FOMC committee cuts interest rates by 75 basis points in an emergency move not seen since September 2001 in order to avoid a total melt down in the U.S. markets. Further rate cuts on the 29-30 January meeting could be seen as the FED sees “increasing downside risk to grow”. After hours, Apple warning of a weak Q2 has the futures indexes trading in negative territory.
ECONOMIC DATA
None
YESTERDAY’S MARKETS
The markets open the session with huge loses after a dramatic fall in all of the world equity indexes. Just one hour before the opening the E-mini S&P futures traded at limit down, 1255.50, while the E-mini Nasdaq reached 1744.50, the E-mini Russell 637.50 and the mini Dow futures 11456.
One hour before the opening an emergency rate cut by the FOMC resulted in a huge spike that pushed the E-mini S&P back up to 1304.50, the size of the rate cut confused traders about the real situation of the economy and the E-mini S&Ps fell to test the Globex lows just above the 1255.50 area. The index reacted positive to the lows and after breaking back above our 1273.00-1275.00 intraday resistance area shifted higher reaching once more the 1300.00 level. The E-mini S&Ps pulled back once more to our previous resistance and now support levels around 1285.00, where buyers stepped in driving prices back up above the 1300.00 level and reaching close to Friday’s settlement at 1324.75. A few moves between the 1320.00 area and 1302.00 that always found support resulted in a successful closing of the open gaps and a sideways trading for the rest of the session with an upside bias but the indexes pulled back before the close. The E-mini S&P closed at 1309.25, the E-mini Nasdaq at 1801.00 and the E-mini Russell at 671.50.
MARKET COMMENTARY AND OUTLOOK
Yesterday I wrote: “If this bear campaign will continue with this strong pace, reaching levels around 1272.00 on the E-mini S&P is realistic. Breaking below 12000 on the cash Dow once the index felt from the 12800 area will be a strong obstacle for the bears, but if that happens, not only the 1272.00 area will be seen on the E-mini S&Ps but it could go to the 1220.00 level, around 11100 on the cash Dow.”
The Dow has broken bellow the 12000 area and the E-mini S&P futures has traded below 1272.00 and despite yesterday’s positive move from the lows the upside looks limited and the markets are still vulnerable. The possibility of a 1-4 day countertrend move that takes prices higher, or a consolidation of this huge move down in order for the markets to settle, looks the most probable scenario for the coming days, but that will be only possible if the E-mini S&P moves above the 1325.25 area. If that happens, on a pre-FED meeting upside move, the index could get as higher as 1342.00 or even 1363.00 before another round of strong selling is seen and yesterday’s lows are tested. On the other side of the coin, if the index is not capable to hold above the 1300.00-1298.00 area, a test of yesterday’s lows seems probable before the markets make another attempt to recover.
Despite the fact that the indexes are trading lower during the night, I will maintain a slightly upside bias all the time that the Globex lows hold. These lows are at 1292.50 on the E-mini S&Ps, 1763.50 on the E-mini Nasdaq and 661.20 on the E-mini Russell. For today’s trading roadmap and intraday updates, please read the authors bio.
TODAY’S SUPPORT, PIVOT AND RESISTANCE LEVELS
S&P
NASDAQ
RUSSELL
Resistance 3
1332.00-1333.50
1832.00-1834.00
684.80-685.50
Resistance 2
1323.75-1325.00
1821.00-1822.50
678.70-680.40
Resistance 1
1316.00-1318.00
1812.00-1813.50
673.60-674.90
PIVOT
1298.00
1801.00
664.90
Support 1
1295.00-1293.00
1769.00-1768.00
662.60-660.80
Support 2
1287.00-1285.00
1761.00-1758.00
656.80-655.30
Support 3
1276.00-1274.00
1744.00-1742.00
646.90-644.90
S&P
NASDAQ
RUSSELL
FIBONACCI
FIBONACCI
FIBONACCI
1438.76
1862.33
761.86
1422.24
1860.67
750.65
1395.50
1858.00
732.50
1368.76
1855.33
714.36
1352.24
1853.67
703.15
1325.50
1851.00
685.00
1298.76
1848.33
666.86
1290.50
1847.50
661.25
1282.24
1846.67
655.65
1255.50
1844.00
637.50
1228.76
1841.33
619.36
1212.24
1839.67
608.15
1185.50
1837.00
590.00
1158.76
1834.33
571.86
1142.24
1832.67
560.65
DAILY PROJECTIONS
S&P
NASDAQ
RUSSELL
AS DAILY HIGH
1330.00
1832.00
680.40
AS DAILY LOW
1266.00
1738.00
630.00
Support, Pivot and Resistance levels courtesy of Arturo Stern. He authors the E-mini Daily trading advisory which gives technical analysis on all the major stock index futures contract. For more of his analysis go to www.theminitrade.com Arturo can be reached at arthur@theminitrade.com
Futures and options trading involve risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. This is neither a solicitation nor an offer to buy or sell futures or options. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed in this document. The past performance of any trading system or methodology is not necessarily indicative of futures results.
All the material contained here or in any communication is only for information purposes and part of our thoughts and personal conclusions.
