S&P

U.S. equity markets finished higher after treading water most of the day in sideways-to-lower trading action. Traders seemed to be waiting for a catalyst all day. Near the close equity markets mounted a strong surge to finish on their highs.

Signs of improvement in the U.S. economy helped the March E-mini S&P 500 push through recent resistance at 1112.75 to turn the main trend to up. The strong close in the Dow has this average in a position to challenge the last main top at 10434. Strong demand for technology stocks helped drive the March NASDAQ through the recent main top at 1833.00.

The threat of a 1987 crash may have receded a little as the S&P embarks on what could be a lengthy trading range.

Will we be partying like its 1999 or crying like its 1987? Find out now!

Friday’s decline has got a lot of commentators asserting that the official top is in for the rally that started March 2009. The primary reason for these assertions is that stocks look to have broken the rising channel they entered during this last leg up.

What will 2010 bring for the S&P? This article takes another look at the S&P three months after the last review.

The December E-mini S&P 500 contract settled at 50% of the recent 1119.00 to 1085.00 trading range after failing at the .618 price of 1106.00. Volume died after the opening and today’s session could best be characterized as lackluster and non-eventful.

BoA/Merrill Lynch see 1120 and 1084 as key levels for S&P500- According to BoA/Merrill analysts, bullish signal if S&P 500 closes above 1120, bearish signal if the S&P closes below 1084.
- See a break of 1120 would target a move to 1200-1250.
- Near-term resistance for the S&P 500 is 1100-1120.

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Greater demand for higher risk from Asia helped drive up U.S. stock index futures overnight. The rally in the December E-mini S&P stopped short, however, of taking out yesterday’s high at 1115.50. The chart pattern suggests that a rally to 1122.00 is likely as this would represent a 50% correction of the entire break from the October 2007 top to the March 2009 bottom.

Wednesday’s weaker than expected ADP Report for November helped contribute to today’s drop in demand for higher risk assets. This led to a stronger Dollar as traders sought safety in the U.S. currency while reducing exposure in riskier stocks and commodities.

All three major stock indices finished higher but intra-day trading action suggests that the markets may be getting expensive at current levels. This morning the three indices surged to the upside mostly on strong buying in Asia and Europe overnight. These markets were buoyed by the weaker Dollar and strong demand for higher yielding assets.

Investors continued to dump higher risk assets today triggering weekly closing price reversal tops in the December E-mini S&P 500 and the December E-mini NASDAQ. A follow-through break to the downside in both of these markets next week will confirm the reversal top and lead to the start of a 2 to 3 week break.

December S&P and NASDAQ stock index futures finished lower for the month while the December Dow eked out a small gain. The closing price reversal tops in the S&P and NASDAQ indicate that the selling is greater than the buying at current levels and set up the possibility for a 2 to 3 month decline.

Trading ended in the stock index futures on Friday with the three major indices getting hit hard by selling pressure. Lower demand for higher risk assets was the theme today as traders took profits and failed to buy on the dips. The recent sharp rise in the equity markets has led many traders to feel that current prices are overextended given the state of the economy.

Where has the year gone? A look at the S&P and previous comments I made as to where it might go dating back to June 2008.