E-mini trading advisory for Sept. 2

DAILY TRADING ADVISORY 02-September-2009

ISM manufacturing Index grew for the first time since January 2008 and Pending Home sales up; markets sold off on bank concerns.

ECONOMIC DATA

8:15 AM ADP Employment Change

8:30 AM Productivity-Rev.

10:00 AM Factory Orders

10:30 AM Crude Inventories

2:00 PM FOMC Minutes

YESTERDAY’S MARKET

After trading lower during the Globex session, the E-mini SP started the day at 1015.00 from where the markets rallied all the way up, the SP made it to 1027.75 and the Nasdaq to 1649.00. The indexes toped and the trend changed. The SP pulled back to 1020.25, bounced to 1024.50 where seller stepped in pushing the index fiercely down to 1000.25. After the huge sell off, the index bounced to 1005.00 and failed to push higher giving way to a new intraday low at 999.50. Once more a feeble bounce failed to gain momentum and the SP printed a new low at 997.50. While holding above the lows, markets traded in a sideways pattern that during the last hour of the session gave way to a new low at 995.50 from where the index bounced a bit into the close. For the day, the SP lost 23.00 points and settled at 996.75, the Nasdaq closed lower at 1596.00 with a 29.00 points loss and the Russell finished the session at 557.30, minus 14.40 points. The Dow lost 185 points closing the day at 9310.

MARKET COMMENTARY AND OUTLOOK

Markets sold off and volatility picked up, the early weak opening that I described on my newsletter resulted in a good trade, later markets got reversed breaking the most recent trading pattern. The break and close below the 1010.00 area on the SP and the failure of the Dow and Nasdaq to hold their short term support areas at 9500 and 1632.00 has posted what it seems to be a short term top. Extremely bullishness at these levels which had all the players in one side of the boat gave way to a surprising sell off that did not respected any of the short term key support areas.

After yesterday’s wide range downside session, it will be normal to see some consolidation, the upper boundary may be around the 1010.00 area on the SP, and only if that level gets exceeded the markets, the index, may return to a neutral position. Follow through the downside will result in additional weakness during the month of September that carries a record of losses. However some consolidation may be seen before the next move.

Today’s session is full of economic reports, before the opening, the ADP Employment data which measure the private job market, much later in the session, the minutes of the last Fed’s meeting, so the volatility may continue in front of next Friday’s monthly unemployment numbers, yesterday’s session and its bearishness call for lower pressure, but after the wide range session a consolidating session is also a possibility, using support and resistance areas with tight stops may help us to save the day, but if the markets will try to come back and the first support areas hold, the SP may try to get back to 1000.00 and 1004.50 areas. BUT TAKE INTO ACCOUNT THAT IF THE MARKETS ARE TRADING DOWN, AVOID TRYING TO PICK A BOTTOM.

TODAY’S SESSION

For today’s trading roadmap and intraday updates, please read the authors bio

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