The S&P opened higher Thursday after a report that Americans filed the fewest applications for unemployment benefits since February 2006.

Later, the futures pared their gains after new home sales fell 8.1% in June. The S&P futures (SPU14.CME) ended the day at a record high but the Nasdaq futures (NQU14.CME) and the Dow futures (CME:YMU14) both closed lower.

Selling good earners

The second-quarter earnings have been coming in mostly positive and many analysts have revised their estimates higher among companies in the S&P 500. According to FactSet, S&P earnings were expected to show a gain of 4.9% but have now pushed expectations out to a gain of 5.6%.

There have been several cases where the good earnings were sold. Yesterday Caterpillar earnings topped expectations but the stock fell 3.1%. The PitBull said that with the markets up so much, many of the big institutions may take the opportunity to sell into the better earnings, and so far he has been right.

I started to mention a few days ago the nervousness overshadowing the new highs last week and into this week. You can see it in the volumes, which picked up late last week and early this week but fell Wednesday and Thursday.

While there is still demand to buy stocks, it seems like investors have become a lot more cautious as the S&P approaches 2000.00 and the Nasdaq closes in on 4000.00.

In Asia overnight, 7 of 11 markets closed higher, and in Europe 7 of 12 markets are trading lower. Today’s schedule includes the durable goods number and earnings from Xerox (NYSE: XRX), Stanley Black & Decker (NYSE: SWK), Tyco (NYSE: TYC), and Covidien (NYSE: COV).

Our View

I suspected the S&P would see a narrow range and low volume yesterday and that’s exactly how the day’s trade went. For the most part it was “a little rally, a little selloff.”

Unlike yesterday that had several economic releases and earnings, today’s only release is durable goods orders at 7:30 AM CT. Wednesday’s total E-mini S&P (ESU14.CME) volume was 1.1 million contracts traded and yesterday’s was just as low at 1.2 mil.

With no surprises overnight in Asia or Europe, unless some big name reports weak earnings, I expect the S&P to pick up right where it left off, going up.

I just do not see any reason that the ESU can’t pull back a little and trade up to 1988-1990 and then finish with a “Late Friday Rip” to a new high. And then we are looking at Mutual Fund Monday.

I know the S&P is getting frosty but that doesn’t seem to matter. I am not sure if it’s certain buyers or the markets as a whole that are fearless but it’s hard to believe that that S&P is 15 handles away from 2000 and the NASDAQ futures (NQU14.CME) only 29 points from 4000.

Our view is unchanged; you can sell the early rally and buy weakness or just buy the pullbacks and wait for the Late Friday RIP!

As always, please use protective buy and sell stops when trading futures and options.

• In Asia 7 of 11 markets closed higher: Shanghai Comp. +1.02%, Hang Seng +0.31%, Nikkei +1.13%.

• In Europe 8 of 12 markets are trading lower: DAX -0.51%, FTSE -0.12%

• Fair value: S&P -5.93 , NASDAQ -7.24, Dow -66.03

• Total volume: LOW 1.16M ESU and 5.3K SPU traded

• Economic and earnings calendar: Durable goods and earnings from Xerox (XRX), Stanley Black & Decker (SWK), Tyco (TYC), and Covidien (COV).

• E-mini S&P 5001959.75-3.25 - -0.17%

• Crude104.30-0.12 - -0.11%

• Shanghai Composite0.00N/A - N/A

• Hang Seng24732.211+91.682 - +0.37%

• Nikkei 22515646.23+28.16 - +0.18%

• DAX9593.68-59.95 - -0.62%

• FTSE 1006773.44-34.31 - -0.50%

• Euro1.3377