E-Mini S&P 500: Critical Juncture

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

The E-Mini S&P 500 was all about the jobs data as the U.S. Unemployment Report exceeded the 150,000 in expectations to 200,000! This brings the unemployment rate to 8.5% from 8.7%. It was perhaps buoyed by construction and courier jobs. Transport and warehousing added 50,000 jobs, while manufacturing added 23,000 jobs and retail added 28,000. Construction jobs were increased by 17,000. Temporary jobs actually fell by 7,500 in December. The hourly earnings only increased by four cents indicating that the jobs added may be lower paying. This aspect of the jobs data may affect Monday's U.S. Consumer Credit, which is forecast at $7.00 billion. Even as the U.S. economy is showing modest growth and recovery, the possibility of another round of stimulus from the Fed is still viable. The housing sector has been a lagging area affecting both the economy and the banking sector. Any potential QE3 for 2012 would not be surprising! The next Fed policy meeting is slated for January 24-25th.

It is thought that next week's earnings reports may take some of the attention away from the eurozone crisis. Monday Alcoa (NYSE:AA) reports earnings, although they recently made reference to a potential cut in their global smelting capacity. Economists are expecting to see a fourth quarter loss. Europe is still viewed as a potential threat in terms of any domino effect on U.S. corporations. The euro banks have until January 20th to come up with $115 billion euros to balance the books from their debt crisis. The Italian and Spanish bond auctions slated for Thursday and Friday may be vital to the eurozone.

The European Central Bank (ECB) issued cheap loans to stimulate activity, but the money is thought to be hoarded by the banks or deposited back to the ECB overnight instead of being used to loan to each other or purchase the debt instruments. Speculators have increased their net shorts on the euro FX by 138,909 from 127,879 last week.

Iran has threatened to block the Strait of Hormuz in retaliation for sanctions from the European Union and supported by the US. The majority of countries are unified in this move, willing to sign waivers to cut down on the importation of the Iran oil. China has proceeded with barter plans, while Russia opposes the sanctions. The U.S. has a strong military presence in the Gulf, but still respects the bluster as Iran announced potential military exercises in the Gulf. The International Energy Agency (IEA) is devising back up plans in lieu of a potential disruption of oil transport in the shipping lane. The market is vulnerable to any new developments in the eurozone and/or the Gulf, but for the moment may concentrate on earnings and progress within the US!

On the stock side: JP Morgan Chase and Co. (NYSE:JPM) was down 0.85 % to $35.38. Citigroup Inc. (NYSE:C) was up 0.28 % to $28.59. Bank of America (NYSE:BAC) was down 1.90 % to $6.19. Alcoa Inc. (AA) was down 1.92 % to $9.18. Boeing Co. (NYSE:BA) was up 0.61 % to $73.98. Caterpillar Inc. (NYSE:CAT) was up 0.25 % to $95.76. General Electric Co. (NYSE:GE) was up 0.66 % to $18.67. Halliburton Co. (NYSE:HAL) was up 0.87 % to $34.86. Hewlett Packard Co. (NYSE:HPQ) was down 0.26 % to $26.43. SPDR Select Sector Fund - Financial (NYSEARCA:XLF) was down 0.52 % to $13.41.

E-Mini S&P 500 Chart.

(Click to enlarge)

Monday, what to expect: We maintain a bullish bias unless the E-Mini S&P 500 penetrates $1230.00! Monday, we anticipate an inside to higher day! Today's range was $1282.25 - $1266.75. The market settled at $1274.25. Our comfort zone or point of control for this market is $1273.5. Our anticipated potential range for Monday's trading is $1296.50 - $1272.50. Longer-term, if we stay on the path, we are looking for $1315.00 as the next upside target! For the shorter-term trader, we view $1265.00 - $1264.00 as critical levels. If these levels are maintained, we see the shorts getting squeezed out. On the flip-side, a break below the $1264.00 level could open the door to $1245.00 - $1235.00. We view these levels as potential buying opportunities!

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