ECONOMIC CALENDAR: 10:00 AM Consumer Confidence
After trading sharply higher on yesterday's night session the E-mini S&P futures opened almost flat and fell to 1439.50 where buyers stepped in. On a steady rally that appeared with sufficient strength to reach the 1454.25 Globex highs, the E-mini S&P futures were rejected at 1449.25, just at our first resistance area at 1449.25-1451.25 while the E-mini RUSSELL futures printed its high at 759.70 just half point above our resistance. The lack of economic data gave the players the chance to jump in at the resistance areas and punch the E-mini S&P futures to a low at 1432.25 while the E-mini Nasdaq futures reached the 2021.00 area. This low on the E-mini S&P futures was just bellow the 50% Fibonacci retracement from the Wednesday's lows and yesterday's highs. That high also coincided with the 23.6% retracement from the 1558.25 October 31 high to the 1417.00 November 21 low. After making a 1-2-3 bottom the E-mini S&P futures rallied back to 1441.75 where confusion between traders about the market direction stopped the bounce. One hour of back and forth action between 1441.75 and 1437.50 was resolved to the downside carrying the E-mini S&P futures to new lows at 1429.75 just above our support area. A huge volume was traded at those lows between bears and bulls on the 1430.00-1432.00 area. Finally the markets gave up and the selling pressure drove the indexes to new lows as the E-mini S&P futures printed 1406.75 on the chart while the E-mini RUSSELL futures broke bellow the 737.00 area and the E-mini Nasdaq tested the lower band of the range.
Yesterday I wrote: "We have initial support just above our pivot at 1438.00-1437.00 on the E-mini S&P futures and 2015.00-2013.75 on the E-mini Nasdaq futures. Those "MUST" hold if the counter tend move will be longer than 1 and a half day, but if those are busted, especially after the first two hours of trading, then the upside move could be over". Friday's close above the 1440.00 on the E-mini S&P futures looks like a turning point for the markets, but don't get distract, the downtrend has not ended yet and there is still a risk of a crash. "
Friday's reversal day, without follow trough usually indicate that the trend will resume in a powerful way. The volume was not so high to indicate that a capitulation has taking place.
The VIX.X has formed a triangle that has to be defined during the next 1-3 sessions and the market technical circumstances point to an increase on its value as no fear was seen on this huge move down. Furthermore, a bearish triangle has been formed on the Nasdaq 100 CASH and on the QQQ, and it looks that it's going to break down.
The E-mini S&P futures are testing the downward sloping line, and a marginal break or a false brake followed by a two day rally could indicate a temporary low. There is some nightly news about a new rescue for Citicorp and that may bring some relief but that does not eliminate the weakness on the economy and the fears of recession, it's just a consolidation of yesterdays down move.
For today, we have initial resistance just above our pivot levels at 1422.00-1423.00 on the E-mini S&P futures and 2016.00-2018.00 on the E-mini Nasdaq futures. If the market wants to consolidate yesterday's down move, those should not offer too much resistance, if exceeded, the next hurdles are 1430.50-1432.75 on the E-mini S&P futures and 2030.00-2032.25, a lot of longs are trapped on those levels and should be hard to break above them, but if those are violated and hold on a pullback the KEY TURNING POINT area on the E-mini S&P futures at 1440.00-1441.50 and 2040.50-2043.50 on the E-mini Nasdaq futures.
You have to remember that reversal days without follow through is a clear indication that the trend will resume, and during the last days all the reversals to the upside has not been more that short covering rallies, so unless we have a move that sticks the way is down.
Initial support is around yesterday's lows at 1408.00-1406.25 on the E-mini S&P futures and 1996.25-1994.00 on the E-mini Nasdaq futures, especially for the E-mini Nasdaq this is a critical area. If those can not hold, 1401.75-1400.50 on the E-mini S&P futures and 1984.00-1982.25 could be reached and must hold if the markets want to avoid a melt down move. If those do not invite buyers to step in 1392.50-1392.00 and 1966.25-1965.50 will be seen before any attempt to bounce back.
I have included today my new AS DAILY PROJECTED HIGH AND LOW objective for the session and I hope you can profit from them.
Thanks and GOOD LUCK.
TODAY'S SUPPORT, PIVOT AND RESISTANCE LEVELS
S&P
Nasdaq
RUSSELL
Resistance 3
1440.00-1441.50
2040.00-2043.50
765.90-766.50
Resistance 2
1430.50-1432.75
2030.00-2032.25
751.90-752.90
Resistance 1
1422.00-1423.00
2016.00-2018.00
746.70-748.20
PIVOT
1421.50
2015.50
742.10
Support 1
1408.00-1406.25
1996.25-1994.00
730.80-729.90
Support 2
1401.75-1400.50
1984.00-1982.25
726.20-724.50
Support 3
1392.50-1390.00
1966.25-1965.50
718.80-716.70
S&P
Nasdaq
RUSSELL
FIBONACCI
FIBONACCI
FIBONACCI
1515.40
2152.85
802.74
1505.60
2138.40
796.46
1489.75
2115.00
786.30
1473.90
2091.60
776.14
1464.10
2077.15
769.86
1448.25
2053.75
759.70
1432.40
2030.35
749.54
1427.50
2023.13
746.40
1422.60
2015.90
743.26
1406.75
1992.50
733.10
1390.90
1969.10
722.94
1381.10
1954.65
716.66
1365.25
1931.25
706.50
1349.40
1907.85
696.34
1339.60
1893.40
690.06
DAILY PROJECTIONS
S&P
Nasdaq
RUSSELL
AS DAILY HIGH
1428.75
2028.50
746.60
AS DAILY LOW
1387.00
1964.00
720.00
Arturo Stern is a market analyst for equity index futures and the author of the "Daily Trading Advisory" newsletter and other advisory tools for stock index futures traders. E-mail him at arthur@theminitrade.com or visit his website at www.TheMiniTrade.com.
