New York Empire Stated Index weaker than expected, Lehman’s loss in line, GE downgraded and a weakening dollar resulted in a mixed session for the U.S. markets.
ECONOMIC DATA
8:30 AM PPI
8:30 AM Core PPI
8:30 AM Building Permits
8:30 AM Housing Starts
9:15 AM Industrial Production
9:15 AM Capacity Utilization
YESTERDAY’S MARKETS
U.S. equity indexes ended mixed for the session. The E-mini S&P opened on the plus side at 1353.50 and pulled back to the 1352.00 area where buyers stepped in pushing the index up to 1357.50. The index pulled back once more and after a triple bottom at 1354.00 and guided by the strength on the E-mini Nasdaq and Russell reached the 1360.50 area. The E-mini S&P backed off once more finding support above the 1357.00 area and rallied to 1363.50, just at our 1362.00-1364.00 resistance area where a double top held the upside momentum. Back and forth action with a bit of profit taking took the index back down to the 1357.50 level, rallied to 1362.00, pulled back and successfully tested the 1357.50 area and rallied to new intraday highs at 1367.50 where a double top printed the daily highs. The index pulled back to 1362.50 and rallied once more but was unable to make a new high; it gave away its gains for the day. At the end of the session, the E-mini S&P settled at 1360.00, almost unchanged, the E-mini Nasdaq added 15.75 points closing the session at 1990.50 and the E-mini Russell ended the session at 738.70 with a gain of 4.70 points. The cash Dow lost 38 points closing at 12,269.
MARKET COMMENTARY AND OUTLOOK
Yesterday I wrote: “The E-mini S&P has already advanced the 26 points that we expected as the minimum for a countertrend rally and now is facing a triangle formation that will have to be resolved during this week. The key will remain the possibility that the main index breaks above my 1362.00-1364.00 area in order for this rebound to continue. If that happens, the extension of the rally which will find strong resistance at the 1371.00 and 1382.00 levels will give us an indication if we have a short term low and the indexes will be winding up and down between 1330.00 and 1410.00 before a major breakout occurs. The E-mini Russell which reversed from two consecutive closes below the 730.00 area should be considered in an uptrend all the time that last week lows hold and the index keeps trading above that long term pivotal level. So, with a mix picture and divergence between the indexes, going day by day until we get a better picture for a mid-term position is the best I can do. Going back to the E-mini S&P, the index will have to deal with the 1362.00-1364.00 area in order to continue up, and only breaking above the 1371.00 will place the index in a neutral position; all the time that the index does not close twice above that level, this rally should be considered only a 1-4 days countertrend move and be resolved later on the week with the resume of the downtrend. So for today, the index should continue to move up, but traders should found opportunities on both sides, going short around my first resistance area could offer an early selling opportunities, but the first sizeable pullback should result in a rally that carries the markets to the next levels.”
As expected, the indexes continued to rally and it seems that they can move up to test the next levels at the E-mini S&P. That means that the 1370’s should be reached during today’s session despite the continuing divergences between the indexes. The strength on the E-mini Nasdaq, the positive close above the 730.00 key level on the E-mini Russell and the way the cash Dow held the GE downgrade are promising signals for these markets to continue on its rebound. However if the indexes trade lower, be careful as we have to take into account that this rebound is only a 1-4 days countertrend move until it proves different. Yesterday flat day on the E-mini S&P keeps the index in a neutral position between the 50% and 61.8% Fibonacci retracement from the March lows to the May high, so only if when the index breakout from the current range will we be able to call the next move.
As a conclusion I will keep buying the breaks all the time that the markets are trading on a plus but I will also try to short with very tight stops on the key 1371.00-1372.75 resistance area.
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
1376.00-1377.50
2016.00-2018.25
751.00-752.90
Resistance 3
1371.00-1372.75
2008.00-2010.25
745.50-749.20
Resistance 2
1367.50-1368.75
2001.00-2003.00
743.60-745.10
Resistance 1
1363.00-1364.50
1994.00-1996.00
739.80-740.80
PIVOT
1359.50
1985.00
736.80
Support 1
1357.00-1355.50
1982.75-1980.00
736.50-735.50
Support 2
1352.00-1350.50
1972.00-1970.50
732.30-731.60
Support 3
1348.50-1347.00
1967.00-1966.00
726.40-725.10
Support 4
1341.50-1340.00
1958.00-1955.75
720.20-719.10
S&P
NASDAQ
RUSSELL
FIBONACCI
FIBONACCI
FIBONACCI
1393.39
2067.22
760.63
1389.61
2057.78
757.87
1383.50
2042.50
753.40
1377.39
2027.22
748.93
1373.61
2017.78
746.17
1367.50
2002.50
741.70
1361.39
1987.22
737.23
1359.50
1982.50
735.85
1357.61
1977.78
734.47
1351.50
1962.50
730.00
1345.39
1947.22
725.53
1341.61
1937.78
722.77
1335.50
1922.50
718.30
1329.39
1907.22
713.83
1325.61
1897.78
711.07
DAILY PROJECTIONS
S&P
NASDAQ
RUSSELL
AS DAILY HIGH
1371.75
2016.25
746.10
AS DAILY LOW
1351.75
1976.25
734.40
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.
