Alcoa lost $1.9 billion during 4Q. Analyst forecast calls for a 1.9% shrink in U.S. economy during 2009 while Bernanke urges strong measures to stabilize banks and spur an economic recovery. Commodities prices including grains continue to collapse. U.S. stocks rise on cheapest valuation in 18 years. GE drops on Barclay’s profits outlook.
ECONOMIC DATA
8:30 AM Export Prices
8:30: AM Import Prices
8:30 AM Retail Sales
8:30 AM Retail Sales ex-auto
10:35 AM Crude Inventories
2:00 PM Fed Beige Book
YESTERDAY’S MARKET
After trading at 857.00 during the night, the E-mini SP started the session at 864.00 and pulled back to 861.50 where a double bottom resulted in a small short covering rally to 866.50 from where it backed off a couple of points and continue to press higher reaching 872.00 before the move ended. A feeble pullback to 868.25 held pushing the SP to 873.75, the Globex highs. The E-mini SP backed off all the way to 864.75 where our intraday support areas came into play. The SP bounced to 872.00 and as trading volumes started to decrease, pulled back to 866.00 and rallied once more printing a new marginal high at 874.00. As our second resistance are continued to come into play, the SP pulled back once more but as in the previous occasions support came in resulting in a bounce that reached 871.75. As the rally lost its early momentum and the Nasdaq started to show increased weakness, the SP sold off to 863.50, bounced to 865.50 and pushed down to 859.00 from where it manages to bounce to the 864.00 level. After failing to break higher, the SP fell to new intraday lows at 858.00, just one point above the 857.00 Globex low from where it bounced strongly to 870.50 where a double top put an end to the rally. The SP sold off once more to 860.00 from where it bounced back to 871.00 and pulled back into the close. For the day, the SP ended almost unchanged at 868.50, the Nasdaq lost two points closing the session at 1204.00 and the Russell closed up 5.70 points at472.50. The Dow lost 25 points closing at 8448.
MARKET COMMENTARY AND OUTLOOK
Yesterday I wrote: “Are the markets in front of another capitulation that will push prices much lower? Is the late rebound well above the daily lows a short term indication that markets will reverse the last decline? Both scenarios are possible, however the selling has been done without any panic, and volumes have been really low since last week, so if the trend is still down, today’s trading session will have to show a wide range downside day, some panic selling with higher volumes. If the selling is coming to an end, no matter how the markets open, the first sign will have to show a consolidation during today’s session, a reversal from early weakness or a close above the 875.50 level. The late bounce from the 860.25 low in the SP that managed to reach 867.00 and the relatively strength in the Nasdaq that broke the selling pattern that was present during all the session, may be seen as moderately bullish, the fact that the close on the SP was above 868.00, may be seen as moderately bullish. The close on the Nasdaq, which recovered half of its early losses may be seen also with some bullishness and all the time that yesterday’s lows can hold, this “moderately bullish factors” have to be considered to try and figure what will be the next move for the markets.”
Despite the “narrow range” seen during yesterday’s session a lot of action was seen, rallies, sell offs and finally an unchanged market for the close. Markets acted as expected consolidating the last day’s weakness and traded in the expected ranges.
Yesterday’s bottoms seem to be highly important and may have built a base for a possible recovery rally, the big three, SP, Nasdaq and Dow managed to post double bottoms, marginal new lows that get reversed later in the session, or consolidations above their short term support areas. The fact that the SP has held for two consecutive sessions the 868.00-867.00 support areas is the first bullish sign during the last few days and may result in a reversal of the current downtrend. The Dow has held the 8350 area for more than six weeks, no matter that weakness is present in that index below the 9000; it has held and has bounced from that level.
On the other side of the coin, the overall weakness that has been seen in the markets and the reversal, many times, from levels just above yesterday’s high on the SP could result in more sideways action until a clear breakout occurs. Today’s support and resistance levels are similar to those posted for yesterday’s session, the most important difference that I can find is that the breakup point for the SP is above the 876.00-877.50 areas instead of yesterday’s 875.50, and I consider that if that index can make it above those levels, the way for the 900.00 mark will be open. But, if the SP starts to trade below 860.00-859.00 and does not post a strong reversal in the next 24 hours more downside pressure could be seen during the coming sessions. Remember that today we have the retail sales numbers that may have a great impact during the session and later at the afternoon the Fed Beige Book that surely will indicate overall weakness in the economy, in all the sectors and in all the different regions.
TODAY’S SESSION
For today’s trading roadmap and intraday updates, please read the authors bio.
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TODAY’S SUPPORT, PIVOT AND RESISTANCE LEVELS
S&P
NASDAQ
RUSSELL
Resistance 4
891.00-893.00
1234.00-1236.00
488.30-489.50
Resistance 3
882.00-883.00
1220.00-1222.00
482.00-483.40
Resistance 2
876.00-877.50
1210.00-1211.00
477.30-478.20
Resistance 1
871.50-873.00
1205.00-1206.00
473.80-475.10
PIVOT
866.50
1202.50
469.60
Support 1
865.50-863.75
1200.50-1198.50
471.20-469.90
Support 2
860.00-859.00
1194.00-1192.00
468.10-467.00
Support 3
856.00-854.00
1186.50-1185.00
464.60-463.90
Support 4
849.50-848.00
1174.00-1172.00
455.30-454.80
S&P
NASDAQ
RUSSELL
FIBONACCI
FIBONACCI
FIBONACCI
901.51
1272.70
498.44
897.49
1264.80
495.06
891.00
1252.00
489.60
884.51
1239.20
484.14
880.49
1231.30
480.76
874.00
1218.50
475.30
867.51
1205.70
469.84
865.50
1201.75
468.15
863.49
1197.80
466.46
857.00
1185.00
461.00
850.51
1172.20
455.54
846.49
1164.30
452.16
840.00
1151.50
446.70
833.51
1138.70
441.24
829.49
1130.80
437.86
DAILY PROJECTIONS
S&P
NASDAQ
RUSSELL
AS DAILY HIGH
877.00
1211.00
481.10
AS DAILY LOW
860.00
1177.75
466.80
Support, Pivot and Resistance levels courtesy of Arturo Stern. He authors the E-mini Daily trading advisory which gives technical analysis on 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.
