Durable Goods orders down 5.3% in January, Fed ready to cut interest rates again and Fannie May and Freddie Mac announcement to increase their current cap lift the markets on the early going.
ECONOMIC DATA
8:30 AM GDP- prel
8:30 AM Chain Deflator- prel
8:30 AM Initial Claims
YESTERDAY’S MARKETS
The E-mini S&P futures opened lower after the Durable Goods orders were released. The index fell to 1372.50 where support came in and rallied immediately to 1379.00, another two setback moves to 1374.00 were bought and the E-mini S&P broke up to new highs reaching its daily high in a quick buying wave and short covering rally at 1390.00, just one point above our resistance levels. Two hours of sideways trading were spent between the early highs and 1383.50 and with the failure to trade above our resistance and unable to print new highs, the bulls finally throw away the towel pushing the index down to 1375.00.The E-mini S&P reacted positively and run back up to 1384.25 before pulling back into the close as it settled at 1380.50; the E-mini Nasdaq made its daily high at 1809.75 and closed at 1800.25 while the E-mini Russell settled at 716.40, almost unchanged for the session. The cash Dow finished the session at 12694 with a gain of nine points.
During the first half hour of trading the index reached the 1371.00 level where a wave of selling and the release of the Consumer Confidence numbers resulted in a pullback to the 1364.00-1363.00 area where the E-mini S&P found support. The early recovery was led by an obvious strength on the E-mini Russell who acted strongly during all the session. The E-mini pushed solidly without any resistance and after the first two hours of the session reached 1386.75. A mild pullback to the low 1380.00s was bought and the E-mini SP spiked to its daily high at 1388.50, the E-mini Nasdaq to 1811.50 and the E-mini Russell reached 725.00. Another pullback on the indexes was bough and after printing lower highs the indexes looked like ready for a profit taking but the positive sentiment continued and the indexes bounced back closing at healthy levels. The E-mini SP gained 11.50 points for the session, the E-mini Nasdaq 11.25 and the E-mini Russell 6.20 points which pulled back strong into the close. The cash Dow broke the triangle formation adding 114 points and closing at 12684.
MARKET COMMENTARY AND OUTLOOK
Yesterday I wrote: “So for today’s session a run to or near yesterday’s highs could offer a good short entry, but if the market holds a pullback to yesterday’s late lows, it could rally back near the highs in what I expect to be a consolidation or inside day after this three day old rally.”
The early part of the session gave us the expected pullback and holds near the 1376.50 Tuesday’s late lows, and once the index got back up above the 1378.00 the move to the highs was quick and strong. Despite the bullish tone on the markets, yesterday’s session was a consolidation day in a move that has not yet broke the triangle formation.
The index should be considered in a mild uptrend all the time that it does not close back bellow the 1363.00-1364.00 pivotal area and a pullback to that zone should be seen as a buying opportunity, but the lack of commitment reflected on extremely low volumes and the lagging E-mini Nasdaq does not confirm yet a possible and definitive break out the wide trading range. The 12800 resistance level on the cash Dow is as important as the 1364.00-1363.00 support area for the E-mini S&P, and the positive signs seen on the E-mini Russell are a first call that we could be near a sustainable rally as small and mid caps usually get sold first when the broad index is ready to fall or get bought first when investors are coming back to the markets. This trading range should continue without a strong pullback, and if that happens, the E-mini SP should be able to break higher during the coming sessions. Yesterday I called for some kind of consolidation after the three days old rally from the 1330.00, and despite the marginal new high on the E-mini SP that’s what we got. Now, a retracement to the 1364.00-1363.00 area that holds on a close which is equivalent to a 31.8 Fibonacci pullback between Friday’s lows and yesterday’s high will be extremely bullish if it holds. This is the key if we already saw a solid low.
TODAY’S SESSION
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
1399.50-1401.00
1826.00-1828.00
732.70-734.80
Resistance 2
1390.00-1391.00
1814.00-1816.00
724.50-725.00
Resistance 1
1384,00-1385.50
1805.50-1807.00
719.30-720.70
PIVOT
1380.50
1795.75
717.10
Support 1
1377.00-1375.50
1794.00-1792.50
713.50-712.10
Support 2
1371.00-1370.00
1782.00-1781.50
708.90-707.80
Support 3
1365.00-1363.50
1766.00-1764.00
701.50-699.30
S&P
NASDAQ
RUSSELL
FIBONACCI
FIBONACCI
FIBONACCI
1422.71
1862.34
750.44
1418.04
1854.67
746.76
1410.50
1842.25
740.80
1402.96
1829.84
734.84
1398.29
1822.17
731.16
1390.75
1809.75
725.20
1383.21
1797.34
719.24
1380.88
1793.50
717.40
1378.54
1789.67
715.56
1371.00
1777.25
709.60
1363.46
1764.84
703.64
1358.79
1757.17
699.96
1351.25
1744.75
694.00
1343.71
1732.34
688.04
1339.04
1724.67
684.36
DAILY PROJECTIONS
S&P
NASDAQ
RUSSELL
AS DAILY HIGH
1385.00
1821.25
720.80
AS DAILY LOW
1366.25
1788.75
705.20
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.
