That's why they call them Stock Index Futures!
Fundamentals
Stock Index futures have consolidated since lows were made on November 21st, despite a slew of weak economic data recently. However, all eyes will be on today's release of November non-farm payroll figures, with the current consensus estimate that 350,000 jobs were lost last month. The unemployment rate is expected to jump to 6.8%, with some analysts fearing rates could top 7%. Not even an unexpected drop in weekly jobless claims, falling 21,000 last week, brought much cheer from economists, as the closely watched 4-week average of new claims rose by 6,250 to 524,500-the highest level in nearly 26 years. So why are the indices holding their own despite the dismal economic news? One reason may be position squaring before the NFP release, with traders lucky enough to short the indices covering their positions. Another reason might be that some traders and investors believe we may be near "value" levels for stocks, and bargain-hunting buyers are coming into the market. A third more interesting theory, especially for those who study the "psychology" of the market, was the announcement by the National Bureau of Economic Research "officially" dating the start of the recession back to December of 2007. So if that is the case, the "recession " has already been in place for at least 1 year already and may, in fact, be a bit "long in the tooth". It also seems that the recent fall in Oil and Gasoline prices is not getting the same attention as the sharp-run up in prices did earlier this year, even though this should give consumers a bit of a "stimulus" effect with lower energy expenses freeing up funds for other uses. If one only pays attention to all the gloom and doom in the media, the current economic turmoil still has quite a way to go. However, since futures markets tend to be forward looking, the old adage "it's always darker before the dawn" may be prophetic!
Technicals
Looking at the chart for the December E-mini NASDAQ 100 futures, we notice the market beginning to enter a consolidation period, with prices making lower highs and higher lows the past several sessions. Trading volume has declined as well, signaling a lack of conviction among bulls and bears. Though the 14-day RSI remains in neutral territory, it has been several months since it has risen above the 50 level and a move above this point may spur additional buying by momentum traders. Minor resistance is seen at the recent highs of 1199.50 made on November 28th, with near-term support found at the 12/2 lows of 1089.50. Major resistance is seen at 1389.00, with major support at 1017.75.
Mike Zarembski, Senior Commodity Analyst
