WEEKLY PIVOTS FOR WEEK ENDING NOV. 16, 2007
R3 1577.50
R2 1551.50
R1 1495.75
PP 1477.50
S1 1448.25
S2 1434.20
S3 1414.00
ECONOMIC CALENDAR
NONE
The market gapped down at the opening and a feeble bounce to 1462.00 was sold as sellers hammered the E-mini Nasdaq futures since the beginning of the session. After testing Thursday's low at 1454.00 the E-mini SP futures turned up and rally back to place a double top at 1462.00 where sellers stepped back in and once more forced the index down. A double bottom at 1454.75 resulted in a short covering rally that reached the 1468.00 area, but the failure of the Nasdaq to join the rally was met with selling from institutions and locals who drove the index to a new daily low at 1452.00. Back and forth action with and upside bias took prices up to 1470.50 on the E-mini SP futures and 2077.00 on the E-mini Nasdaq futures where the move was rejected.. This was just at our first support area that acted as resistance and where our intraday update called to go short with stops above 1472.00. After testing once more the 1462.00 zone the market got its foot going and rallied to new highs at 1477.75, then during the last 30 minutes of trading, and after making a high at 1478.50 on the E-mini SP futures and 2088.00 on the E-mini Nasdaq futures the indexes were punched strongly as the E-mini SP felt 23 points to 1454.25 and the E-mini Nasdaq plunged 51 point from its daily high to a new low at 2037.25,"knock out”.
As I note on my Friday's report "Yesterday's rally seems to be a "dead cat bounce" in an obvious change in direction that already has taking place on the markets , and the Nasdaq futures finally joined the other indexes. "
Once more after the market made its lows on Friday's session, complacency was seen as buyers brought the E-mini SP futures back up to an intraday high before the last heavy round of selling. On my Friday's report, I wrote, "While another test of the lows could be on the horizon, the picture shows me that some kind of range has been formed and this move down has to been consolidate during the next sessions."
The weak closing on the E-mini Nasdaq futures was just at the 31.8 retracement between the MARCH 2007 low at 1700.00 and the high at 2260.00, but that does not mean it will hold this level, I personally don't trust this support.
My subscribers have to remember that just after the Fed started this new cycle of rate reductions, I wrote that interest rate reductions will come with lower prices in the market, and it is not very difficult to get to this conclusion, lower rates comes as a result of slower expansion on the economy, and that means lower profits for the companies. But this cycle has another key factor, and that is high inflation and dramatic loss of equity because of the housing bubble blast. If you open a multi year SP chart, you will see that this rally started in the year 2002 as the FED started to increase rates, and the next cycle will have the contrary behavior.
This week we have option expiration, so the volatility should continue to be part of the game.
Friday's close is just at the support areas on all the indexes, and this can be resolve:
a) with a correction that starts at or bellow Friday's settlements for a one to four days countertrend rally; or
b) panic selling that will bring the indexes to test its August lows. My personal opinion is that we are in front of a deeper correction, but I don't eliminate the possibility of a relief rally which can start from a consolidation at the lows or as a reaction from the next strong support area around 1434.00, that will match the DOW CASH testing the 12800 KEY SUPPORT area.
We have initial resistance at 1462.25-1464.00 on the E-mini SP futures and 2059.00-2061.00 on the E-mini Nasdaq futures, if those are not a problem we should go for the 1468.50-1471.00 level on the E-mini SP futures and 2067.00-2069.00 on the E-mini Nasdaq futures, and if those are exceeded, Friday's late session highs at 1477.50-1478.50 on the E-mini SP futures and 2088.00-2090.00 on the E-mini Nasdaq futures should act as a wall.
First support area is at 1452.00-1449.75 on the E-mini SP futures and 2025.00-2023.50 on the E-mini Nasdaq futures, if those are sliced, the next "MUST HOLD" support is at 1444.50-1442.00 on the E-mini SP futures and 2014.00-2012.50 on the E-mini Nasdaq futures. If those cannot hold the selling heaviness a test of 1434.50-1433.50 on the E-mini SP futures and 2000.50-1988.75 on the E-mini Nasdaq futures will be seen today.
GOOD LUCK
TODAY SUPPORT, PIVOT AND RESISTANCE LEVELS
S&P
Nasdaq
Resistance 3
1477.50-1478.50
2088.00-2089.00
Resistance 2
1468.50-1471.00
2067.00-2069.00
Resistance 1
1462.25-1464.00
2059.00-2061.00
PIVOT
1462.75
2062.75
Support 1
1452.00-1449.75
2025.00-2023.50
Support 2
1444.50-1442.50
2014.00-2012.50
Support 3
1434.50-1433.00
2000.00-1998.75
S&P FIBONACCI NUMBERS
Nasdaq FIBONACCI NUMBERS
1506.12
2137.09
1494.32
2112.60
1478.50
2088.00
1468.28
2072.33
1462.78
2064.75
1451.75
2037.25
1434.16
1992.67
1423.12
1968.20
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