Ford’s worst quarter in its history, Amazon positive earnings, Initial Claims above 400K and Existing Home Sales higher than expected decline kept stocks under pressure during all the session resulting in big loses.
ECONOMIC DATA
8:30 AM Durable Orders
10:00 AM Michigan Sentiment- Rev.
10:00 AM New Home Sales
YESTERDAY’S MARKETS
Markets opened lower and basically never looked back posting a deep sell off. The E-mini S&P opened at 1282.00 and popped up to 1283.50 where our subscribers were updated; “I will look for weakness on the S&P's all the time that it’s trading below 1284.50-1285.00 with the real selling taking place below the 1277.50 level.” The E-mini S&P reached 1283.75 where sellers started to push the markets down. After testing support at 1270.0.00 the index bounced back up to 1275.50 and regardless of the strength on the E-mini Nasdaq failed to gain upside momentum. The S&P’s fell to their next support area reaching the 1266.00-1264.00 level and treaded on a side ways pattern for the next couple of hours just to break to new lows at 1257.75 from where another rally attempt failed at 1262.00 and once the E-mini Nasdaq broke the 1830.00 support area one hour before the closing the indexes nose dived into the end of the session. For the day, the E-mini S&P lost 28.75 points and settled at 1253.75, The E-mini Nasdaq which tried hard to held gave back 29.50 points closing at 1819.50 and the E-mini Russell lost 16.30 points ending the session at 704.90. The Dow showed extreme weakness losing 283 point and finishing the session at 11,349.
MARKET COMMENTARY AND OUTLOOK
Yesterday I wrote: “After yesterday’s strong wave of buying that drove the indexes to their best levels after the last correction, the intraday reversal indicates that we could be close to a downside correction. It seems that another strong opening that fails to break above yesterday’s highs that reached the 38.2% Fibonacci retracement from the May highs to the July lows on the E-mini S&P and the Dow may pull the breaks on this rally and drove prices down at least to the 1240.00 level on the S&P’s. However, if yesterday’s highs get exceeded more strength could be seen in the short term. I have been long term bearish, but I have to recognize that the time cycle and the extension of this rally could eliminate the capitulation low that I was looking for. However, the indexes should see some pullback, maybe to the 1240.00 area that I just mentioned and then enter a slightly bullish sideways trend.”
Yesterday weak session where all the indexes plummet could continue with another day of lower prices before some rebound is seen, and then later push the indexes lower or maintain the markets on a sideways trend before the next breakout occurs. The fact that the Dow broke below the 11,400 keeps that index in a weaker position, and failure to hold the 11,200 area could signal another test of the 10,700 level. However, the S&P’s managed to close above the 1250.75 area, and that level should see considered as a short term turning point, two consecutive closes below that level will indicate a test of levels below the 1200.00 once a new leg down gets confirmed by a brake of the 1241.00-12400.00 areas.
For today’s session, we get some more housing data half hour after the opening, any upside move before the release of the economic numbers will be only short covering, and the real action should start 40 minutes after the session starts. Keep a close eye on the Nasdaq, yesterday’s late downside move could trigger extreme weakness on that index if the first support areas get broken, two days ago, when the market rallied and that index was clearly reversed from the 1870.00 area I indicated that regardless of its positive close, the way the market sold off from the highs was a very bad sign, tops usually are very volatile.
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
1272.50-1275.00
1848.75-1851.00
720.50-721.70
Resistance 3
1266.00-1267.50
1841.00-1842.00
717.30-718.40
Resistance 2
1262.00-1263.25
1832.00-1834.00
712.20-713.50
Resistance 1
1257.50-1259.50
1824.50-1826.00
707.00-709.00
PIVOT
1263.25
1831.50
709.30
Support 1
1250.00-1248.75
1815.50-1813.50
703.50-702.80
Support 2
1244.50-1243.50
1808.00-1806.00
700.20-699.10
Support 3
1240.00-1238.75
1800.00-1799.00
695.90-693.90
Support 4
1235.00-1233.50
1791.00-1789.00
688.80-687.50
S&P
NASDAQ
RUSSELL
FIBONACCI
FIBONACCI
FIBONACCI
1340.01
1947.64
759.21
1331.99
1935.36
753.90
1319.00
1915.50
745.30
1306.01
1895.64
736.71
1297.99
1883.36
731.40
1285.00
1863.50
722.80
1272.01
1843.64
714.21
1268.00
1837.50
711.55
1263.99
1831.36
708.90
1251.00
1811.50
700.30
1238.01
1791.64
691.71
1229.99
1779.36
686.40
1217.00
1759.50
677.80
1204.01
1739.64
669.21
1195.99
1727.36
663.90
DAILY PROJECTIONS
S&P
NASDAQ
RUSSELL
AS DAILY HIGH
1269.50
1841.50
713.90
AS DAILY LOW
1238.25
1789.50
691.40
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.
