Retail Sales were better than expected, Lehman’s board adjustments and a volatile session on crude oil prices resulted in a trading session with moderate gains.
ECONOMIC DATA8:30 a.m. CPI8:30 a.m. Core CPI10:00 a.m. Michigan Sentiment – preliminary
YESTERDAY’S MARKETS
Markets ended up moderately on the plus side. The E-mini S&P 500 opened above the previous settlement at 1344.00. An initial sell off on crude oil prices and the better than expected retail sales numbers pushed the index to its daily highs at 1355.50 while the E-mini Nasdaq reached 1964.50and the E-mini Russell managed to reach levels above the 730.00 area. The rally stalled at those levels and the E-mini S&P 500 pulled back to 1347.50. Another bounce took the index back up to 1355.00. Once the rally failed to gain additional momentum, the indexes traded in a sideways pattern. The rebound on the crude oil prices put the breaks on the rally and the indexes started to move down. Once the E-mini S&P 500 traded bellow our 1347.00 area, the sell off got its foot going and the selling continued until the E-mini S&P 500 reached 1342.25. Another bounce to 1346.00 was met by sellers and once the index broke bellow the 1340.00 level, the selling accelerate driving the E-mini S&P 500 down to 1333.25and the E-mini Nasdaq to 1919.25. A late short covering rally managed to move the markets higher to close in the middle of the daily range. At the end of the session the E-mini S&P 500 added 4.75 points and closed at 1342.75, the E-mini Nasdaq, which managed to recover on a late rally closed at 1937.75, plus 2 points and the E-mini Russell settled at 721.50, up 3.50 points for the session. The Dow cash ended at 12141 with a gain of 57 points.
MARKET COMMENTARY AND OUTLOOK
Yesterday I wrote: “Yesterday’s settlements near the lows may already exhaust this leg down, and I presume that a rebound is just around the corner. That rebound should be at least 26 points on the E-mini S&P 500, and that should bring the index back up to the 1362.00-1364.00 area in a countertrend move that can last from one to four days. Traders have to take into account that any rally that does not exceed the 1373.50 area, with two consecutive closes above that level, will keep the indexes in the same vulnerable position that they are today and that should bring the markets to test the January and March lows. The markets MUST rally today or the strength of the downtrend is higher than I presume and a completely melt down move is underway. For today’s session I want to be a buyer all the time that yesterday’s lows hold, but if the indexes trade lower I will fold my hands so I don’t try to pick a bottom as I did late yesterday, that means that if the stock markets are trading in positive territory I will look where to buy, and if the markets are down, I will join the trend.”
The expected rebound and rally seemed to be powerful after the strong opening, but higher crude oil prices and the E-mini Nasdaq, which continues to show extreme vulnerability were too much for the markets and the “round trip” seen on the markets printed a possible range for today’s session. The E-mini S&P 500 was able to close a small gap from April 15 and the lower low was only marginal and rejected as fast as it was reached. So this volatile rebound can continue for another one to three days before the market decides what way to go. I wrote yesterday about the possible extension of the countertrend rally and I said it should be 26 points, if I take into account yesterday’s lows, I can assume that the index should be able to reach the 1361.00 area before getting back into troubles.
We get today the CPI numbers and later in the day the Michigan sentiment, which measures consumer confidence, both should have an impact, in the pre-opening, and later on the session. Yesterday’s range should be covered and I don’t expect a higher high or a lower low, so unless the crude oil keeps running strong or the release of the numbers give a surprise to0 traders I will expect the week to end quite with trading on both sides of the range. However if the data comes out worst than expected, new lows that reach 1320.00 on the E-mini S&P 500 could be seen in a move that could accelerate this downtrend. The E-mini Nasdaq was the leader during the march to early June rally, and has continue to be during this sell off, so following it to guess market direction is recommended. Keep in mind that the new “participant” in the technical analysis, crude oil futures, complicates a little bit more any technical analysis as the markets are responding strongly to that contract.
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
1366.25-1368.00
1974.00-1976.00
739.80-741.20
Resistance 3
1360.20-1361.25
1962.00-1963.00
736.50-737.20
Resistance 2
1354.75-1356.00
1951.00-1953.00
729.80-731.00
Resistance 1
1347.25-1349.25
1945.00-1947.00
724.30-725.60
PIVOT
1344.00
1941.00
723.20
Support 1
1339.00-1337.25
1934.00-1932.00
720.30-718.90
Support 2
1333.00-1331.75
1926.00-1924.50
715.10-713.60
Support 3
1326.00-1324.75
1917.00-1914.75
710.60-708.90
Support 4
1321.50-1320.00
1906.00-1904.00
702.90-701.20
S&P
NASDAQ
RUSSELL
FIBONACCI
FIBONACCI
FIBONACCI
1391.50
2037.71
754.92
1386.25
2027.04
751.48
1377.75
2009.75
745.90
1369.25
1992.46
740.32
1364.00
1981.79
736.88
1355.50
1964.50
731.30
1347.00
1947.21
725.72
1344.38
1941.88
724.00
1341.75
1936.54
722.28
1333.25
1919.25
716.70
1324.75
1901.96
711.12
1319.50
1891.29
707.68
1311.00
1874.00
702.10
1302.50
1856.71
696.52
1297.25
1846.04
693.08
DAILY PROJECTIONS
S&P
NASDAQ
RUSSELL
AS DAILY HIGH
1360.50
1974.25
733.80
AS DAILY LOW
1338.25
1929.00
719.20
Support, pivot and resistance levels courtesy of Arturo Stern. He authors the E-mini Daily trading advisory, which gives technical analysis on all of the major stock index futures contract. For more of his analysis, go to www.theminitrade.com. Arturo can be reached at HYPERLINK "mailto:arthur@theminitrade.com.
" 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.
