Yesterday after the close, S&P downgraded France's Credit rating two notches to BBB+ and the market immediately sold off. Buyers have stepped back in overnight though as the French credit downgrade is not a big surprise. The ES went on to make higher highs earlier this morning crossing back above the 1400 level. Shortly after, the US GDP numbers were released showing a disappointing growth of 2.2% versus expectations of 2.5%. Markets briefly sold off, but buyers quickly stepped back in and the ES is moved back above 1400 again.
Europe has witnessed disappointing bond auctions in Italy, lower consumer confidence in Germany and worse than expected consumer spending in France, yet the FTSE, the CAC and the DAX are all trading higher this morning.
Markets don't seem to care about bad news and that is likely to do with strong technicals as the ES broke out of a 13 day trading range yesterday and closed well above prior resistance at 1390. The resilience has surprised me a bit amidst a barrage of bad news and data but I have to be guided by what price action is telling me and that is that the market is bullish, at least for the immediate term. I have to favor buying the dips at the moment, though I continue to expect choppy action and think any follow through to the upside today will be limited... It will be important to see if strength can be sustained past the first hour of trading this morning.
Levels to watch today on the ES:
Resistance above at: 1403-1404, 1406-1407, 1411-1412,
Support Below at: 1395-1396, 1389-1390, 1386-1387
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