Initial Claims at 667,000, Continuing Claims above 5 million, New Home Sales at a new record low, Durable Goods orders minus 5.2%, GM $30.9 billion annual loss and Obama's budget proposals, which include new aid for financial sectors, gave way to a negative session
ECONOMIC DATA8:30 AM GDP-prel.8:30 AM Chain Deflator-prel.9:45 AM Chicago PMI10:00 AM Michigan Sentiment- rev.
YESTERDAY’S MARKETAfter been trading higher during the Globex session, the E-mini S&P 500 started the day at 773.50.After bouncing just above the 775.00 area, the index pulled back to 768.00 where the market held. The E-mini S&P 500 bounced to 776.00 pulled back to 770.00, tested the early highs and after a small setback, finally pushed up to 779.00. Unable to break higher, the index pulled back to 775.00, bounced to 778.00 and once it failed to make a new high backed off to 771.00, bounced one point and tested the early lows at 768.00. After trying to break above the 772.50 area, markets started to trend down with mild short covering rallies. The E-mini S&P 500 made a low at 764.00, bounced back to 768.00 sold off to the KEY support area at 760.50. The index rallied back all the way up to 768.50 and after trading in a sideways pattern broke down strongly reaching 750.25 from where it bounced to 758.00 just to get sold into the close. For the day the E-mini S&P 500 lost 9.50 points and closed at 752.00, the Nasdaq lost 21.75 points and settled at 1132.25 and the Russell ended lower by 4.00 points at 393.90. The Dow, which showed strength for most of the session, gave back its early earnings closing lower by 88 points at 7182.
MARKET COMMENTARY AND OUTLOOKYesterday I wrote: “I was looking for a successful test of the November lows and I was expecting the E-mini S&P 500 to hold on its first test of that level. We cannot rule out another sharp sell off that pushes that market down to the 743.00-741.00 levels and the Dow to the 7160-7120 areas; however, I still think the market can continue to try to move to the upside, obviously all the time that the lows hold. If yesterday’s highs will get broken during today’s trading session, in the E-mini S&P 500 and the Dow, and the Nasdaq will join the party, then the rally that we are waiting for could happen, that rally may push the E-mini S&P 500 near the 800.00 area before the week is over. The big question is what will happen during the next few days, is this a first degree countertrend that may fail in the next 48 hours and push the markets to new lows, or the rally will be able to last at least for another 8-10 days before mid term direction gets decided. So after yesterday’s trading session, where markets fluctuated, I will look for the posted highs as the near “line in the sand” for short term direction, and I will try to be a small buyer near the 750.00 area in the E-mini S&P 500 if we get there; another trend session, may be, and if that happens I think will have an upward direction.”
Yesterday’s negative and choppy session, in which the E-mini S&P 500 and Dow were rejected from their respective resistance areas at 780.00 and 7400, a double top has placed the index in a break position with strong evidence that the downtrend could be stronger than expected and ready to get resumed. Yesterday I wrote that the previous session highs would be the “line in the sand” if the markets would be pushing up at least for the next two sessions, well, instead of breaking higher, markets posted a double top, and double tops on a bear trend usually get broken to the downside. I also wrote a few days ago that the fact that the Dow broke and keeps trading below the 7500 area indicates much lower prices, but I was waiting for a confirmation of the E-mini S&P 500, two consecutive closes below the 750.00 mark. So the markets are at a critical position in which a new low could give way to another wide down leg in this bear market; or the floor that comes in play at 750.00 on the E-mini S&P 500 and 7,120 on the Dow will finally prove to be a very strong support area and give the indexes the catalyst to start to press higher.
The fact that the E-mini S&P 500 has not been able to hold its gains. The fact that the Nasdaq which was showing a bullish divergence that has slowly evaporated during the last sessions and the continuing weakness in the Dow Jones does not print a nice picture, and with today’s economic data, a Friday, the last day of the month, the indexes could close at new lows. In fact, the only positive news is that the indexes could continue to trade in a sideways pattern defined by the 740.00 to 800.00 area on the E-mini S&P 500 and 7100 to 7400 on the Dow. The trend is down and the last two days rally attempts have not changed that situation.
For today’s trading session, an early test of the 740.00’s on the E-mini S&P 500 or a break above the 760.50 area could give way to another rally attempt, but all the time that the E-mini S&P 500 is trading below the 750.00 mark trying to get long could represent a huge risk
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
770.50-771.00
1159.00-1161.00
408.60-409.10
Resistance 3
766.00-767.50
1154.00-1155.00
403.00-403.40
Resistance 2
759.00-760.50
1145.50-1146.50
399.20-400.40
Resistance 1
754.50-756.00
1138.00-1140.50
395.30-396.80
PIVOT
760.50
1144.50
397.30
Support 1
748.00-747.50
1127.00-1125.50
392.50-391.00
Support 2
744.00-742.00
1121.00-1118.50
387.80-387.10
Support 3
736.00-735.00
1114.00-1112.00
384.80-383.50
Support 4
731.50-729.50
1107.00-1105.00
381.00-380.20
S&P
NASDAQ
RUSSELL
FIBONACCI
FIBONACCI
FIBONACCI
901.19
1380.06
473.1
854.27
1301.32
447.6
825.52
1253.07
432.0
807.75
1223.25
422.4
796.77
1204.82
416.4
779.00
1175.00
406.8
768.02
1156.57
400.8
764.63
1150.88
399.0
761.23
1145.18
397.2
750.25
1126.75
391.2
732.48
1096.93
381.6
721.50
1078.50
375.6
703.73
1048.68
366.0
674.98
1000.43
350.4
628.06
921.69
324.9
DAILY PROJECTIONS
S&P
NASDAQ
RUSSELL
AS DAILY HIGH
765.50
1153.00
400.40
AS DAILY LOW
736.75
1105.00
384.80
Support, pivot and resistance levels courtesy of Arturo Stern, who 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.
