There is no debating that stocks are in an uptrend.
However, there are a number of negative forces in the market. Look no further than the poor Chinese data released Wednesday. The S&P 500 index is currently in a six-point range as it continues to find support against our major 1,433 - 1,434 level. I will say this again, the S&P has provided a great range trade all week as it awaits a catalyst to break out.
The level I’m watching? 1,450.
Well, because a close above that level will encourage further buying into Thursday's European Central Bank meeting and ahead of nonfarm payroll data Friday. A close below Tuesday's low, and even against the mid 1,430s, will keep traders on the sideline as it would give the market a very heavy feel. I do not see traders pulling the plug on longs, however, until they see poor data. Remember this has been a light volume rally for months. Even the sell-off is light volume. With that said, the level I’m watching Wednesday will be the mid 1,430s.
And to be clear, I’ll be looking to buy there.
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