Cannon Trading Futures Blog: Daily Support and Resistance Levels

Overnight Global News: S&Ps +7.20 on $1.19 sell-off in oil prices and the Israel-Hezbollah ceasefire; T-notes -4.5 ticks on nervousness ahead of this week's PPI and CPI reports.

• A cease fire began earlier today at 8 AM Jerusalem time between Israel and Hezbollah that so far seems to be holding. However, the mechanics of Israel's withdrawal and the insertion of UN-backed troops and the Lebanese Army into Southern Lebanon remain uncertain. In addition, Hezbollah has not agreed to disarm.

• Disruptions continued at Heathrow Airport in London today due to last week's terrorist scare and one third of flights were canceled today. However, the UK government today downgraded its terrorism alert to "severe" from "critical," which suggested the government believes they are getting a grip on the situation.

• Eurozone Q2 GDP rose to +0.9% q/q (+3.6% annualized), which was a 6-year high. That was the first time in 5 years that the Eurozone GDP beat US GDP. The European Commission forecast that Eurozone GDP will ease to +2.8% in the second half of 2006 and then ease to +2.0% in Q1-2007.

• China's July retail sales were very strong at +13.7% (vs +13.9% in June), showing little sign of responding to the Chinese government's tepid attempts to slow the economy to a more sustainable pace. However, the strong level of Chinese retail sales is a positive indication that Chinese domestic demand is improving, which would reduce the nation's dependence on exports and perhaps curb the Chinese trade surplus by boosting imports. The market is still looking for another rate hike from the Chinese central bank by the end of September.