Fannie Mae’s $2.3 billion losses, productivity lower than expected and a huge rally on the U.S. dollar is pushing commodities lower, resulted in a huge gain for the U.S. markets with all the indexes winning the gold medal.
WEEKLY PIVOTS FOR WEEK ENDING Aug. 8R3 1321.00R2 1311.50R1 1297.00PP 1278.75S1 1263.75S2 1227.00S3 1207.75
ECONOMIC DATANone
WEEKLY RECAPA positive week for the U.S. markets as lower crude oil prices suggest less inflation pressure for the upcoming months. Monday’s trading session started on a weak note as HSBC reported lower than expected earnings. Personal Income and Spending showed that the U.S. consumer is still alive and Factory Orders came out better than expected, however the markets ended lower despite the crude oil sell off that resulted in a strong short-covering rally that failed to hold into the end of the session. For the day, the E-mini S&P lost 11.50 points closing the week at 1248.75, the E-mini Nasdaq settled at 1811.75, minus 21.25 points and the E-mini Russell lost 13.20 points at 704.00. The Dow settled at 11283 losing 42 points. Tuesday’s session the indexes opened up strong waiting for the FOMC policy statement release. CISCO reported better than expected earnings resulting in an early boost for all the equity indexes regardless of the ISM services index that showed additional contraction in the economic activity but the indexes managed to hold their gains until the FED’s interest rate decision that kept rates unchanged got released. The indexes finished the session with huge gains as the E-mini S&P added 34.25 points closing the session at 1283.00, the E-mini Nasdaq advanced 3.2% or 57.25 points at 1869.00 and the E-mini Russell settled at 721.00, up 17.00 points. The Dow closed higher 331 points at 11615. The positive momentum continued into Wednesday’s session despite the wider than expected losses on Freddie Mac, the indexes held the selling pressure helped by the increased selling on the crude oil which traded near the $117 per barrel. For the day, the E-mini S&P closed at 1287.75, the E-mini Nasdaq gained another 27.00 point and settled at 1896.00 and the Russell closed up 4.10, at 725.40. The Dow ended the session up 40 points at 11656. Thursday’s session the indexes got reversed as a lower opening resulted in a late sell off. AIG reported another huge loss and the weekly initial job claims jumped to levels not seen in the last six years. The indexes closed with big losses with the E-mini S&P losing 19.75 points closing the session at 1268.00, the E-mini Nasdaq at 1886.00, minus 10.25 points and the E-mini Russell at 715.60, minus 9.60 points. The Dow lost 224 points finishing the session at 11431. Friday’s extraordinary gains for the U.S. dollar against all the other currencies that resulted in another sell off in the crude oil contract signaling lower inflation pressure for the near future and an early succe4sful test of the previous day lows, resulted in a monster rally since the beginning of the session, productivity was up 2.2% and the indexes posted Olympic sized gains. The S&P ended higher by 24.25 points at 1292.25, The Nasdaq closed at 1923.75 and the Russell added 16 points closing at 731.60. The Dow was up 302 points at 11734. For the week the indexes posted strong gains advancing between 2.5 % and 4.5% while crude oil lost a huge 7.9% during the same period.
FRIDAY’S MARKETSMarkets opened lower and after testing last Thursday’s low rallied and never looked back. The E-mini S&P opened lower printing a low on the charts at 1262.00 where buyers stepped in strongly pushing the index up to 1268.50. A two point pullback was met with huge bids pushing the indexes up in a parabolic move to 1286.50 on the S&P’s and 1916.50 on the E-mini Nasdaq. After holding in a sideways trend for the next hour an unable to show some profit taking, the indexes pushed to new intraday highs at 1289.50 on the S&P’s and 1923.50 on the Nasdaq. The uptrend continued with very strong momentum and the indexes kept moving higher with low volumes but with shorts running for cover. As the crude oil continued to collapse, the indexes moved to new highs reaching 1296.75 and 1931.00 for the S&P’s and Nasdaq respectively. During the last hour of trading the indexes continue to hold theirs gains and printed new marginal highs at 1298.00 on the S&P’s, 1932.00 on the Nasdaq and 735.40 on the Russell before pulling back into the close. For the day, the S&P was up 24.25 points and settled at 1292.25, the E-mini Nasdaq ended at 193.75 up 37.75 points and the E-mini Russell closed the day with a gain of 16.00 points at 731.60. The Dow ended with huge gains at 11734, plus 302 points.
MARKET COMMENTARY AND OUTLOOKLast Friday I wrote: “Markets reversed some of their late gains while they keep showing strong divergences between the indexes. The relative strength on the Nasdaq and Russell kept the markets with the nose above the waters but it will take only a move to the highs on those both indexes that fail to break higher to bring sellers back with all their force into action. On the other side of the coin, the last pullback from the 1292.00 area triple top during the last two sessions, which get reversed from yesterday’s 1263.00 lows could push prices up to the 1330.00-1340.00 areas that I pointed yesterday as an upside objective if the rally will continue before the bear campaign resumes. So the coming days will give as a clear indication of what can happen in the short term. We should keep in mind that today we could see a consolidation or inside day, next week option expiration usually keeps a slightly bullish bias. There is support above yesterday’s lows at 1265.50-1263.50 on the S&P’s, 1883.00-1881.75 on the Nasdaq and 714.20-712.80 on the Russell. Nothing bad happens all the time, that those levels can hold an early sell off and they could offer a good long trade.”
The early pressure that ended in a double bottom on all the indexes resulted in a great entry for those who were looking where to be buyers. The huge rally that crashed all the resistance levels and turned into a parabolic rally once the pivot points were exceeded have the indexes once more on a very strong position. The triangle formation on the S&P’s and Dow has been broken to the upside signaling short term buying pressure and a possible continuation of the rally that if everything is OK, probably will reach my 1330.00-1340.00 objective area during the coming sessions. The same bullish pattern can be seen on the Nasdaq which finally broke above the July highs and if it rallies together with the other two indexes should reach the 2050.00 level. The long term patter remain bearish but the seasonal cycle, a summer rally and the U.S. elections call if not for a new ”bullish” campaign, at least for a consolidation where the lows for the next months have already been printed in the charts. Last Friday huge move came from the breakout point at 1263.00 on the S&P’s and despite the fact that the rally could get consolidated during the next couple of days, the momentum remains strong and only a reversal that seems unlikely at this moment could turns the short term sentiment to bearish. The week has a few important economic reports, and the August option expiration, that usually keeps a bullish tone, so a pullback between today and tomorrow should be a buying opportunity for the rest of the week.
This time the divergence between the Nasdaq which usually signals market direction has been resolved pushing the other indexes up, and only if today I see the markets, that have the possibility that already exhausted the buying pressure end lower, then I will hold a short position. If the indexes post another positive session, I would not want to hold my short term short positions anymore. However Friday’s huge rally could show some consolidation before we have a clear indication of where this market will go on the short term.
So, for today’s trading session I will expect a two sides action trading session, where getting short against resistance once the rally stalls could give as a good short trade, but the positive momentum on the different indexes call for the first decent pullback to hold and at least try to reach Friday’s highs.
TODAY’S SESSIONFor 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
1320.00-1320.75
1960.00-1962.50
744.80-745.60
Resistance 3
1311.50-1312.50
1952.75-1954.00
741.00-741.90
Resistance 2
1306.00-1306.75
1944.00-1946.50
737.20-738.30
Resistance 1
1296.50-1298.00
1933.50-1935.00
733.80-734.90
PIVOT
1284.00
1911.50
726.10
Support 1
1288.75-1287.50
1919.00-1917.25
729.40-727.80
Support 2
1283.50-1282.00
1911.50-1910.00
725.00-724.90
Support 3
1278.00-1276.50
1898.00-1896.50
721.10-720.00
Support 4
1272.25-1271.50
1891.00-1988.75
726.70-715.40
S&P
NASDAQ
RUSSELL
FIBONACCI
FIBONACCI
FIBONACCI
1356.25
2017.35
774.56
1347.75
2004.90
768.84
1334.00
1984.75
759.60
1320.25
1964.60
750.36
1311.75
1952.15
744.64
1298.00
1932.00
735.40
1284.25
1911.85
726.16
1280.00
1905.63
723.30
1275.75
1899.40
720.44
1262.00
1879.25
711.20
1248.25
1859.10
701.96
1239.75
1846.65
696.24
1226.00
1826.50
687.00
1212.25
1806.35
677.76
1203.75
1793.90
672.04
DAILY PROJECTIONS
S&P
NASDAQ
RUSSELL
AS DAILY HIGH
1313.00
1954.25
745.60
AS DAILY LOW
1277.00
1901.50
721.40
Support, pivot and resistance levels courtesy of Arturo Stern, who 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.
