E-mini stock index futures waver at highs

Good day! Friday's jobs data disappointed market participants on Friday. According to the Labor Department, nonfarm payrolls increased by only 103,000 in December. Analysts had been expecting an increase of 150,000-175,000 jobs. Private sector jobs rose 113,000, but this was substantially less than payroll processor ADP's report on Wednesday that indicated 297,000 private sector jobs had been created last month.

Dow Jones Industrial Average (Figure 1)

On the bright side, the unemployment rate fell from 9.8% to 9.4%, which is the lowest it's been in over a year and a half. Nevertheless, this surprise was not enough to continue to entice the bulls. The major indices have been holding above their 20-day moving averages since the beginning of December, but Friday brought another retest of that support zone and it did so on strong volume compared to the the average of the past month. Not even optimistic comments by Fed Chairman Ben Bernanke managed to lift the market's spirits. Bernanke told the Senate Banking Committee that the pace of the recovery is expected to increase "moderately" in 2011.

The index futures traded in a channel on the all-sessions charts from the highs prior to the morning data to the lows that followed. The momentum within that range continued to shift on the 5 minute charts along with the 60-minute ones and a larger short setup triggered following the third high at 10:30 a.m. ET. This move broke through morning lows and the new downtrend continued into nearly 13:00 ET when both the Dow Jones Ind. Ave. and S&P 500 retested Tuesday's lows. The indices recovered throughout the remainder of the afternoon, but the pace slowed in the final two hours and remained slower overall than the morning selloff. This continued the bearish bias heading into Sunday evening when the index futures began trading once again.

S&P 500 (Figure 2)

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