The equity indexes rebound after spending most of the day under huge pressure on concerns that the Federal Open Market Committee (FOMC) move will not be enough to save the economy from recession.
Economic data8:30 Initial Claims8:30 Existing Home Sales10:30 Crude Inventories
Yesterday’s marketsAnother dramatic day for all the indexes as the markets started the session under huge pressure. On the Globex session, the E-mini S&P 500 futures traded as low as the 1360.50 area, that is almost 50 points down from the previous day settlement, while the E-mini Nasdaq traded before the regular session as low as 1724.50, well below Tuesday’s lows. The E-mini S&P 500 futures opened the session with a huge gap and rallied all the way to 1310.50, while the E-mini Nasdaq futures reached 1772.00 and the E-mini Russell the 677.00 area. The notorious weakness on the E-mini Nasdaq triggered a sell off on all the indexes. The E-mini S&P 500 futures fell from the 1310.50 to the 1292.00 area just below our 1393.00.00 support, a short covering bounce took the index back to 1302.00 where sellers joined the party and in a steadily sell off pushed the index down to the 1270.50 level, while the E-mini Nasdaq collapsed to 1698.25.
Our lucky subscribers to the real time service knew that the “low “ on the E-mini Nasdaq was the objective for this move down, “The 1698.25 low on the E-mini Nasdaq looks like a good objective for this move. The E-mini S&P 500 futures should be able to start to build upside momentum above the 1287.00 area with the real buying above my 1291.00”, and what a momentum. After making the lows at 1270.50 on the E-mini S&P 500 futures never looked back as every pullback was a buying opportunity. The first wave of buying took the index back to the 1310.00 area and the index pulled back to 1294.00. A strong bid, an institutional buying program and a huge short covering rally resulted in a move to 1344.50, just above our 1342.00 upside objective for a countertrend rally, an showing a strong rebound from a successful test of the lows. The Dow futures rallied from 11658 to a daily high at 12300.
Market commentary and outlookYesterday I wrote: The Dow has broken below the 12000 area and the E-mini S&P 500 futures have traded below my 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 one-to-four day countertrend move, that takes prices higher, or a consolidation of this huge move down in order for the markets to settle, looks the must probable scenario for the coming days, but that will be only possible if the E-mini S&P 500 breaks 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.”
The fact that the E-mini S&P 500 made an intraday low just below my 1,272.00 area and held, the dramatic turn on the E-mini Nasdaq after trading well below the 1,755.50 and rallying more than 110 points from below Monday’s “limit down” and the almost 700 point move on the Dow from yesterday’s lows with a close above the 12,100 it makes yesterday’s action, printed already on the daily charts the test of the lows. The extreme negative sentiment reflected on the VIX.X and the huge volume of short positions will probably result on more short covering during the next coming days in front of the next FOMC committee meeting, or a consolidation that could reduce the volatility until the next strong move is seen. Meanwhile I don’t expect another wave of strong selling all the time that the lows hold, so we have a short term bottom.
Today’s sessionFor 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
1363.00-1364.50
1838.00-1839.50
710.50-712.00
Resistance 2
1355.00-1356.50
1826.50-1828.00
703.30-704.40
Resistance 1
1348.25-1351.00
1818.00-1820.00
698.00-699.00
PIVOT
1325.75
1802.00
684.80
Support 1
1333.00-1332.00
1799.00-1797.00
688.00-686.80
Support 2
1326.50-1324.75
1786.00-1784.00
681.50-680.40
Support 3
1318.00-1316.00
1772.00-1770.00
676.00-674.00
S&P
NASDAQ
RUSSELL
FIBONACCI
FIBONACCI
FIBONACCI
1464.23
1996.45
773.66
1446.77
1969.55
762.34
1418.50
1926.00
744.00
1390.23
1882.45
725.66
1372.77
1855.55
714.34
1344.50
1812.00
696.00
1316.23
1768.45
677.66
1307.50
1755.00
672.00
1298.77
1741.55
666.34
1270.50
1698.00
648.00
1242.23
1654.45
629.66
1224.77
1627.55
618.34
1196.50
1584.00
600.00
1168.23
1540.45
581.66
1150.77
1513.55
570.34
DAILY PROJECTIONS
S&P
NASDAQ
RUSSELL
AS DAILY HIGH
1374.00
1837.00
719.00
AS DAILY LOW
1301.25
1696.00
667.80
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
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