(CME:ESZ13) - With The Market Closing On The Lows And VIX On The Highs, We Could Have More Follow Through to The Downside Today: The S&P began pulling back from the highs yesterday for two taper related reasons. First the deal in Washington disappointed those who thought real progress will be made, even though the fact that a deal was done at all opens the door for a Fed taper next week. Second, the S&P gave a push toward highs early into Tuesday's session and set up a technical failure; longs are covering in a stronger fashion after a fail. After a very quiet start to the week, traders and investors look to Retail Sales and Weekly Jobless Claims today. Although strong data may give a knee jerk reaction lower, look for it to ultimately lead the market higher by the end of the day. We are at major support at 1774.50-76 and this level will be crucial on a closing basis. We are at the lowest level since Nov. 20, and the 20-day moving average is ticking down for the first time in weeks. The 1784 level will be very pivotal on a closing basis, a move back above here that holds will help this market consolidate higher into next week's Fed. However, traders can play the levels and look for a quick new high on the session at this level for a selling opportunity. A close below 1774.50 will ultimately bring 1757, the next major level, into play, which aligns with the 50-day moving average.
Resistance - 1784**, 1793.75-94.75**, 1800-01**, 1810-12.50***, 1825***
Support - 1774.50-76***, 1766*, 1757***, 1746*, 1736.50**
(NYBOT:CLF14) - Sell Any Rally Against $99: Crude oil posted a tremendous weekly draw yesterday beating expectation with more than 10.5 million barrels. Despite this data crude never put in a new high against $98.7,5 which was posted much earlier in the session. Builds in gasoline and heating oil negate this tremendous build, signaling that this is not a demand issue, this is more likely refiners refining the crude to avoid a tax at the end of the year on their extra inventory of crude. You can see that the build in the products closely match that of the draw in crude. Pullbacks have found support above $97 and at the 50-day moving average, which comes in today at $97.25; look for a close below this level to signal a further correction to major support at the 200-day moving average at $96.73. After such a long consolidation through the month of November, we find many strong support levels below. However, most important will be a close back below the 200-day moving average and the $96.15 level. If this begins to happen we expect to see a further dip that will test a major line in the sand at $94.43-$94.70. Furthermore, action below the $96 level will begin to press the 50-day moving average lower and potentially building a death cross (the 50-dma passes below the 200-dma). Market action is currently at resistance at $97.72-$97.90, only a close back above here can help signal a retest of the highs and major resistance at $98.92.
Resistance - 97.72-97.90**, 98.92***, 99.86-99.94***
Support - 97.10-97.25**, 96.68**, 96.30-96.15***, 95.52-.63*, 95.26** 94.70-.43****