Chicago PMI near the 50 level and a mild pullback from the highs on Crude Oil prices resulted in a consolidating session with mixed results.
ECONOMIC DATA
10:00 AM Construction Spending
10:00 AM ISM Index
12:00 AM Auto Sales
12:00 AM Truck Sales
YESTERDAY’S MARKETS
Markets ended mixed on a quite session. The E-mini S&P opened at 1281.00 and rallied to our resistance at 1285.75. As expected the initial move failed driving the index lower to 1275.50, just at our support level where the daily low was printed on the charts. The lack of economic data, the mild pullback from the highs on the crude oil prices and the end of month bullish bias were enough to keep the E-mini S&P afloat. After making the low the index grinded up in a short covering move that reached 1291.00. The E-mini S&P pulled back to 1286.25 where buyers stepped in driving the index to its daily high at 1292.00. Unable to break higher after reaching our upside objective and guided by the weak E-mini Nasdaq, the E-mini S&P pulled back to 1286.75 where a triple bottom failed to hold resulting in another pullback to the 1281.00 area. Once more the market held, and the E-mini S&P made all its way back up to 1288.75. Unable to gain additional momentum, the index gave back all of its gains and pushed down quick to 1279.25 before bouncing back a bit into the close. For the day, the E-mini S&P settled almost unchanged adding 1.00 point at 1281.00, the E-mini Nasdaq lost 19.75 points closing the session at 1846.00 and the E-mini Russell ended lower by 7.20 points at 691.70. The cash Dow gave back all of its early gains ending the session almost unchanged at 11,350.
MARKET COMMENTARY AND OUTLOOK
Yesterday I wrote: “The size and extension of the last down move have placed the indexes near levels where a bounce could be seen, if that bounce will be short lived or the indexes will start a consolidation period that finally will result in a mid term recovery from the recent loses, is something that only time will tell us, but the odds favor some kind of temporary bounce. Friday’s low on the E-mini S&P has reached support levels and they should hold despite an intraday break below them and rally. However, if that rally will last more than one day and then get resolved with another steep fall, or the rally will be a 2-4 days move into the end of this holiday week and then later next week take out the recent lows it depends of what happens during today’s session. For today’s trading session I will expect some kind of rebound, but I am not so sure that it will be longer that one day and then move once more lower to make new lows in capitulation move that bring the markets to new lows below the March low. Only a rally that holds the recent lows for more than 14 days will indicate that a mid term low is in place. During today’s trading session I will go long on a test of Friday’s lows or I will try to play the bullish side of the markets all the time that the indexes are trading above my pivot point levels.”
The markets were able to rally during the first half of the session making easy for us to play from the long side, but later on the day the weakness on the techs and mid caps made both sides of the range tradable. Yesterday failed “rally” or consolidation session should be enough for the markets to try and move higher in this shorted holiday week where the Unemployment data and Nonfarm payrolls information will get released on Thursday. The E-mini S&P may be able to reach the next level around 1310.00 and perhaps close the gap at 1320.00. HOWEVER, yesterday’s early lows around 1275.00 will have to holds on a pullback or we could have another wide range down day. Yesterday I wrote about the possibility that the index move higher in a 2-4 days countertrend move, and obviously, the E-mini S&P tried to bring the markets up, but the weakness on the E-mini Nasdaq pushed the markets lower. So this mixed picture will have to get resolved with a rally in all the indexes or the current divergences will result in another slide for the U.S. markets. I am not calling for a recovery and only if the indexes are able to move higher for more than 15 days, then some kind of bottom can be called. You have to take into account that consolidations at the lows normally break lower and the extreme weakness in the markets made difficult to sustain a rally, so we can have a bit more of sideways action with a mild bullish bias until the next strong move is seen. We have been waiting for a panic move that bring long traders to a capitulation with an increase on the VIX.X which at this moment does not show any concern, so I think we are far away from calling a bottom and a mid-term rally, so be aware that the 2-4 days rebound scenario is workable only if yesterday’s lows hold, and if not be ready for an acceleration of the downtrend and instead that the rebound last 2-4 days it only was 2-4 hours that already happened during yesterday’s session.
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
1306.50-1308.00
1883.00-1884.50
706.30-707.40
Resistance 3
1297.75-1299.50
1875.00-1877.00
701.90-702.60
Resistance 2
1290.50-1292.00
1863.50-1865.25
699.10-699.80
Resistance 1
1284.00-1285.25
1853.75-1854.50
694.20-695.40
PIVOT
1282.75
1853.75
694.00
Support 1
1279.50-1278.00
1843.00-1840.75
689.20-688.00
Support 2
1274.00-1273.00
1836.00-1834.50
685.80-684.30
Support 3
1271.00-1269.50
1830.00-1829.00
682.00-680.60
Support 4
1266.00-1264.00
1823.00-1821.00
676.60-674.90
S&P
NASDAQ
RUSSELL
FIBONACCI
FIBONACCI
FIBONACCI
1319.10
1922.75
723.58
1315.15
1915.50
720.42
1308.75
1903.75
715.30
1302.35
1892.00
710.18
1298.40
1884.75
707.02
1292.00
1873.00
701.90
1285.60
1861.25
696.78
1283.63
1857.63
695.20
1281.65
1854.00
693.62
1275.25
1842.25
688.50
1268.85
1830.50
683.38
1264.90
1823.25
680.22
1258.50
1811.50
675.10
1252.10
1799.75
669.98
1248.15
1792.50
666.82
DAILY PROJECTIONS
S&P
NASDAQ
RUSSELL
AS DAILY HIGH
1286.50
1859.50
696.80
AS DAILY LOW
1269.75
1828.75
683.40
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.
