Investors focus on after Christmas sales and the Israeli retaliation attacks on the Gaza strip. Crude oil trades higher on Middle East conflict. Wall Street stumbled on Monday but managed to close with moderate loses after a joint venture between Kuwait and Dow Chemical fell through, threatening one of the larger merger deals of the year and adding to fears about a faltering global economy. GMAC receives $5 billion in bailout funds.
ECONOMIC DATA10:00 AM Consumer Confidence
YESTERDAY’S MARKETA quiet Globex session resulted in a slightly positive opening for the futures indexes. The E-mini S&P 500 started the session at 870.00. From there it bounced to 871.00, then the E-mini S&P 500 traded on a narrow range as volumes continued to be extremely light. As the Nasdaq and Russell started to push lower, the E-mini S&P 500 pulled down to 866.00, bounced a point and continued to push lower reaching the Globex lows at 860.50. As the trading session continued, the E-mini S&P 500 tried to hold above the 860.50 area but failed and made a new low at 858.25. After holding above that level, the E-mini S&P 500 posted a new marginal low at 857.25. From there it made another attempt to break higher. After failing to trade above our updated intraday resistance at 862.00, the index moved lower, posting a new low at 853.25. With trading volumes continuing to be ultra light, the E-mini S&P 500 bounced to 858.50 but failed to break higher backing off once more to 855.00 where it held and pushed higher in another bouncing attempt. The E-mini S&P 500 reached 859.00 and then traded on a two point range before breaking higher reaching 864.75. From there it pulled back to our updated support at 858.00 just to get bought; a volume increase during the last half hour of the session resulted in a late rally that moved all the way up to 871.50. For the day, the E-mini S&P 500 added 1.50 points closing the session at 870.50, the Nasdaq lost 13.00 points ending at 1175.50 and the Russell ended lower by 5.40 and settled at 468.50. The Dow lost 31 points ending the session at 8483.
MARKET COMMENTARY AND OUTLOOKYesterday I wrote: “On the short term, last week trading action has continued to respect the current ranges and the triangle formation, and if we don’t get a big breakout during this week, it’s only because the low volumes do not allow it, but be sure that we are near the next sizeable move. So until that breakout happens, trading both sides of the markets should be the way to go, of course be aware of a directional move or a trend session. This time of the year, and the low volumes favor the long side, so if the markets break above our first or second resistance levels, stop trading from the short side as the few short players could be covering to offset their positions. It is very important to take into account that most of the professional and high volume traders will not be participating in the markets until next week, so if you are on vacation, there is not rush to jump into the markets.”
On extremely low volumes that only picked up into the close, markets started the day with notorious weakness dropping precisely to the current support levels before bouncing into the close. The indexes keep holding the current ranges that run between 850.00-920.00 on the E-mini S&P 500 and 8400-9000 on the Dow. Yesterday’s trading action and the late rally may indicate that another test of the high boundary of the current ranges may be in the cards, and, if today, after the release of the Consumer Confidence data, that traders expect to show a slightly increase from last month, the markets are able to hold, we could see a positive session in front of the end of the year. I wrote yesterday that low trading volumes favor the long side of the markets, and yesterday’s late rally should offer support for some upside movement and higher prices for the rest of the week, however, making predictions with such low volumes and lack of liquidity could be premature. Remember that the 881.25 area on the E-mini S&P 500 should offer strong resistance, but once it gets cleared chances for a late Christmas rally that could reach the 900.00-920.00 areas on the E-mini S&P 500 will get increased. Of course more movement should be seen within this wide range until a solid breakout occurs and traders should remain aware that volumes.
I would like to see the Nasdaq leading the upside move, as that index may be ready to try and move higher after being trading with extremely weakness during the last seven days.
So, for today’s trading session I will favor the long side of the markets despite the fact that trading action could be jumpy, but I can not rule out an uptrend session if the E-mini S&P 500 can hold our pivot point during the first hour of the session.
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
886.00-887.50
1197.00-1198.00
482.80-484.20
Resistance 3
881.50-882.50
1191.00-1193.00
477.20-478.50
Resistance 2
877.00-878.25
1183.00-1185.00
473.90-475.00
Resistance 1
872.50-874.00
1178.00-1179.00
470.10-471.80
PIVOT
865.75
1176.50
467.40
Support 1
868.00-866.50
1171.00-1170.00
466.60-465.20
Support 2
863.50-861.75
1166.00-1164.00
462.10-460.50
Support 3
858.00-856.50
1157.00-1155.50
458.10-456.40
Support 4
847.50-845.50
1145.00-1144.00
449.80-447.60
S&P
NASDAQ
RUSSELL
FIBONACCI
FIBONACCI
FIBONACCI
906.26
1265.55
504.50
901.49
1255.70
500.30
893.75
1239.75
493.50
886.01
1223.80
486.70
881.24
1213.95
482.50
873.50
1198.00
475.70
865.76
1182.05
468.90
863.38
1177.13
466.80
860.99
1172.20
464.70
853.25
1156.25
457.90
845.51
1140.30
451.10
840.74
1130.45
446.90
833.00
1114.50
440.10
825.26
1098.55
433.30
820.49
1088.70
429.10
DAILY PROJECTIONS
S&P
NASDAQ
RUSSELL
AS DAILY HIGH
882.00
1186.50
472.10
AS DAILY LOW
861.50
1145.00
454.30
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.
