U.S. markets continue to lose ground in another low volume session. Citigroup upgraded Lehman, Personal Spending was up 0.1 and Personal Income up 0.5 for February showing more evidence of recession.
WEEKLY PIVOTS FOR WEEK ENDING April 4, 2008
R3 1379.50
R2 1364.25
R1 1349.00
PP 1331.50
S1 1305.75
S2 1292.00
S3 1253.50
ECONOMIC DATA
9:45 AM Chicago PMI
WEEKLY RECAP
The equity indexes started the week with solid gains as JP Morgan raised its offer for Bear Stearns from $2 to $10 a share, and the Existing Home sales increased by 2.9% during February. All the indexes opened with a gap and held their gains and pushed higher during the session getting as high as 1361.50 on the E-mini S&P and 1826.50 on the E-mini Nasdaq, the E-mini Russell pushed up to 705.40. The indexes spent most of the session near the highs but some profit taking at the end of the day pushed the markets lower, the E-mini S&P settled at 1351.50 with a 26.75 points gain, the E-mini Nasdaq added an impressive gain of 69.25 closing at 1819.25 and the E-mini Russell ended the session at 701.40, 26.00 point higher than the previous close. The cash Dow finished at 12,548 with a 187 points gain pulling back into the close from above the 12,600 resistance area. Tuesday, the story was different as Consumer Confidence hit a five year low and the Home Price Index showed a 10.7% decline versus the previous year. Despite the weak economic data, the indexes traded higher during the session but ended on a weak note, as selling came into the markets during the last hour of trading. The E-mini S&P settled at 1351.50, unchanged for the day, while the E-mini Nasdaq added 6.50 point closing at 1826.00 and the E-mini Russell managed to print a second close above the 700.00 area finishing the session at 704..20, 2.80 points above the previous session. The Dow cash closed at 12,532 losing 16 points during the day. Wednesday, was a bad day for the markets as they were under pressure since the beginning of the session; the economic data was weak as Durable Goods orders showed a 1.7% decline, sales of new homes sloped on February and oil prices jumped more than $5 per barrel. All the indexes opened below their previous settlements but managed to held most of the session, the E-mini Russell traded for the third time near the breakout pint at 705.00 while the E-mini S&P reached 1349.50 and the E-mini Nasdaq got as high as 1829.50.The intraday rally was rejected and the selling was resume. Once the cash markets closed, the futures sold off strongly making new lows for the day at 1334.00 on the E-mini S&P and 1805.75 on the E-mini Nasdaq. The E-mini S&P closed at 1335.50 losing 16 points for the day, the E-mini Nasdaq at 1810.25 with a 15.75 point loss and the E-mini Russell at 698.30, 5.90 points bellow the previous session. The cash Dow lost 109.00 point and ended the session at 12422.00. Thursday’ session was not the tech day as Oracle bearish commentaries resulted in heavy pressure for the Nasdaq. The GDP numbers came out, weak but as expected and the Initial Claims in their weekly average.
The indexes get sold during the early part of the trading session but rebounded later on the day. Once more the E-mini Russell failed to trade above the weekly highs and the E-mini S&P couldn’t make it above the 1350.00 area. The last hour of trading was a copy of the previous session as the lows were done at the end, The E-mini S&P settled at 1329.75, minus 5.75 points, the E-mini Nasdaq at 1792.00 with a loss of 18.25 points and the E-mini Russell at 692.70 with a loss of 5.60 points during the session. The cash Dow failed to sustain the 12,400 area loosing 120 points ending the day at 12302. Friday’s started as a positive day with stocks opening above their previous close, regardless of the Personal Spending numbers which showed that American consumers, who have sustained the economy amid housing's worst downturn in a generation, rose in February at the slowest pace in more than a year. The early bounces failed to gain upside momentum and the indexes spent the morning in a tight range. Later on the day a down trend move took the indexes to new weekly lows with none of the bounces sticking, the selling was done without panicking but all the indexes ended well bellow their previous settlements, the E-mini SP closed at 1318.50, bellow the critical 1320.00 level, the E-mini Nasdaq which made its lows at 1768.00 managed to bounce at the end and settled at 1779.50 and the E-mini Russell finally gave up after a few days trying to break higher and finished at 684.30. The Dow cash was not the exception and handled to close above 12200.
MARKET COMMENTARY AND OUTLOOK
Well, the initial rally failed once more and the 1340.50 Globex high on the E-mini S&P was never reached. Despite the low volumes, the markets continue to see weakness and selling pressure, and the fact that the E-mini S&P closed below the 1320.00 area should be considered as the first signal of more downside pressure, which will be confirmed with a second close below that level. I wrote an update last Friday, where I explain the long term cycles, and I mention that during the eighth year of the 10-year cycle, the indexes have found their lows on March. That does not mean that I expect a bullish market, not on the financial circumstances that the U.S. economy is suffering, but I still think that a range bounded market can survive for the next months without making new lows and attempting to move higher, to the 1400.00 area on the E-mini S&P. I also called for a low last Friday or the latest this coming Monday, if that happens, my analysis will be correct, but if the market can not sustain a good rally Monday or Tuesday since the opening, then I will consider the bullish case ended. It looks to me that it is too late to enter into a short position, but some change has to be seen for investors to jump in and start to buy the markets. The E-mini S&P and cash Dow has formed a clear down trending channel which has to be resolved by a strong reversal or a capitulation will be seen. Monday trading session will have to be positive, with a reversal above 1320.00 on the E-mini S&P that sticks, as any indication of trending down could result in a panic selling that was not seen during last week pullback. So I will watch closely the 1320.00 area on the E-mini S&P and if the market starts to trade above it I will be a buyer, but on the first sign of weakness I will avoid a long position. If the index opens lower but test successfully Friday’s lows may possibly starts to rally, but if that low is broken, we may go for the 1297.00 area before the index shows any positive sign. On a higher opening, above 1320.00, I will stay with the trend, but that level will be my “line in the sand” for any long position. I want to see something positive to go long, and I will avoid buying weakness.
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 4
1343.00-1344.00
1810.00-1812.00
708.00-710.50
Resistance 3
1333.75-1335.00
1802.00-1804.00
701.00-703.80
Resistance 2
1326.00-1328.00
1792.00-1793.00
692.00-693.50
Resistance 1
1321.50-1323.00
1787.00-1789.00
687.10-688.50
PIVOT
1324.50
1785.50
687.70
Support 1
1316.00-1314.25
1776.00-1774.50
682.60-681.10
Support 2
1310.25-1308.00
1768.00-1767.00
678.50-677.80
Support 3
1304.00-1302.50
1762.00-1760.00
675.00-673.40
Support 4
1297.00-1295.50
1853.00-1751.75
671.60-671.00
S&P
NASDAQ
RUSSELL
FIBONACCI
FIBONACCI
FIBONACCI
1383.38
1876.65
723.55
1377.12
1866.85
719.75
1367.00
1851.00
713.60
1356.88
1835.15
707.45
1350.62
1825.35
703.65
1340.50
1809.50
697.50
1330.38
1793.65
691.35
1327.25
1788.75
689.45
1324.12
1783.85
687.55
1314.00
1768.00
681.40
1303.88
1752.15
675.25
1297.62
1742.35
671.45
1287.50
1726.50
665.30
1277.38
1710.65
659.15
1271.12
1700.85
655.35
DAILY PROJECTIONS
S&P
NASDAQ
RUSSELL
AS DAILY HIGH
1329.75
1794.75
690.80
AS DAILY LOW
1303.00
1753.25
674.60
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.
