E-mini trading advisory for Sept. 21

DAILY TRADING ADVISORY 21-September-2009

Michigan Sentiment index up in early September, markets fluctuate after posting new highs for the year.

WEEKLY PIVOTS FOR WEEK ENDING 25-September-2009

R3 1098.50

R2 1089.00

R1 1073.00

PP 1052.50

S1 1048.50

S2 1033.25

S3 1018.00

ECONOMIC DATA

10:00 AM Leading Indicators.

WEEKLY RECAP

Another good week for the U.S. stock indexes. After trading lower during Sunday’s night stocks started the week with losses, it was the Lehman Brothers collapse anniversary, but the early weakness turned into a buying opportunity as the markets recovered and closed with gains. The SP added 6.25 points and settled at 1043.50, the Nasdaq gained 4.50 points closing at 1688.00 and the Russell added 4.70 points closing the day at 595.30. The Dow managed to extend the rally by 21 points closing at 9,626. The bullish sentiment continued into Tuesday’s session, the different economic reports were well received by investors, NY Manufacturing Index was up to 18.9, and Retail sales jumped 2.7% and PPI was up 1.7%.The SP posted its second consecutive close above the 1040.00 area, a positive sign and an indicator of higher prices. Later in the session, Bernanke said that the recession is likely over; this pushed the markets up for a close on the green, new yearly highs for all the indexes.

Wednesday’s session CPI came out up 0.4% and Industrial Production gained 0.8% gave way to another positive session, a slow uptrend developed during the day, new highs, new money into the markets. Thursday’s session was not different, early strength was sold but the markets posted new intraday highs and fluctuated during the day. Housing Starts at the highest in the last nine months, Initial Claims lower than expected and Philadelphia Fed higher than expected gave way to new highs and a flat close. For the day, the SP lost 0.75 points and settled at 1,062.75, the Nasdaq gained 2.25 points finishing the day at 1720.00 and the Russell added 0.60 points closing the day at 614.50. The Dow closed marginally lower by 7 points at 9,783. Friday was quadruple witching expiration, markets fluctuated during all the session, ranges were narrow and the settlements were below fair value. For the day, the SP lost 1.75 points and settled at 1061.00, the Nasdaq added 1.25 points closing the week at 1721.25 and the Russell closed almost unchanged at 614.20. The Dow closed higher by 36 points at 9820. The week was strong and the markets advanced more than 2%.

FRIDAY’S MARKET

Ready for the September quadruple witching expiration and after trading with losses during the Globex session, the E-mini SP started the day at 1067.00 and pulled back to 1063.50. The index bounced back to 1066.25 and failed to break above the early highs giving way to a pullback to 1062.25. With the Russell leading the profit taking move and the Nasdaq trading in negative territory, the SP continued to press lower to the 1060.25 level. The sell off lost its momentum and after a few attempts to break lower shorts covered giving way to a bounce to 1064.75. With intraday low volumes, the indexes fluctuated in a sideways pattern, after testing 1059.75 the index came back and during the last hour of the session reached 1067.00, later, the markets pulled back into the close closing below fair value. For the day, the SP lost 1.75 points and settled at 1061.00, the Nasdaq added 1.25 points closing the week at 1721.25 and the Russell closed almost unchanged at 614.20. The Dow closed higher by 36 points at 9820.

MARKET COMMENTARY AND OUTLOOK

Last Friday I wrote: "During the last two weeks I wrote that if the SP was able to close during two consecutive sessions above the 1040.00 area, the next levels, at 1068.00-1070.00 would probably get reached. It was real easy for that market to move forward reaching its next upside objective, two consecutive days, in a slow but a solid manner, the SP moved higher and reached my upside objective. What is next? First of all, everything indicates that the SP will continue to push upward on its way to close an open gap from last October, that gap is around the 1102.00 area; second, yesterday, after been trading only to the upside for nine days, the rally stalled, once the objective was reached, markets fluctuated and closed moderately lower. Is Friday’s option expiration the reason to take some chips off the table? Or is it that the markets may see some consolidation before they try to close the open gap? Or we have a short term top? There is no evidence that the uptrend has ended, there is no evidence that the trend has changed and the markets will move lower, there is only a one day negative session with moderate losses, so there is no reason to stop buying the dips."

Markets traded strong during the week reaching my 1070.00 area on the SP. As we approach the end of quarter, the risk of a correction seems higher, this correction could take place during the next two or three weeks, also the Dow is getting closer to the 10,000 area that I assume that the first time it gets tested, some selling will be seen.

On the SP, the 1,070.00 area which was slightly exceeded during the week may have posted a high for the next few days, but once that level gets exceeded on a closing base, the way for the 1,102.00 area will be open.

Last Friday I wrote that there is no evidence that the uptrend has ended and that the markets will start to trade lower, however, Friday’s weak close, below fair value may be indicating a first degree correction, that means three to four trading sessions in which selling dominates, if that correction exceed this time window, then we could assume that a short term high has been posted and the markets will trade in a sideways pattern before they resume their uptrend into the end of the year. Also, we could have a few sessions in which the indexes struggle to push down, a pullback that does not push below the 1,038.50 will give a chance to buyers to regroup and push the markets higher.

But if the indexes continue to trade higher without any decent pullback, with this long term buying pressure, then this abnormal uptrend will certainly get resolved with a very strong profit taking move before the end of the year.

On the short term, for today’s trading session, markets may be under pressure as long as the 1067.00 area holds, so selling the bounces below that level may result in a good trade. So in conclusion, we could see the markets trading lower for the next three to four sessions, if that happens and the SP holds the 1038.50 area and the Dow the 9600 level, a great buying opportunity for those who lost the last up leg from the 1040.00 area will be present.

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

1078.50-1080.00

1748.50-1750.00

626.70-628.10

Resistance 3

1073.00-1074.00

1739.25-1740.00

622.30-624.00

Resistance 2

1067.00-1067.50

1730.25-1731.00

618.90-620.30

Resistance 1

1063.00-1064.25

1724.50-1726.00

615.80-616.50

PIVOT

1061.50

1721.50

613.80

Support 1

1059.50-1058.00

1718.00-1716.50

612.60-611.90

Support 2

1055.50-1054.50

1712.50-1711.00

609.70-609.50

Support 3

1051.00-1049.75

1703.75-1702.00

605.30-603.80

Support 4

1044.00-1043.00

1694.75-1693.00

601.20-598.50

S&P

NASDAQ

RUSSELL

FIBONACCI

FIBONACCI

FIBONACCI

1117.69

1805.94

653.9

1098.51

1776.97

640.1

1086.76

1759.22

631.6

1079.50

1748.25

626.3

1075.01

1741.47

623.1

1067.75

1730.50

617.8

1063.26

1723.72

614.6

1061.88

1721.63

613.6

1060.49

1719.53

612.5

1056.00

1712.75

609.3

1048.74

1701.78

604.0

1044.25

1695.00

600.8

1036.99

1684.03

595.5

1025.24

1666.28

587.0

1006.06

1637.31

573.2

DAILY PROJECTIONS

S&P

NASDAQ

RUSSELL

AS DAILY HIGH

1064.00

1734.75

620.30

AS DAILY LOW

1052.50

1717.00

611.80

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.

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