The markets are at a bit of a crossroads...will the forces of inflation around the globe push the Federal Reserve to take heed and end its easing cycle? That's a bigger topic for another time, but will affect the course of stocks, commodities and the dollar. Let's take a more short-term look at some technical levels for the S&P 500 and gold futures for traders.
The CME June S&P 500 index futures closed lower on Monday as it extended last Friday’s breakout below the 20-day moving average at 1344, suggesting that a short-term top has been posted. Momentum indicators, Stochastics and the Relative Strength Index (RSI) remain bearish hinting signaling that sideways to lower prices are possible near-term. If June extends Monday’s decline, the reaction low at 1310 is the next downside target. Closes above last Friday’s high at 1369 could temper the near-term bearish outlook in the market.
For day traders, I see the market force as neutral to bullish. Watch for lower drops today to catch support and push higher. The market is ready to rally anytime and is getting a lift this morning from the latest economic data and earnings, including a better-than-expected report from Johnson & Johnson and State Street.
COMEX June gold futures closed slightly higher on Monday, consolidating above the 10-day moving average at $918 an ounce. Stochastics and the RSI remain neutral to bullish, signaling that sideways to higher prices are possible near-term. Closes above the 20-day moving average at $935 are needed to suggest that a short-term low has been posted. If June renews the decline off March’s high, the 50 percent retracement level at $855 is the next downside target. First resistance is the 20-day moving average at $935, and second resistance is at $944. First support is at $907, and second support is at $898. Gold futures are currently trading higher, getting a boost from renewed dollar weakness, and as an inflation hedge. If you trade gold, watch the dollar! I’ve included a dollar index futures chart below, watch for breakouts as they will move commodities.
Good luck and good trading!
Jeff Friedman is a Senior Market Strategist with Lind Plus. He can be reached at 866-231-7811 or via email at jfriedman@lind-waldock.com. Join Jeff for his monthly webinar, Friedman’s Futures Forecast, by visiting Lind-Waldock’s events page.
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