E-Mini S&P 500: Euro Fears Trump Holiday Cheer

Includes: AA, BA, BAC, C, CAT, GE, HAL, HPQ, JPM, XLF
by: DeWayne Reeves

The E-Mini S&P 500 seems to be taking one step forward and two steps backward. While the US economic data has been supported by better jobs reports and the housing market potentially is seen as bottoming, the Eurozone debt crisis is still out there. Further complications are derived from potential conflicts with Iran.

The market will be looking overseas for the all-important Italian long-term government bonds which have been out of favor with investors as of late. The auction Thursday may very well determine if the E-Mini S&P 500 can break through the $1266.00 or reverse into the previous lows. Italy must attract investors and increase demand for their debt instruments to keep costs below the 7 % non-sustainable levels.

The European Central Bank (ECB) had given out cheap loans to increase the support of the auctions, but now the possibility of banks hoarding the money sours the efforts of the ECB. The Euro banks are skeptical about loaning money and may affect already vulnerable liquidity concerns. $8.5 billion euros of debt with maturities of up to ten years are up for auction Thursday.

To add to global uncertainties and fears, Iran has threatened to stop oil transports through the Strait of Hormuz if sanctions are not lifted on its oil. The rhetoric has been viewed as bluster, yet the Iranian ties are with Russia and China. The US has strong ties to Israel. The US also has a strong military presence and can prevent any potential situations from escalating. This has been culminating for some time now, without circumstance. For a quiet, low volume holiday week, there is a great deal to look for.

On the stock side: JP Morgan Chase and Co. (NYSE:JPM) was down 0.97% to $32.71. Citigroup Inc. (NYSE:C) was down 2.68% to $26.18. Bank of America (NYSE:BAC) was down 3.47% to $5.29. Alcoa Inc. (NYSE:AA) was down 3.07% to $8.52. Boeing Co. (NYSE:BA) was down 1.17% to $73.40. Caterpillar Inc. (NYSE:CAT) was down 2.26% to $89.48. General Electric Co. (NYSE:GE) was down 0.94% to $17.84. Halliburton Co. (NYSE:HAL) was down 2.31% to $33.35. Hewlett Packard Co. (NYSE:HPQ) was down 1.64% to $25.23. SPDR Select Sector Fund - Financial (NYSEARCA:XLF) was down 1.19% to $12.92

E-Mini S&P 500 Chart

Thursday, what to expect: We are technically in 4th day buy mode on the Daily Chart unless the E-Mini S&P 500 penetrates $1203.00. Thursday, we anticipate an inside to higher day. Wednesday’s range was $1264.50 - $1243.00. The market settled at $1244.50. Our comfort zone or point of control for this market is $1253.00. Our anticipated range for Thursday’s trading is $1265.50 - $1237.50. The E-Mini S&P 500 has continually failed to breach the $1266.00 zone, thus potentially it may result in a reversal.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.