Continuing Rally?
CPI’s release was in line with market expectations. After a initial upside move to 1501.60 in the SPU we have sold off to the 1491 level. Volume has been steady as 2600 contracts have traded.
For today in the SPU, it is worth noting that yesterday’s close was the highest since June 2. We made up five
sessions of market losses in one session with about a 9% uptick in volume. This normally leads to further gains, and we are looking for 1538 by the end of the week. However, there will be resistance points along the way : 1497-1498, 1502-1505 above this level we should immediately challenge the April 25 settle of 1510, and the June 2 intraday high of 1511. If we close on a hourly basis above this level, look for 1522 at some point during the session.
If the market goes below a support band between 1490-1488 we see a test of the 1483.50 – 1479 area. Only an hourly close below this level would put further upside movement in jeapordy. For the NDU we have large resistance between 3900 and 3959. Encompassed in this area are the six-week high, a 50% retracement of our high to low move of the year (3917.50), the two-month high settle and intraday high, both from May 1 and the 100-day moving average at 3959.
In general, we are looking for the market to trade to the 100-day MA, where we would suggest longs take profit. Along the way the key today should be the 3855-3865 area. If we can sustain trade above this zone look for 3900. Above this level expect strong buying above 3920 that should take us to 3960. If we get above this level, 4000 is in clear sights. On the downside, if we trade below a key support band of 3810-3785 we are looking for 3735. Below this level look for 3710-3690, if we close below here on a hourly basis it is bearish moving forward.
The Dow has resistance between 10914 and 10932 in the DJU. Support between 10746 and 10720. Also today, SF Fed Pres. Parry speaks at 10:10 on the reserves role in the economy. At 1:00 the Beige Book will be released. At 3:00, KC Fed President Hoenig speaks on Economics.