Not as bad as expected (after seasonal adjustments) Durable Good orders, positive financial results from some retailers and a sell-off attempt to bring crude oil prices lower resulted in moderate gains for the equity markets.
ECONOMIC DATA
8:30 AM Durable Orders
8:30 AM GDP - prel.
8:30 AM Chain Deflator - prel.
10:30 Crude Inventories
YESTERDAY’S MARKETS
Volatile crude oil prices and better than expected Durable Goods orders resulted in a moderate positive session for U.S. equities. After opening higher and reaching our 1390.00 resistance area, the E-mini S&P pushed down to 1385.75 closing the opening gap. A bounce attempt failed and the index made new intraday lows just at our 1381.50-1380.00 support area. Despite the rebound on crude oil prices, the indexes tried to come back, with the E-mini S&P reaching 1386.25. Unable to break higher, selling came into the markets and pressed the indexes to new daily lows, the E-mini S&P reached 1377.75. As fast as the market fell, buyers stepped in once the E-mini S&P traded back up to 1386.00. Another wave of selling couldn’t break to new lows and after testing the waters at the 1380.00’s, the e-mini S&P rallied all the way back up to the 1386.00 pivotal level. Once that area was exceeded, the short covering rally took all the indexes to new daily highs, the E-mini S&P reached 1393.25 before pulling back into the close. For the session, the E-mini S&P advanced 6.75 points closing the session at 1391.50, the E-mini Nasdaq which came back strong from its intraday lows, managed to close at 2005.00 adding 12 points for the day and the E-mini Russell that traded in a narrow range, closed up 4.8 points at 738.50. The cash Dow ended the session just below the 12,600 resistance area at 12,594, up 45 points for the day.
MARKET COMMENTARY AND OUTLOOK
Yesterday I wrote: “Last Friday’s lows and yesterday’s bounce suggest that a short term bottom is in, but strong resistance is just around the corner for the E-mini S&P and cash Dow. The E-mini Nasdaq should continue to press higher with strong upside momentum once it trades back up above my 2004.50 area, but it seems that a recovery, if we have one, will be harder and slower for the other indexes. There is always the risk that yesterday’s rally is only a one day countertrend move in this possible new downtrend, but I think the E-mini S&P should be able to test the 1400.00 area before the index gets into trouble. For this to happen, the indexes will have to show additional strength before new longs jump back into the markets. Despite the fact that I favor the long side for today’s session, the situation remains unclear and further confirmation that the indexes will hold above yesterday’s and last Friday’s lows is needed to call for a multi week slightly upside consolidation instead of a possible test of 1350.00 and maybe 1320.00 on the E-mini S&P. Assuming that my analysis is correct and yesterday bounce will continue, I will be a buyer with tight stops near my support levels, and I will do it with confidence all the time that the E-mini Nasdaq continues to lead this move.”
Markets had an erratic session as they reacted to the oil prices, but the recent lows held and probably this move will continue until a clear breakout occurs. The E-mini S&P will have to close two consecutive sessions above the 1400.00 level to negate this two days consolidation pattern, all the time that the index can not close above that area, the index remains vulnerable, this is true also for the Dow below the 12,800 level. However, the successful test of the 38.25% Fibonacci retracement from the March lows to the May highs, give the bulls a chance for this market to resume the uptrend, and all the time that 1370.00 holds on a closing basis, if not bullishness, at least sideways trending may be seen. Yesterday was the second straight session that the markets advanced, and it is possible that the E-mini S&P will test the waters just above the 1400.00 area, and then, we’ll know if a potential head and shoulders pattern has been formed or the consolidation between the 1370.00-1440.00 areas will continue for the next few weeks.
If this scenario is correct we should see more choppy action with opportunities on both sides of the range, but with increased risk, so keeping tight stops is a good idea. Today, we’ll get the GDP preliminary numbers and the Crude inventories, both are extremely important and they could result in a “make or break” session. Keep in mind that this situation could also result in a trend day, so if after the first hour of trading, once the crude inventories get released, the index reverses, I will trade against that first hour low or high and stay with the trend. I still favor the upside as I consider that last week sell off was too fast and has left trapped a lot of shorts around the 1370.00 area. So the situation is unclear, as the yesterdays rally seems weak and it could get reversed to9 resume a fast downtrend, but additional upside momentum on the E-mini Nasdaq and a potential sell off on Crude oil could give the power to the E-mini SP and Dow to move higher.
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
1411.00-1412.50
2024.50-2026.50
751.00-752.40
Resistance 3
1401.00-1402.50
2018.00-2019.00
748.00-749.20
Resistance 2
1396.25-1397.50
2012.00-2014.50
744.30-745.20
Resistance 1
1393.00-1394.25
2006.25-2007.50
741.00-741.80
PIVOT
1387.50
1999.00
736.00
Support 1
1388.50-1387.25
1988.00-1986.50
736.80-736.00
Support 2
1383.00-1381.75
1980.75-1979.00
733.40-732.60
Support 3
1378.25-1377.00
1969.50-1968.00
728.50-727.00
Support 4
1372.00-1371.00
1961.00-1958.75
724.20-723.00
S&P
NASDAQ
RUSSELL
FIBONACCI
FIBONACCI
FIBONACCI
1418.33
2050.01
754.19
1414.67
2043.99
752.01
1408.75
2034.25
748.50
1402.83
2024.51
744.99
1399.17
2018.49
742.81
1393.25
2008.75
739.30
1387.33
1999.01
735.79
1385.50
1996.00
734.70
1383.67
1992.99
733.61
1377.75
1983.25
730.10
1371.83
1973.51
726.59
1368.17
1967.49
724.41
1362.25
1957.75
720.90
1356.33
1948.01
717.39
1352.67
1941.99
715.21
DAILY PROJECTIONS
S&P
NASDAQ
RUSSELL
AS DAILY HIGH
1400.25
2019.50
743.50
AS DAILY LOW
1384.50
1994.50
734.30
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.
