Daily E-mini trading adivisory for Oct. 1

Markets rallied recovering some of Monday’s huge losses as investors search for bargains and optimism that Congress will reach an agreement on a financial relief plan before the end of the week. Consumer Confidence up and Chicago PMI is down.

ECONOMIC DATA8:15 AM ADP Employment10:00 AM Construction Spending10:00 AM ISM Index10:35 AM Crude Inventories12:00 AM Car Sales12:00 AM Truck Sales

YESTERDAY’S MARKETSMarkets bounced after Monday’s huge sell off. A higher opening managed to hold during all of the trading session. The E-mini S&P 500 opened well above Monday’s settlement at 1139.50 and bounced to 1142.00 where sellers stepped in pushing the index down to 1132.00. The old low at 1133.00 held the test and markets rallied. The S&P 500 pushed up to the 1149.00 area, pulled back to 1144.25 and rallied all the way up to 1152.00 where the rally lost its momentum. The S&P 500 backed off to 1142.00 and after holding there for a few minutes rallied all the way back up to 1153.75, just below the 1154.50 Globex high. Another profit-taking move pushed the index down to 1143.75 where buyers stepped in back once more and drove the index back up to 1152.00. The sideways pattern with a slightly upward bias continued, the S&P 500 pulled back to 1146.25 and rallied reaching new highs at 1161.75. Another pullback to 1156.00 was met with additional buying pushing the index up to new highs at 1162.75. As support was coming in near the highs, the indexes continued to print new highs on the charts with the S&P 500 reaching 1166.50 and the Nasdaq 1587.00. Once more, the 1160.00-1158.00 intraday support areas and the S&P 500 held and the index rallied to new marginal highs at 1167.50. A last run during the last hour of the session reached 1175.75 before pulling back into the end. For the day the S&P 500 gained 48.75 points and settled at 1167.50, the Nasdaq recovered 82.25 points closing the day at 1594.25 and the Russell settled at 678.00, up 27.90 points for the session. The Dow came back strong closing at 10850, up 485 points.

MARKET COMMENTARY AND OUTLOOKYesterday I wrote: “The S&P 500 has reached levels below the 1133.00 area, one of the scenarios that we discussed yesterday, is this down move the false break of the lows that we were expecting? Is this the moment to go long the markets as something will have to be done immediately to restore confidence or is this just a temporary low in a market that at some moment could go for the 1093.00 area on the S&P 500 and 10000 on the Dow? Yesterday’s sell off should see a relief rally, maybe a huge relief rally that takes the S&P 500 back to 1163.00 or higher and the Dow back to the 10700-10800 band before the markets get back in troubles; it will happen today? I don’t know, but these huge chaotic moves will continue making difficult for day traders to play the markets with reasonable stops. So keep in mind that when you place a trade, and you find yourself on the right side of the markets, you may adjust your stop loss orders or take a profit at the first sign of failure, and if you are on the wrong side, be quick to take your loss.”

Yesterday’s strong rally is what usually happens after a huge drop, buyers look for bargains and shorts cover taking their profits. Many times I have described that most of the huge one day moves do not have any importance on the daily charts until there is a follow through during the next sessions, wide range days, like those that we are experiencing in the current market conditions, have a lot of probabilities to get reversed during the next session as they usually exhaust a move. The markets are on a bearish trend and susceptible to dramatic changes on every piece of news, so trying to figure if yesterday’s rally is only a “dead cat bounce” or the best buying opportunity of the year is still premature for a call.

Traders will be waiting for the vote on the new version of the bailout plan, that probably will result in a rally, that I suspect will get reversed as the plan do not correct the current credit crisis; it will be like a day when the FED comes out with a rate decision, an exaggerated move that fails and then a clear trend, that may happen if the vote is during the regular trading hours, if not an upside gap should be seen for the next opening. Yesterday’s rally, from the 1133.00 area, that resulted in an inside day on the daily charts will have to show during today’s trading session a continuation pattern to the upside to convince me that a short term multi day rally that reaches at least the 1221.00 area on the S&P 500 during the next few sessions is in the cards, otherwise, the index will continue to trade lower with this bear market typical furious rallies. Another possibility for today’s session is to see the indexes consolidate on a relative narrow range, but it seems that narrow range sessions are not possible under this market conditions.

There are a few economic reports during today’s trading session and the rest of the week is also busy, we get the unemployment figures next Friday, so expect volatility to continue unless another strong upside session is seen today or the markets trade on a relative narrow range. The 1160.00 area on the S&P 500 will be pivotal for today’s trading session, the index will start to get weak if it trades too much time below that level, but if it breaks below it and then it goes over it once more, the trend should be upwards.

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

1191.50-1193.00

1631.00-1633.00

700.60-701.80

Resistance 3

1185.50-1188.00

1621.75-1623.00

695.10-696.60

Resistance 2

1179.00-1181.00

1612.00-1613.75

688.00-689.90

Resistance 1

1173.50-1175.00

1603.00-1604.50

682.00-683.50

PIVOT

1151.75

1568.50

672.00

Support 1

1161.00-1159.00

1585.00-1584.00

671.30-670.00

Support 2

1155.00-1153.50

1574.50-1573.00

666.10-664.50

Support 3

1149.25-1148.00

1566.00-1564.50

662.00-660.80

Support 4

1132.00-1130.75

1539.00-1537.00

654.20-653.30

S&P

NASDAQ

RUSSELL

FIBONACCI

FIBONACCI

FIBONACCI

1278.90

1767.55

727.35

1263.85

1743.95

720.15

1239.50

1705.75

708.50

1215.15

1667.55

696.85

1200.10

1643.95

689.65

1175.75

1605.75

678.00

1151.40

1567.55

666.35

1143.88

1555.75

662.75

1136.35

1543.95

659.15

1112.00

1505.75

647.50

1087.65

1467.55

635.85

1072.60

1443.95

628.65

1048.25

1405.75

617.00

1023.90

1367.55

605.35

1008.85

1343.95

598.15

DAILY PROJECTIONS

S&P

NASDAQ

RUSSELL

AS DAILY HIGH

1203.50

1650.00

706.00

AS DAILY LOW

1139.75

1550.00

662.80

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 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.

Comments
comments powered by Disqus