Stock index exuberance tempered by Fed comments

(CME:ESZ13) - Close Enough To 1800, Look For Pressure To The Downside Early: Equities began a slight correction yesterday ahead of Wednesday's FOMC minutes from the October meeting. Many were attributing this movement to comments from Carl Icahn. It is very doubtful that he will move global indexes lower, the more likely scenario was that the hawkish comments from the notable dovish Fed President Dudley caused profit taking. Major indexes had a strong move last week through major resistance levels following dovish comments by Janet Yellen in her Senate confirmation hearing. This looks like a well-orchestrated game of cat and mouse and the market's over exuberance needed to be brought back down. Major support in the S&P will come in this week at 1774.50-1776; below there 1757 is a major line in the sand. Additionally, today the 20-day moving average comes in at 1765 and as it rises will likely come into play at some point this week; a close below will signal that this immediate bullish momentum is dying out. A close back above 1796, but furthermore new highs above 1800 will negate this small correction.

Resistance - 1796*, 1800-02**, 1810-12.50***

Support - 1785*, 1774.50-1776***, 1770*, 1765-66**, 1760-1757***

(NYMEX:CLZ13) - Last Day For DEC Crude: Crude Oil has continued to consolidate lower after breaking yesterday morning along with other commodity prices. The test lower aligned with comments from Fed President Dudley. The December contract, which is testing below $93, trades about 70cents lower than the new front month January contract. Yesterday, the January contract reached a high of $94.94 before reaching a marked close of $93.68. This begins to confirm our prediction that the range bound crude market will be looking to break lower as soon as the December contract expires. Recent contract lows in January come in at $93.17 last week; a close below here will likely lead to retest to a double bottom in the contract from June at $90.40. Comments favoring a trimming of bond purchases have had an obvious effect on the market; traders will be focusing on tomorrow's FOMC minutes closely to compliment the weekly EIA and economic data. If the market fails to close below a new swing low, crude could remain range bound until then.

Resistance - 94.05**, 94.94-95.15**, 95.55*, 95.74**, 96.70-96.92***

Support - 93.17***, 91.50-91.60*, 90.40**, 85.46***

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Rich Ilczyszyn

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