Initial Claims down to 654K, Continuing Claims reaching a new record high at 5.84 million and Wells Fargo beating expectations by more than double gave way to a strong rally to close this shortened holiday week.
WEEKLY PIVOTS FOR WEEK ENDING 17-April-2009
R3 889.00
R2 878.50
R1 859.00
PP 820.00
S1 821.00
S2 802.00
S3 751.00
ECONOMIC DATA
None
WEEKLY RECAP
After struggling for most of the week, global and U.S. markets closed strong for the holiday. With markets posting a strong Sunday night session where the SP reached 848.00, Monday’s session started with weakness and selling pressure as concerns about job loses and the banking sector dominated the session. Markets posted a marginally negative session closing with moderate losses, the SP closed lower by 10.00 points at 830.50, the Nasdaq lost 4.25 ending the session at 1312.00 and the Russell lost 10.10 points and settled at 446.30. The Dow lost 41 points ending the session at 7975. Tuesday, traders got ready for the start of the earnings season, early in the morning rumors about GM getting ready for a possible bankruptcy gave way to a negative opening and stocks, also George Soros’s commentaries about the fragility of the recent rally influenced investors giving way to some profit taking after last week 6% gain in the markets. For the session, the SP lost 16.50 points and settled at 814.00, the Nasdaq ended lower by 31.25 points at 1281.00 and the Russell closed at 431.40, minus 14.90 for the day. The Dow lost 186 points and settled at 7789. Just after the close, Alcoa reported that it has swung to a loss, but a merge in the housing sector between Pulte and Centex and the lower Wholesale Inventories data gave way to a session where prices fluctuated. Markets managed to close on the green, the SP added 8.50 points finishing the day at 822.50, the Nasdaq ended at 1298.50 after gaining 17.75 points and the Russell closed higher by 6.80 points at 438.70. The Dow closed with a moderate gain at 7837.
The last day of this holiday shortened week, markets exploded to the upside, Wells Fargo reported before the opening that its earnings for the first quarter are projected to almost double analyst’s expectations, this pushed the futures indexes strongly up, and once the Initial Claims data came out showing lower levels than the previous week and despite that the Continuing Claims continued to climb, markets held their gains and regardless of the low trading volumes traded in a bullish way pressing higher for most of the session. For the day the SP added 30.00 points and settled at 852.50, the Nasdaq closed at 1336.00 with a 37.50 points gain and the Russell gained 26.70 points finishing the week at 465.40. The Dow closed above the 8000 mark at 8083 with a 246 points gain.
THURSDAY’S MARKET
With the global markets trading solidly during the Globex session and the good news in the banking sector, the E-mini SP started the session sharply higher at 842.50, after a mild pullback to 839.00 the index pushed higher reaching 847.75. With low volumes and most of the traders already joining the holiday, the markets traded in a narrow range for the rest of the day. The SP tested the early lows at 840.00 but the mild pullbacks were buying opportunities, the index tested once more the early highs, pulled to 852.50, rallied to the 850.00 level and after trading for a while in a narrow range near the highs finally pushed higher into the close. For the day the SP added 30.00 points and settled at 852.50, the Nasdaq closed at 1336.00 with a 37.50 points gain and the Russell gained 26.70 points finishing the week at 465.40. The Dow closed above the 8000 mark at 8083 with a 246 points gain.
MARKET COMMENTARY AND OUTLOOK
After trading at 848.00 during the previous Sunday’s night and struggling for the first three days of the week to push down, the markets opened with a strong upside gap for Thursday’s session. With the upside gap calling for some sort of exhaustion but with the markets holding above critical support areas and despite that the weekly lows were posted during the night, the recent bullish pattern is still intact.
We were expecting the recent sell off to reach lower prices testing at least the 780.00 area on the SP and 7500 on the Dow, however the pullback was less than expected and respected the 78.6% Fibonacci retracement between the recent highs and the March lows. This may be bullish and pointing for higher prices, but for this scenario to be true canceling the bearish implication that those strong wide gaps normally indicate, the next rally will have to last more than four to five trading sessions.
That does not mean that the recent Bull Run won’t see a sizeable pullback, but it seems that the markets could continue to move up IF they have not completed yet a third test of the recent highs with this new high, from where a failure could give way to a 80 point pullback on the SP and at least 500 points on the Dow.
So the next few coming sessions will define if last Thursday’s highs were the last high of this trading pattern or the SP will be able to reach the 860.00-880.00 area during the week and then, maybe show some profit taking in the apparently process of building a base for a further upside move during the second part of the year.
I was thinking that last Thursday, the index could have been showed a low for the recent pullback, but the strong opening have negated, for now, a lower low near the 780.00 area and then another run to the recent highs or a marginal new high, but with the strong opening, the markets could make a struggling upside move that will get a confirmation of more upside potential with a second consecutive close on the Dow above the 8000 area and the SP holding above 850.00.
Lately, Monday’s have the tendency to show some weakness or profit taking, so if the market opens in negative territory look for the early weakness to get reversed after the first 40 minutes of the session, and look for the first test of Friday’s settlement to get sold despite that the indexes may be able to hold high levels, so trading both sides of the market could result a good strategy, at least until the 831.00 area on the SP gets broken to the downside.
TODAY’S SESSION
For 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
875.00-877.00
1368.50-1370.00
481.80-482.80
Resistance 3
869.50-870.50
1360.00-1361.00
476.40-477.20
Resistance 2
861.50-863.00
1348.50-1351.00
473.60-474.00
Resistance 1
855.50-858.00
1342.00-1343.00
468.70-470.90
PIVOT
843.00
1325.00
457.60
Support 1
849.50-848.00
1330.00-1328.00
462.70-461.20
Support 2
845.00-844.00
1323.00-1321.50
459-10-458.60
Support 3
838.50-837.00
1311.00-1308.50
452.60-450.50
Support 4
833.00-831.00
1296.00-1294.00
448.00-446.60
S&P
NASDAQ
RUSSELL
FIBONACCI
FIBONACCI
FIBONACCI
991.56
1528.25
595.3
938.93
1456.44
546.6
906.68
1412.44
516.8
886.75
1385.25
498.4
874.43
1368.44
487.0
854.50
1341.25
468.6
842.18
1324.44
457.2
838.38
1319.25
453.7
834.57
1314.06
450.2
822.25
1297.25
438.8
802.32
1270.06
420.4
790.00
1253.25
409.0
770.07
1226.06
390.6
737.82
1182.06
360.8
685.19
1110.25
312.2
DAILY PROJECTIONS
S&P
NASDAQ
RUSSELL
AS DAILY HIGH
869.00
1360.50
481.90
AS DAILY LOW
837.50
1316.50
452.10
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.
