears of a global economic slowdown. These fears were highlighted in the gold market, which surged to new contract highs above $1700.00 ounce. Asian equity markets took the brunt of the selling, with the China Shanghai index losing more than 4.0% and the Japanese Nikkei closing down by more than 2.0%. European equity markets fared slightly better in the early morning hours, as they drafted a level of support from the European Central Bank’s decision to purchase Spanish and Italian government debt. This has helped contain fear premiums in the region and relieved pressure on related sovereign debt spreads. Additionally, an emergency meeting among G-7 financial leaders affirmed their stance to provide stability and liquidity in the financial markets, and that may have helped to offset some of the initial negativity. At the very least, it shows that financial leaders are willing to take further action if needed. A lack of fresh economic data points in the US this morning is expected to keep the market focused on slowdown fears and the S&P downgrade. Still, the knock-on effects of the S&P downgrade are unknown and may take some time materialize.

S&P 500: The September S&P 500 established a new low for the decline overnight and has challenged the lower end of the November consolidation zone (1156.10). The outside market tone has grown more uncertain over the weekend, with the latest rating downgrade to US debt, and the full impact of that downgrade has not been fully priced into the market just yet. Meanwhile, a number of European bank stocks benefited from the ECB’s purchase of Italian and Spanish bonds overnight, but the impact that might have on US bank shares is unknown. The Commitments of Traders Futures and Options report as of August 2nd for S&P 500 Stock Index showed non-commercial traders were net short 16,379 contracts, an increase of 18,139. This represents a change from a net long to net short position. The Commercial traders were net short 36,897 contracts, a decrease of 12,249. Non-commercial and non-reportable traders combined held a net long position of 36,897 contracts, a decrease of 12,249 in their net long positioning. Again, these figures could be understated after the index fell another 6.5% since the report was conducted. This also suggests that the S&P 500 may have more downside to go to turn the net spec positioning to a short status. Some traders point to the 1150.00 level as the next downside stopping point for the S&P 500. Meanwhile, the weak economic backdrop continues to foster a sell on strength mentality.

DOW: The September E-mini Dow had a gap lower open Sunday evening and fell to new low for the decline. The S&P Ratings downgrade has weighed heavy on mining and industrial stocks in overnight action as they brace for the negative impact on global growth prospects. Slowing global growth concerns pressured crude oil prices lower overnight, and that is a factor likely to weigh on energy-related components within the index. The Commitments of Traders Futures and Options report as of August 2nd for Dow Jones Index $5 showed non-commercial traders were net long 18,704 contracts, a decrease of 7,013. The Commercial traders were net short 22,513 contracts, a decrease of 9,506. Non-commercial and non-reportable traders combined held a net long position of 22,513 contracts, a decrease of 9,505 on the week. It is possible that theses figures are understated after the E-mini Dow tumbled more than 700 points since the report window closed. The early morning tone continues to favor the bear camp, with Fibonacci support coming in at 11,190 and 10,792. Near term resistance comes in at 11,590.

NASDAQ: The September NASDAQ extended last week’s weakness during the initial morning hours and fell to levels not seen since November 30, 2010. Tech related shares have come under a great deal of pressure in recent sessions as they try to adjust to slower growth. These shares have also come under pressure from an aggressive liquidation trade as uncertainty within the market grows. Some of that liquidation was highlighted in the latest Commitments of Traders Futures and Options report as of August 2nd for the Mini NASDAQ. Non-commercial traders were net long 61,273 contracts, a decrease of 17,270. The Commercial traders were net short 67,934 contracts, a decrease of 19,083 contracts. Non-commercial and non-reportable traders combined held a net long position of 67,935 contracts, down 19,081 on the week. The report coincided with a reading on the September NASDAQ of 2288.25, and prices have fallen by more than 150 points since, which suggests a greater level of long liquidation selling. The September NASDAQ has a level of support below the market from the November 2011 lows at 2084.25.

TODAY’S MARKET IDEAS: Economic slow down fears, along with debt concerns in both Europe and US have not gone away, and that keeps a big negative hanging over equity markets this morning. Volatility and uncertainty is expected to remain elevated, and that is expected to keep trading conditions difficult. The trends in both the September E-mini Dow and S&P 500 remain in favor of the bear camp, with downside support coming in at 10,915 and 1150.00. Near term resistance on the September E-mini Dow comes in at 11,590 and 1223.50 for the September S&P 500.

This content originated from - The Hightower Report.