Daily Futures Commentary July 31, 2009

Friday, July 31, 2009

Stock Index futures are pointing higher this morning as speculators brace for the U.S. Gross Domestic Product Report which is expected to show that the recession eased during the second quarter. Today’s report is expected to show a second quarter decline of 1.5% versus a drop of 5.5% in the first quarter.

The slowdown in the decline of the GDP is a sign that the recession is easing and could prompt traders to buy equity futures as appetite for risk assets is likely to rise. A strong rally today will put a cap on a great month that saw a major rally in equities ignited by much better corporate earnings. News that the economy is improving could trigger a strong rally as traders may try to close this market on its high for the month to set the tone for next month.

The key area that needs to be penetrated is the psychologically important 1000 price in the September E-mini S&P 500. Currently this market is up but trading neutral for the week. 985.75 is acting like a key pivot. This price should control the short-term direction of …
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