Ford $5.9 billion loss, Colgate better than expected earnings, Altria and Shell lower earnings, the stimulus plan approval by the House; Initial Claims above expectations at 588K and Continuing claims at 4.7 million, Durable good orders down 2.6% as business spending slumps and New Home Sales tumble 14.7% to record low; all this gave way to a negative session as caution returned to the markets.
ECONOMIC DATA
8:30 AM Chain Deflator-Adv.
8:30 AM GDP-Adv.
9:45 AM Chicago PMI
9:55 AM Michigan Sentiment-Rev.
10:00 AM Employment Cost Index
YESTERDAY’S MARKET
A negative nightly session for the futures markets resulted in a lower opening, the E-mini SP started the session at 856.75 from where it bounced to 859.50 just to get sold to a new intraday low at 854.50, and unable to bounce pushed lower to 850.50. With volumes on the light side, the E-mini SP started a struggling rally that tested 856.50, pulled back, moved higher and down once more and continued to push to the upside reaching 859.00. Once the index failed to trade above the opening high and after a double top, it pushed down all the way to 851.50, the index bounced up to 853.50 and pushed to new lows at 849.00. After a few feeble bounces that failed to break the descending trend, the E-mini SP reached 842.75. As the low held, the SP pushed higher testing the 850.00 area, after a few failed attempts just below that area, the index pulled back to 844.50 and once that level get broken the markets made a new daily low, on the SP at 840.25. For the session, the SP lost 21.75 points and settled at 842.75, the Nasdaq ended lower by 25.25 points at 1206.00 and the Russell ended the day at 454.70 after losing 17.60 points. The Dow gave back the previous day gains closing the session at 8,149, a 226 point loss.
MARKET COMMENTARY AND OUTLOOK
The markets posted a strong negative session reversing the previous day huge gains and higher opening gaps that as I wrote yesterday, probably exhausted the move up. The fact that the index was able to rally only three days has the move under the limits for a first degree countertrend and not a new upside trend, despite the huge amount of support that was seen at the 800.00 area on the SP, 1140.00-1136.00 on the Nasdaq and 8,000 on the Dow.
That does not mean that the downtrend is ready to resume, but before another breakout attempt will be seen, the markets may consolidate for a few days, and maybe maintain a bearish bias as the excitement of the previous days that resulted from the rumor and that the balance sheet of the banks will be cleaned. Yesterday’s trading volumes were also very light, so I assume that all the time that the 832.00 on the SP holds, the down move will be a struggling one. Obviously, there would need to be some follow through, a fact that we have not seen in the last moves.
With all this, plus, the economic numbers to be release today, the end of month bullish bias, and next Friday unemployment numbers, the indexes could spend some more time trading inside the current ranges. Is there something bullish in this trading pattern? Another one or two negative sessions where the markets hold the previous support levels, or they post a higher lows could result in a strong rally that this time manages to hold for more than five trading sessions. But the last Wednesday’s highs that posted a lower high in the mid term charts, if not exceeded could result in a strong downside break.
For today’s trading session, all the time that the SP can hold yesterday’s lows, there is a chance for an inside day where the lows and highs were seen yesterday, so lets try to play both sides of the markets unless some clear bearish or bullish pattern develops.
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
861.00-863.00
1234.50-1236.00
470.50-471.80
Resistance 3
857.00-858.25
1225.00-1226.00
466.00-467.40
Resistance 2
851.50-853.00
1216.50-1218.00
459.80-460.40
Resistance 1
847.00-848.50
1210.50-1212.50
456.60-457.90
PIVOT
851.50
1211.00
459.20
Support 1
839.00-837.50
1201.50-1199.00
452.00-450.90
Support 2
834.00-832.00
1193.50-1192.00
448.20-446.70
Support 3
827.50-825.50
1186.00-1184.00
443.20-442.70
Support 4
821.00-819.50
1175.00-1173.00
438.60-438.00
S&P
NASDAQ
RUSSELL
FIBONACCI
FIBONACCI
FIBONACCI
922.72
1288.28
505.13
915.28
1279.97
500.27
903.25
1266.50
492.40
891.22
1253.03
484.53
883.78
1244.72
479.67
871.75
1231.25
471.80
859.72
1217.78
463.93
856.00
1213.63
461.50
852.28
1209.47
459.07
840.25
1196.00
451.20
828.22
1182.53
443.33
820.78
1174.22
438.47
808.75
1160.75
430.60
796.72
1147.28
422.73
789.28
1138.97
417.87
DAILY PROJECTIONS
S&P
NASDAQ
RUSSELL
AS DAILY HIGH
857.25
1218.00
463.30
AS DAILY LOW
825.25
1183.50
442.70
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.
