S&P breaks support in correction lower

E-mini S&P 500 (CME:ESU13) breaks a key support level: Equities have begun their correction as the S&P has retreated more than 50 points from the highs with a low last night of 1653.75. We expected a big swing caused by yesterday's data and we got it, the 1666 level held briefly before stops were cleared. The S&P is finding support at the light 1353 level early but with another tremendous lineup of data today that includes Housing and Confidence data look for a clear out of this early low and use the 1647.50 as a buying opportunity ON THE FIRST TEST. We have to realize that a lot of institutional money has scored a large profit this year and we are seeing profit taking ahead of Septembers FOMC meeting as many investors are not sure how a tapering of bond purchases may cause the market to react. A close below 1347 will likely send this market another 20 points lower. If this major support holds we expect a consolidation back up to the major 1666 level, but the market may stay in check in the newly defined range for the next couple weeks. This will be an amazing opportunity for day traders to play the levels.

Resistance - 1666***, 1674*, 1679-81***, 1685.50*, 1695.50***

Support - 1653*, 1647.50***, 1629.25***, 1611.25***

Expiration, geo-risk and "don't go home short into a weekend" may push oil (NYMEX:CLU13) higher today: Crude Oil has continued to remain strong and yesterday's close above $106.91 proves just that as it marked the highest close on this swing. With price action remaining above $107 this session but finding our resistance at $107.52-88, look for this market to stick and trade higher as we head into the weekend. The reality is who wants to be short heading into this weekend with tension mounting in the Middle East. Additionally, we have seen a rally over the last several months as each contract expires. The September contract expires on Tuesday and we expect this to help boost the market as well. A lower close back below $106.91 will be discouraging but only a close back below $105.56-75 will show signs of a failure. A close below$ 104.75-105 will confirm a failure and put the short term bears in control of this market. However, the path of least resistance is higher and the previous highs are at the $108.82-93 level, look for this to come into play in the next two sessions.

Resistance -    107.52-88**, 108.82-93***, 110**, 113.14***

Support - 106.91**, 105.56-75***, 104.79-105***, 103.67-85**

About the Author
Rich Ilczyszyn

Rich Ilczyszyn is Founder and Chief Market Strategist of iiTRADER.com. Rich excels at creating dynamic trading strategies for clients that establish solid positions, while remaining flexible enough to capitalize on market opportunities when they arise. By identifying market trends, breakouts, and failures in a timely fashion, Rich presents clients with the opportunity to realize their objectives while effectively managing their risk.

Rich is featured expert/trader and contributor on CNBC's "Futures Now" Show, and has been quoted in multiple of top-tier publications, including: The Wall Street Journal, Associated Press, Bloomberg News and Reuters.

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