Stock index futures were headed lower in early trade after the Commerce Department reported U.S. housing starts fell more than forecast in September. Single-family home construction dropped 12 percent to a 544,000 annual rate, a 26-year low. December S&P futures were last down 4.50 at 936.50.

Lind Plus Senior Market Strategist Jeff Friedman said technical momentum indicators, the Relative Strength Index (RSI) and Slow Stochastics, have turned nuetral for now for S&P 500 futures and are signaling sideways trade, but it seems more likely than not there could be another big downdraft ahead.  He added that Thursday’s gains in stock index futures seemed to be based on short covering, and that traders should get used to big swings. ” I see a huge, two-sided market for weeks to come,” he said.

Friedman said support for December S&P futures comes in near last Friday’s low at 838, with the 2002 low coming in at 767. Resistance comes in at the 10-day moving average at 982, and the 20-day moving average at 1083.

On Thursday, October 23, 2008, you can hear more of Jeff’s market views in a special live webinar. It’s free to attend, just go to www.lind-waldock.com/events and click on the calendar link to sign up. A simple registration is required.