At Least in the Early Going the Bullish Buzz from Tuesday in Missing

OVERNIGHT CHANGES THROUGH 6:05 AM (CT): S&P 500 -80, DOW +0

Unfortunately the bull market isn't able to get fresh Wal-Mart earnings every day and therefore one has to wonder where the markets will direct its attention today. While the UK equity market could have garnered some support from favorable BOE dialogue overnight, there doesn't appear to be a definitively bullish track in the early European equity markets this morning. The market saw earnings news from John Deere and Target this morning and those earnings didn't seem to help the market. At least in the early action today, the talking heads seem to be throwing around the question of a double dip recession again and that suggests the market in general is still concerned about the "direction" of the US economy. Prior to the August top in equities, the market seemed to be debating the pace of the recovery effort, but after the mid month slide in equities, the debate seems to have shifted to a growth/no growth argument. While a growth/no growth debate might set a low bar for economic numbers, that type of environme t probably serves to chase a number of investors from equities. We think the US equity market needs evidence of additional easing and or distinctly better numbers or the bear camp looks to have the edge.

S&P 500: The S&P seems to be set to start the Wednesday trade out right on the prior sessions closing value and given the lack of significant economic news from the overnight news cycle, there doesn't appear to be a dominating theme controlling sentiment. Unfortunately for the bull camp, Target and John Deere earnings failed to provide the market with any lift. While there is a fair amount of merger and acquisition talk in the marketplace this week, that angle doesn't appear to be getting much play in the mainstream press and therefore the bull camp seems to be in need of some additional help. In other words, the path of least resistance in the S&P might be set to favor the bear camp today, unless earnings news rekindles optimism. Critical support in the September S&P is seen at 1084.00, with even numbers of 1080 another logical support point.

DOW: The Mini Dow comes into the Wednesday action waffling around both sides of the prior session's close and seemingly lacking a fundamental focus. Earnings from Target are likely to set the tone for the market today, which in the early trade today is seemingly less optimistic, than it was at this time on Tuesday morning. Given the lack of market moving economic readings scheduled today, it is possible that traders could take the surprise build in US crude oil stocks from a private survey yesterday afternoon as a sign that the US economy is slowing. Therefore, it is possible that the equity market could take a bit of guidance from the weekly EIA energy stocks data shortly after the NYSE opening this morning. Critical support in the September Mini Dow is seen at 10,325, with more likely support in the market seen down at 10,271.

NASDAQ: The Nasdaq appears to have spent a large amount of its early trade today below the Tuesday close and that in turn might have been the result of disjointed and mixed international equity market action. Negative talk toward US Agencies from members of Congress overnight might be something capable of denting economic sentiment, as an already suspect US housing market doesn't need any additional pressure from Washington. About the only distinctly positive tilt in the headlines early this morning is that BHP is launching a hostile takeover bid for Potash, but that news might be considered somewhat stale by most traders. Near term critical support is seen at 1827.25 today, but even lower support can't be ruled out down at 1820.00. 

STOCKS TECHNICAL OUTLOOK:

Note: Technical commentary is based solely on statistical indicators and does not necessarily correspond to any fundamental analysis that may appear elsewhere in this report.

S&P 500 (SEP) 08/18/2010: The cross over and close above the 60-day moving average indicates the longerterm trend has turned up. Momentum studies trending lower at mid-range should accelerate a move lower if support levels are taken out. The close below the 9-day moving average is a negative short-term indicator for trend. Market positioning is positive with the close over the 1st swing resistance. The next downside target is 1064.05. The next area of resistance is around 1100.99 and 1111.64, while 1st support hits today at 1077.20 and below there at 1064.05.

S&P E-MINI (SEP) 08/18/2010: The major trend could be turning up with the close back above the 60-day moving average. Declining momentum studies in the neutral zone will tend to reinforce lower price action. A negative signal for trend short-term was given on a close under the 9-bar moving average. Market positioning is positive with the close over the 1st swing resistance. The next downside target is now at 1063.75. The next area of resistance is around 1101.00 and 1111.75, while 1st support hits today at 1077.00 and below there at 1063.75.

NASDAQ (SEP) 08/18/2010: The cross over and close above the 40-day moving average is an indication the longer-term trend has turned positive. Momentum studies trending lower at mid-range could accelerate a price break if support levels are broken. The market's close below the 9-day moving average is an indication the shortterm trend remains negative. The market setup is supportive for early gains with the close over the 1st swing resistance. The next downside objective is 1795.57. The next area of resistance is around 1861.37 and 1883.06, while 1st support hits today at 1817.63 and below there at 1795.57.

DOW (SEP) 08/18/2010: The downside crossover of the 9 and 18 bar moving average is a negative signal. Momentum studies trending lower at mid-range should accelerate a move lower if support levels are taken out. The close below the 9-day moving average is a negative short-term indicator for trend. Market positioning is positive with the close over the 1st swing resistance. The next downside objective is now at 10232. The next area of resistance is around 10375 and 10399, while 1st support hits today at 10291 and below there at 10232. 

MINI-RUSSELL 2000 (SEP) 08/18/2010: Daily stochastics declining into oversold territory suggest the selling may be drying up soon. The market's close below the 9-day moving average is an indication the short-term trend remains negative. The market setup is supportive for early gains with the close over the 1st swing resistance. The next downside target is 605.8. The next area of resistance is around 633.1 and 640.3, while 1st support hits today at 615.9 and below there at 605.8.

***This report includes information from sources believed to be reliable and accurate as of the date of this publication, but no independent verification has been made and we do not guarantee its accuracy or completeness. Opinions expressed are subject to change without notice. This report should not be construed as a request to engage in any transaction involving the purchase or sale of a futures contract and/or commodity option thereon. The risk of loss in trading futures contracts or commodity options can be substantial, and investors should carefully consider the inherent risks of such an investment in light of their financial condition. Any reproduction or retransmission of this report without the express written consent of Optioneer LLC. is strictly prohibited.
 
Optioneer utilizes a non-directional methodology based on medium and longer-term time horizons, while much of Optioneer's research and commentary will relate to a shorter-term, directional viewpoint. Therefore, Optioneer's research may at times appear contrary to what the Optioneer strategy dictates. It is important to recognize that our research is not intended to, in any way, replace the guidelines and parameters of the Optioneer strategy, but rather to augment our brokerage services.