S&P 500 e-mini future (ES), Daily
Sales dropped while inventories climbed according to the US wholesale trade report today. The wholesale trade report revealed an ugly January mix of a big 1.3% sales drop with a 0.3% inventory climb that left a dangerous spike in the inventory-to-sales (I/S) ratio to a lofty 1.35 new expansion-high, after divergent December revisions that aggravated the rise. The inventory climb did lift Q4 and Q1 GDP prospects, though at the expense of Q2-Q3, given a recession-sized I/S surge that likely reflects an unintended build as sales contract. We still think that the oil-hit to U.S. GDP growth is approaching its end, but plenty of inventory pain remains in the pipeline.
With the market at resistance and showing signs of upside momentum waning we are looking for short trades in the S&P 500 index futures (USA500 in MT4). Should the market first move decisively below 1976 we are then interested in selling rallies to or inside the Sell Area between 1976 and 2009. In such case we are looking for sell signals as per teachings in the webinars. Target 1 is at 1937-1951.50 while Target 2 is at the next support at 1900 – 1915.
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Chief Market Analyst
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