The Bulls are Managing to Spin the Headlines Into Their Favor

OVERNIGHT CHANGES THROUGH 6:05 AM (CT): S&P 500 +550, DOW +45

While the talking heads overnight were attempting to play up easing talk from the Fed yesterday as a positive from the market today, favorable UK retail sales readings overnight seem to have given the bull camp an added argument in the early going today. However, the markets in general still seem to be skeptical of embracing a positive view on the US economy and it could take a series of favorable data points this morning to effective put down the fear of a double dip recession. In fact, it would appear that the brunt of the recent strength in equity prices were the result of take over activity and not favorable economic information. Therefore the equity market probably needs something positive from the somewhat active US economic report slate this morning to rekindle ongoing buying interest. However, the Fed's Bullard is scheduled to speak again later today and perhaps the bull camp is capable of spinning the potential need for further economic assistance for the US economy into a positive for US stocks latez in the trading session.

S&P 500: The S&P is showing some initial positive action this morning as the talking heads are fanning take over prospects and suggesting that the market is expected to get a lift from ongoing easing talk from the US Fed's Bullard. It is possible that the US markets are benefiting from the UK retail sales readings but to see the September S&P regain the 1100 level this morning, probably requires something positive from a flurry of scheduled data points early today morning. Critical support in the September S&P is seen at 1087.90 early in the action today.

DOW: The Dow hasn't had two straight higher closes since July 27th. The September Mini Dow enters the trade this morning above the prior two closing levels and seemingly in a slightly positive stance. Perhaps favorable UK retail sales activity and lingering take over activity will favor the bull camp early today, but to sustain a positive track today probably requires a generally up beat "sweep" of scheduled economic data. It would seem as if economists are generally expecting the data to be positive this morning, with the initial claims figures more than likely carrying the most weight. Therefore we see a critical pivot point in the September Mini Dow at 10,348 level and the failure to hold that level through the scheduled numbers might take control away from the bull camp.

NASDAQ: The September Nasdaq has forged a quasi pattern of higher lows on the charts but the inability to sustain above the 1850 level might also be seen as a sign of a lack of bullish resolve. With the September Nasdaq starting the session today almost right on the prior close and within relative proximity to the Tuesday close, it almost seems as if the Nasdaq is coiling on the charts for a major decision on the direction of the economy. In conclusion, there should be no shortage of data today to make a judgment on the direction of the economy and therefore traders might go with a break out range defined as 1855.00 and 1827.50. Pushed into the market we would favor the bull track.

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) 08/19/2010: Stochastics trending lower at midrange will tend to reinforce a move lower especially if support levels are taken out. A negative signal for trend short-term was given on a close under the 9-bar moving average. The market's close below the pivot swing number is a mildly negative setup. The next downside target is 1074.60. The next area of resistance is around 1094.00 and 1103.40, while 1st support hits today at 1079.60 and below there at 1074.60.

S&P E-MINI (SEP) 08/19/2010: Momentum studies trending lower at mid-range should accelerate a move lower if support levels are taken out. The market's short-term trend is negative as the close remains below the 9-day moving average. The market tilt is slightly negative with the close under the pivot. The next downside target is now at 1073.82. The next area of resistance is around 1093.37 and 1103.31, while 1st support hits today at 1078.63 and below there at 1073.82.

NASDAQ (SEP) 08/19/2010: Momentum studies trending lower at mid-range should accelerate a move lower if support levels are taken out. The market's close below the 9-day moving average is an indication the short-term trend remains negative. It is a slightly negative indicator that the close was under the swing pivot. The next downside objective is now at 1810.75. The next area of resistance is around 1850.50 and 1870.75, while 1st support hits today at 1820.50 and below there at 1810.75.

DOW (SEP) 08/19/2010: Momentum studies trending lower at mid-range should accelerate a move lower if support levels are taken out. A negative signal for trend short-term was given on a close under the 9-bar moving average. It is a mildly bullish indicator that the market closed over the pivot swing number. The next downside objective is now at 10309. The next area of resistance is around 10420 and 10437, while 1st support hits today at 10356 and below there at 10309. 

MINI-RUSSELL 2000 (SEP) 08/19/2010: Daily stochastics are trending lower but have declined into oversold territory. A negative signal for trend short-term was given on a close under the 9-bar moving average. The market could take on a defensive posture with the daily closing price reversal down. It is a slightly negative indicator that the close was under the swing pivot. The next downside objective is 609.0. The next area of resistance is around 629.9 and 638.9, while 1st support hits today at 614.9 and below there at 609.0. 

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