Citigroup bailout and Existing Home sales new lows result in a strong rally after last Friday new lows.
ECONOMIC DATA8:30 AM GDP-prel.8:30 AM Chain Deflator-prel.10:00 AM Consumer Confidence
YESTERDAY'S MARKETHolding its nightly gains after Citigroup's bailout, the E-mini S&P 500 opened the trading session at 815.00 and pulled back to the 808.00 area where the early sell off held. As traders waited for the housing data, the index traded on a narrow range, once it got release, the markets resumed its upside move. The E-MINI S&P 500 reached 823.50, pulled back to 818.00 and in a parabolic move pushed up to 836.00 before pulling back to the 830.00 area, which held. The E-MINI S&P 500 then rallied back to the highs where a double top resulted in another pullback to 829.00 where buyers stepped back in driving the index to a new marginal high at 837.75 from where the index pulled back once more. As the lows held and the short covering rally continued, the E-MINI S&P 500 moved up to new high at 842.50. As the rally lost its steam, the E-MINI S&P 500 pulled all the way down to 825.00 bounced back to 831.00, tested the low and rallied to 837.00 w here it failed to be joined by the Dow and Russell. After trading on a sideways pattern the E-mini S&P 500 finally moved up posting a lower high, which was strongly, rejected pushing the index back down to 829.50. As the markets continued to show strong supports and the pullbacks continued to get bought, the E-mini S&P 500 pushed up once more to the highs, pulled a few points and finally broke higher reaching 845.75. The index pulled back to 840.00 where a late powerful short covering move triggered a strong move to 866.25, which got strongly reversed to the 845.00 level. For the day, the E-mini S&P 500 gained 56.00 points ending the session at 748.00, the Nasdaq also advanced 56.00 points and settled at 1147.00 and the Russell ended higher by 31.80 points closing the day at 433.00. The Dow gained 396 points ending the session at 8443. All the futures indexes settled below fair value.
MARKET COMMENTARY AND OUTLOOKYesterday I wrote: “The early week action will tell us the story for the next few weeks, Friday's rally touched the new 804.25 support area on the E-mini S&P 500 and the 8000 level on the Dow, If this is a "kiss of death" pattern, where the indexes came back just to test the previous support and fail to continue higher, another sharp drop could be in the cards, however, if the markets continue to move higher, a test of the next levels at 864.00 on the E-mini S&P 500 and 8500 on the Dow could be seen in the next two sessions, only if those two markets manage to break above those levels, then we could call short term low. This Thanksgiving week volumes will start after a low was placed last Friday, this is a traditional bullish week, the problem, the volumes, but that does not mean that this markets that have knocked out all the longs won't do the same if a low is in place, my 804.25 weekly pivot point will act as a line in the sand for a mid-term long or short position despite the fact that low volumes do not give credibility to a move, but they do have the capability to start a move. If we have a low or if we successfully test the low, and the market holds, the reversal will be as brutal as the last down move. For today's trading session, the E-mini S&P 500 will have to trade above our 804.25 weekly pivot point, try to maintain a long position above it but be careful to have a stop loss order in and to secure some profits if you are in the right side of the trade."
We couldn't ask for more, the early sell off held above the 804.25 and the furious rally pushed the E-mini S&P 500 up to 866.25, just 2 points above my upside objective and key resistance area. Finally, we have some follow through, a rally that lasted more than a few hours. The E-mini S&P 500 has rallied more than 100 points in the last two sessions; the Dow has advanced more than 1000 points, it is probably that this huge moves will get consolidated before the next strong breakout occurs, however, if yesterday's highs get exceeded, then the E-mini S&P 500 will go for the 900.00 level and the Dow will test 9000 before this holiday week is over. In many occasions markets have started an upside move near thanksgiving and they have continue to move higher into the mid December, obviously, this is not a normal year, the bear campaign and the last two months steep declines are not normal, but this huge sell off, is the kind of move that could result in a furious bear market rally. Yesterday's rally has the chances to get reversed during today's trading session, this is because the run to the 864.00 was clearly rejected, also, and the Nasdaq did not show enough strength to be able to lead the move up. Another scenario, the one that I favor is that the markets will consolidate between today and tomorrow's session then last rally and then start a run to the next resistance area around the 940.00 level on the E-mini S&P 500.
Take into account that if today we have a negative session is not a change of the last two days uptrend, but a consolidation of a huge move, only a wide range down session that breaks below 800 could indicate a retest of last week lows.
For today's trading session, expect opportunities on both sides, unless the 832.00 gets exceed to the downside, if that level holds, look for the markets to rebound and maybe continue this Thanksgiving rally.
TODAY'S SESSIONThere is initial resistance at 855.00-856.50 on the E-mini S&P 500, 1155.00-1057.00 on the Nasdaq and 440.10-441.60on the Russell. I assume that if the markets break above them they will go for another test of yesterday's highs, if that happen those areas are at 863.00-864.00 on the E-mini S&P 500, 1163.00-1165.50 on the Nasdaq and 445.20-445.80 on the Russell. Nothing good happens all the time that those levels remain intact, if the session will see a consolidation of the last trading sessions, markets won't be able to exceed them by more than a few points, but if finally this short term upside trend will get some additional momentum, look for the indexes to break higher and test 872.00-873.50 on the E-mini S&P 500, 1174.00-1176.00 on the Nasdaq and 450.50-451.80 on the Russell.
Initial support is at 840.00-838.50 on the E-mini S&P 500, 1138.00-1136.00 on the Nasdaq and 429.10-427.90 on the Russell, if those levels cannot hold, look for an important test of the next levels at 832.50-831.00 on the E-mini S&P 500, 1128.00-1127.00 on the Nasdaq and 424.00-422.70 on the Russell. Those MUST hold. It is extremely important for the last rally to continue to move higher, trading below them will give the control back to the bears. If those areas fail, then look for more selling pressure that pushes the indexes down to 825.00-824.00 on the E-mini S&P 500, 1120.00-1118.00 on the Nasdaq and 414.70-413.30 on the Russell. GOOD LUCK.
TODAY'S SUPPORT, PIVOT AND RESISTANCE LEVELS
S&P
NASDAQ
RUSSELL
Resistance 4
881.25-883.50
1188.00-1191.00
456.30-457.20
Resistance 3
872.00-873.50
1174.00-1176.00
450.50-451.80
Resistance 2
863.00-864.00
1163.00-1165.50
445.20-445.80
Resistance 1
855.00-856.50
1155.00-1057.00
440.10-441.60
PIVOT
832.50
1127.50
422.90
Support 1
840.00-838.50
1138.00-1136.00
429.10-427.90
Support 2
832.50-831.00
1128.00-1127.00
424.00-422.70
Support 3
825.00-824.00
1120.00-1118.00
414.70-413.30
Support 4
818.00-816.25
1105.00-1103.00
409.70-408.80
S&P
NASDAQ
RUSSELL
FIBONACCI
FIBONACCI
FIBONACCI
1000.54
1312.45
507.60
980.96
1290.80
497.60
949.25
1255.75
481.40
917.54
1220.70
465.20
897.96
1199.05
455.20
866.25
1164.00
439.00
834.54
1128.95
422.80
824.75
1118.13
417.80
814.96
1107.30
412.80
783.25
1072.25
396.60
751.54
1037.20
380.40
731.96
1015.55
370.40
700.25
980.50
354.20
668.54
945.45
338.00
648.96
923.80
328.00
DAILY PROJECTIONS
S&P
NASDAQ
RUSSELL
AS DAILY HIGH
898.50
1201.00
457.20
AS DAILY LOW
815.00
1109.00
414.80
Dear traders: Next Wednesday I will have a small surgical procedure; service will be suspended from Wednesday until next Monday after thanksgiving holiday. Thanks!
Support, pivot and resistance levels courtesy of Arturo Stern. He authors the daily E-mini 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.
