U.S. markets rally as people goes to the polls. September factory orders drops sharply, minus 2.5%.
ECONOMIC DATA
8:15 AM ADP Employment
10:00 AM ISM Services
10:35 AM Crude Inventories
YESTERDAY'S MARKETS
Markets traded higher on the election day. After trading sharply higher during the Globex session, the E-mini SP started the day at 988.50 from where it pulled back in an orderly way to my updated 980.00 support area. After holding the early sell off, the index pushed strong higher during the next 90 minutes of the session reaching 1004.50. The index then retraced to 999.00 holding the daily gains. Once the E-mini SP traded back above the 1000.00 level it continued with its uptrend reaching a new high at 1005.50. The SP then pulled back to 996.00. Unable to trade lower and with ultra light volumes, the SP bounced back up to 1001.00 and pulled back down mildly to the 998.00 level. As the session continued, the E-mini SP got back above the 1000.00 mark testing levels near the intraday's highs reaching 1004.50. Unable to break higher and with notorious weakness on the Russell, t he SP pulled back reaching 992.50 bounced to 997.50, sold off to the 886.50 level and rallied strong into the end of the session to new highs. For the day, the SP gained 33.75 points and settled at 1303.25, the Nasdaq ended up 39.00 points at 1380.50 and the Russell ended the session at 543.00 after lagging all the session. The Dow rallied 305 points ending the session at 9625.
MARKET COMMENTARY AND OUTLOOK
Yesterday I wrote: “Despite the modest higher close the different indexes gave us the consolidation that we were expecting after the last rally as the markets get ready for the weekly events. Tomorrow session should keep this neutral to slightly bullish consolidation as investors wait for the election results, it is not important for the markets who will win the battle, the fact is that everything works out normal without problems counting the votes. The markets have reacted well to the economic numbers that continue to show evidence of a recession, that is bullish, but this bullish sentiment could be close to an end as next Friday unemployment numbers may be really bearish, 240K jobs lost and unemployment rate at 6.3%. So, another day of sideways trading seems logical and probably will result in opportunities on both sides of the range, on the upper boundary, the 980.00 resistance level, on the downside the 955.00 support area. Today's trading session is expected to be a low volume session. Look for the first rally to stall and get short, the ideal entry price should be near the 980.00 area. If that works out well, look for the first decent pullback to get long, with tight stops.”
We came into yesterday's session looking for an initial rally to reach the 980.00 key resistance area on the SP. As the markets started the session on a strong note, that level turned into support and held the initial pullback as the relief rally continued. Yesterday's rally and close above the 1000.00 area on the SP and 9500 on the Dow gave the indexes on a short term positive momentum. It does not have anything to do with the elections or who will win, it is a normal bear rally and a countertrend move that sooner or later, maybe by Friday once the labor data gets released, will get reversed and start a sideways long term pattern, with the highs, maybe around 1060.00-1040.00 and the lows at the 860.00 level. The SP has rallied already for five days, too much days for a first degree move, so it should continue higher at least for the next 48 hours. Only if Friday's numbers come out bad, but not worst than expected, the rally will gain additional upside momentum. The indexes have built a bullish channel that keep pointing higher, that does not mean that we could not see a down day, but I don't think that it will be before next Friday.
So for today’s trading session, buying the pullbacks all the time that the first support levels hold, may be the less risky strategy, and if the indexes do not hold there but later on the session come back, stay long above the 1000.00 mark on the SP and 9600 on the Dow. It will be bullish to see the Russell moving higher together with the other indexes.
TODAY'S SESSION
There is initial resistance at 1007.00-1008.50 on the SP, 1385.00-1386.50 on the Nasdaq and 545.00-545.80 on the Russell, if those get exceeded look for the indexes to push higher to the next levels at 1013.00-1014.25 on the SP, 1392.00-1394.00 on the Nasdaq and 548.90-550.20 on the Russell. Those are the key resistance levels, if this rally will continue, these levels, in particular on the Russell are critical, so failure to break above them will put the recent rally in jeopardy, however, if the indexes trade above them, then the next areas at 1018.00-1019.50 on the SP, 1399.50-1401.00 on the Nasdaq and 553.90-554.90 on the Russell will be the only obstacles to reach the 1040.00-1060.00 area on the SP and 10,000 on the Dow.
Initial support is at 999.00-998.00 on the SP, 1373.00-1371.00 on the Nasdaq and 540.50-539.10. All the time that the indexes hold those areas, the uptrend should hold its strong momentum, but if those can not hold, then the next levels at 994.00-992.00 on the SP, 1364.00-1363.00 on the Nasdaq and 536.80-535.70 on the Russell will have to invite buyers in or the trend will be rolling to the downside, if that happens, the last support levels before calling and end to the huge rally seen from the lows are at 983.00-981.50 on the SP, 1352.00-1350.00 on the Nasdaq and 532.30-531.00 on the Russell. GOOD LUCK.
TODAY'S SUPPORT, PIVOT AND RESISTANCE LEVELS
S&P
NASDAQ
RUSSELL
Resistance 4
1026.00-1027.50
1408.00-1410.00
559.30-560.50
Resistance 3
1018.00-1019.50
1399.50-1401.00
553.90-554.90
Resistance 2
1013.00-1014.25
1392.00-1394.00
548.90-550.20
Resistance 1
1007.00-1008.50
1385.00-1386.50
545.00-545.80
PIVOT
991.25
1366.00
543.10
Support 1
999.00-998.00
1373.00-1371.00
540.50-539.10
Support 2
994.00-992.00
1364.00-1363.00
536.80-535.70
Support 3
983.00-981.50
1352.00-1350.00
532.30-531.00
Support 4
976.00-975.00
1342.00-1341.00
524.00-523.20
DAILY PROJECTIONS
S&P
NASDAQ
RUSSELL
AS DAILY HIGH
1026.00
1407.50
559.30
AS DAILY LOW
983.00
1357.00
537.70
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.
