Trading_floor's  Instablog

We expect the S&P500 cash to open lower compared to the close of yesterday’s US session give the current trading levels of the S&P500 future. The continued concern of the European debt situation and yesterday’s rejection from the Irish government of receiving help from the EU has clearly not eased equity markets nor supported the EUR. This concern seems to outweigh the very strong ZEW survey numbers out of Germany and decent earnings reports from Wal-Mart and Home Depot. In today’s US session the numbers to look out for that could alter sentiment are Industrial Production and Capacity Utilization.

We expect Industrial Production to have a small rebound on the back of September’s -0.2% drop month-on-month. Consensus is currently reading a 0.3% increase, while we expect a marginal lower increase of 0.2%. A surprise to the upside here would clearly trigger off a rebound in equity markets as the positive trend from retail sales lately would be seen as supported by a pickup in industrial production. Capacity utilization has stalled around 74.7% lately and we expect to rise marginally to 74.8%.

However the most probable development in S&P500 throughout the US session is range trading as the future has done pretty much all day; ranging between 1187 and 1195. In order for this to break out to either side would require news that fundamentally changes the outlook; industrial production and capacity utilization could be a bet, but we find it unlike that it is going to happen.