GDP and Initial Claims as expected and a volatile session in crude oil, which got reversed from its highs losing more than $4 dollars per barrel, resulted in a positive session in the U.S. markets.
ECONOMIC DATA
8:30 AM Personal Income
8:30 AM Personal Spending
8:30 AM PCE Core Inflation
9:45 AM Chicago PMI
10:00 AM Michigan Sentiment – Rev.
YESTERDAY’S MARKETS
U.S. equity indexes ended with gains for the third consecutive session. The E-mini S&P opened at 1388.75 and bounced immediately to 1393.00. The index pulled back twice to check the opening price posting a double bottom once crude oil inventories were released. Despite the huge spike in crude oil prices, the equity indexes started to move up with strength and momentum. The E-mini S&P reached 1399.25 pulled back a couple of points and finally traded at 1401.00. Another slightly pullback was bought and the index rallied strongly to 1405.50. The rally stalled at that level but short covering kept pressing prices to the upside and finally the E-mini S&P made its daily high at 1407.00 while the E-mini Nasdaq reached 2033.00 and the E-mini Russell 751.50. Finally the momentum vanished and the indexes gave up more than half of their gains into the close. At the end of the day, the E-mini S&P advanced 6.25 points closing the session at 1397.75, the E-mini Nasdaq that kept leading the markets, closed at 2023.00 adding 18 points for the day and the E-mini Russell traded higher closing the session at 744.90 plus 6.40 points.
MARKET COMMENTARY AND OUTLOOK
Yesterday I wrote: “Yesterday was the second straight session that the markets advanced, and it is possible that the E-mini S&P will test the waters just above the 1400.00 area, and then, will know if a potential head and shoulders pattern has been formed or the consolidation between the 1370.00-1440.00 areas will continue for the next few weeks. If this scenario is correct we should see more choppy action with trade opportunities on both sides of the range, but with increased risk, so keeping tight stops is a good idea. Today, we’ll get the GDP preliminary numbers and the crude inventories, both are extremely important and they could result in a “make or break” session. Keep in mind that this situation could also result in a trend day, so if after the first hour of trading, once the crude inventories get released, the index reverses, I will trade against that first hour low or high and stay with the trend. I still favor the upside as I consider that last week’s sell off was too fast and has left trapped a lot of shorts around the 1370.00 area. So the situation is unclear, as yesterday’ rally seems weak and it could get reversed to resume a fast downtrend, but additional upside momentum on the E-mini Nasdaq and a potential sell off on Crude oil could give the power to the E-mini S&P and Dow to move higher.”
The markets continued to press higher and my strategy to buy all the time that the first hour lows holds, gave us some nice profits. Yesterday’s late pullback, has posted a short term top until/unless the indexes can trade higher. The end of month bullish bias, the bunch of economic data to be released before and after the opening, should give as an interesting session, where I assume trading both sides of the range will be the way to play today’s session. I think that the markets will be able to hold and close the month near the 1400.00’s on the E-mini S&P, but if I am wrong and after three days of rally, the indexes break below my second support levels, I will be very cautious with the long side. Furthermore, I will be starting the day with a slightly bearish bias but I won’t overstay in my position if I get short as I suspect there will be some buying around the 1390.00’s on the S&P’s. Looking at the cash Dow, if that index is not capable to trade and hold above the 12,750 area, then a test of the 12,500-12,350 levels could be seen early next week.
In conclusion, I don’t expect too much to the upside at these levels and I will try to trade both sides of the market as the end of month bias should be able to keep a choppy action without any serious sell off.
TODAY’S SESSION
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TODAY’S SUPPORT, PIVOT AND RESISTANCE LEVELS
S&P
NASDAQ
RUSSELL
Resistance 4
1417.50-1418.75
2048.00-2050.00
759.60-760.20
Resistance 3
1411.00-1412.50
2039.00-2040.50
753.80-754.50
Resistance 2
1407.50-1408.75
2033.00-2034.50
749.70-750.50
Resistance 1
1401.50-1403.25
2027.00-2029.00
746.40-747.90
PIVOT
1397.50
2018.50
743.90
Support 1
1396.00-1394.50
2016.00-2014.75
741.90-740.40
Support 2
1392.00-1391.00
2010.00-2008.00
736.80-735.50
Support 3
1387.25-1386.50
2003.00-2001.00
729.90-728.50
Support 4
1381.00-1379.50
1993.50-1992.00
724.30-723.50
S&P
NASDAQ
RUSSELL
FIBONACCI
FIBONACCI
FIBONACCI
1439.76
2086.80
777.71
1434.99
2078.95
773.89
1427.25
2066.25
767.70
1419.51
2053.55
761.51
1414.74
2045.70
757.69
1407.00
2033.00
751.50
1399.26
2020.30
745.31
1396.88
2016.38
743.40
1394.49
2012.45
741.49
1386.75
1999.75
735.30
1379.01
1987.05
729.11
1374.24
1979.20
725.29
1366.50
1966.50
719.10
1358.76
1953.80
712.91
1353.99
1945.95
709.09
DAILY PROJECTIONS
S&P
NASDAQ
RUSSELL
AS DAILY HIGH
1412.50
2044.25
756.30
AS DAILY LOW
1392.25
2011.00
740.10
Support, Pivot and Resistance levels courtesy of Arturo Stern. He authors the E-mini Daily trading advisory which gives technical analysis on all 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.