Stock indexes stabilize after yesterday’s correction

Equities continued a correction through yesterday's session but have since seemed to stabilize. The S&P (CME:ESZ13) reached a low of 1774.50 following the release of yesterday's FOMC minutes, finding support at our major three star level and allowing traders to jump in for a great trade opportunity as noted here yesterday. After trading through the 1782-85 level yesterday, the market has used this as a resistance range heading into this morning. Even though data out of Europe and China missed expectations last night, the S&P has been able to consolidate higher. Traders will be awaiting PPI and Weekly Jobless Claims this morning in what should trade as a "good news is good news" atmosphere since this is a weekly gauge on jobs and the minutes have already been digested. The 20-day moving average comes in at 1768.50 and a new low and a close below here will help signal that the immediate momentum is dying out. The next major support level is 1757 and this must hold to avoid a more significant, but healthy, correction.

Resistance - 1782-85**, 1793.75-96***, 1800*, 1810-12.50***

Support - 1774.50-76***, 1768.50**, 1757***, 1742*

Crude oil (NYMEX:CLF14) is trading slightly higher this morning and nearly $1 off of the $93.47 lows last night. Crude has been building a small trend of higher lows in recent days as it looks to consolidate higher. Inventories showed a smaller build than expected yesterday and gasoline inventories showed a slightly larger draw than expected. The trend of large builds has been broken for three consecutive weeks now. We are looking for slightly higher prices as a great opportunity to short this market. Crude has failed to close above $94 all week and a close above $94.13 will be significant in signaling a consolidation slightly higher. Still, major resistance comes in at $94.94-$95.15 at previous highs and the 20-day moving average at $95.26. This level will pose significant headwind and could be looked to sell against today. Only a close above here could ultimately signal a further correction as we head into Friday and as we always mention, traders are more inclined to close shorts and speculate long into a weekend.

Pivot - a close above 94.05-94.13 will signal a consolidation higher

Resistance - 94.94-95.15**, 95.55*, 95.74**, 96.70-96.92***

Support - 93.17***, 91.50-91.60*, 90.40**, 85.46***

About the Author
Rich Ilczyszyn

Rich Ilczyszyn is Founder and Chief Market Strategist of 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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