GMAC gets $7.5 billion to fund Chrysler loans; markets close with little change but lower for the session on concerns about the probable GM bankruptcy and next week housing data.
WEEKLY PIVOTS FOR WEEK ENDING 31-July-2009
R3 1008.75
R2 1001.00
R1 993.25
PP 963.50
S1 955.75
S2 948.00
S3 918.25
ECONOMIC DATA
10:00 AM New Home Sales
WEEKLY RECAP
Markets posted another strong week as they continue to push up, Monday’s trading session saw the markets higher as the Leading Indicator report showed a 0.7% increase, up beating earnings gave way to a positive session as the markets closed on the green. Tuesday’s session started with the Bernanke’s testimony, in which he indicated that the FED is still focused on the economic recovery. On the corporate arena, CIT said that it is still considering bankruptcy. For the day, the SP added 4.50 points and settled at 953.50, the Nasdaq closed higher by 14.25 points at 1554.75 and the Russell finished almost unchanged at 524.70. The Dow added 67 points finishing the session at 8915.
Wednesday’s session started on the negative side but early weakness get reversed keeping the uptrend intact, Morgan Stanley wider than expected loss, Wells Fargo bad mortgage loans increased, stocks struggle for direction. Nasdaq extend its rally for the 11th consecutive session but markets closed mixed for the day, the SP lost 4.00 points and settled at 949.50, the Nasdaq added 2.50 points closing the session at 1556.50 and the Russell closed almost unchanged at 524.70. The Dow lost 34 points closing the session at 8881. Markets posted a strong and solid rally during Thursday session as they ignored the increase on the weekly Initial Claims data, ATT, 3M and Ford reported better than expected results, Initial Claims was up to 554K, Continuing Claims lower and Existing Home sales up 3.6%, much better than expected. Markets posted a strong session breaking above the resistance areas. For the day, the SP added 19.50 points and settled at 969.00, the Nasdaq closed higher by 27.50 points at 1584.00 and the Russell closed at 541.60, up 16.90 for the day. The Dow closed with a solid 188 points advance at 9069.
Friday’s Globex session opened with losses, Microsoft weak outlook and Amazon 10% drop in profits kept the indexes under light pressure; the session saw some consolidation of the previous day rally. The Michigan Sentiment reported lower as growing unemployment eroded consumer confidence. However, there was not selling pressure and the indexes managed to come back pushing the futures to a higher close, the SP closed higher by 8.75 points at 977.75, the Nasdaq gained 13.25 points and settled at 1597.25 and the Russell added 6.20 points finishing the session at 547.80. The Dow added another 23 points finishing the week at 9093.
FRIDAY’S MARKET
After trading in a sideways pattern during the Globex session, the E-mini SP started the day at 967.50 and after pulling back to 966.25 it bounced to 969.50. After a few attempts and with the Nasdaq recovering from early losses, the SP reached 972.00. With the NQ failing to break above the Globex highs, the SP pulled back to 968.50 and once the economic report get released, the index pushed lower to 964.00 from where it bounced to 967.25. While trying to decide its direction, the index reached 968.00 and once more pulled back. The SP tested the Globex lows at 962.50. The markets held and the SP slowly rallied reaching 971.00, after pulling back to 968.00 and once it broke the 971.00 level, the index pushed up to 974.50, later, the index traded in a narrow range near the highs and reached 975.00.
Finally, during the last half hour of the session, the markets broke higher reaching new highs. For the day, the SP closed higher by 8.75 points at 977.75, the Nasdaq gained 13.25 points and settled at 1597.25 and the Russell added 6.20 points finishing the session at 547.80. The Dow added another 23 points finishing the week at 9093.
MARKET COMMENTARY AND OUTLOOK
The rally continues with no signs of weakness and, as I pointed during the last few sessions, it seems that it will be able to push higher, there is not evidence that the move ended. I mentioned that the SP will have to show a pullback, which only if it exceed a three day period, may indicate that the rally has ended and the markets will trade in a sideways pattern.
But there area also other ways in which the rally could end, one of them, every time that the market close on the high it could show signs that the buying has exhausted, but in this case, we have seen during the last few sessions, many closes at or near the daily high, so I can not assume that this pattern of trend was exhausted by last Friday settlements.
Another way in which a move could end, is a wide opening gap (in this case an upper gap) in the same direction of the trend, that gap gets reversed and the market closes in the red; that could be an indication, normally it gets followed by a weak rally, that rally, if it fails to post a new high, and the next sessions the market starts to trade with losses, may indicate that a short term top has been posted.
We have not seen any signs that the rally has ended, markets tend to exaggerate their moves, and this one, could get extended. At this point is highly risky to take short, unless you want to catch a high by posting a stop loss order just above the late high. I personally prefer to stay with this strong trend until I see some signs of a correction.
For today’s trading session, beware of a wide up opening gap, wait to see if the index retreats and then on signs of support get long. If the opening does not show any strong move, wait for the first pullback in order to try to enter long, short trades, lets be careful and wait and see how the session take place. The recent pattern may continue to play.
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
989.50-990.00
1618.00-1619.25
558.90-560.20
Resistance 3
986.00-986.50
1612.00-1612.50
555.80-556.80
Resistance 2
982.50-983.50
1605.50-1607.00
553.80-554.00
Resistance 1
979.25-980.50
1600.00-1602.00
548.80-550.90
PIVOT
973.00
1589.75
544.60
Support 1
974.50-973.25
1594.00-1592.00
545.70-544.70
Support 2
970.00-968.50
1588.00-1586.50
542.10-540.60
Support 3
963.00-961.50
1583.00-1581.00
537.50-536.60
Support 4
958.00-956.50
1575.00-1573.00
533.40-532.80
S&P
NASDAQ
RUSSELL
FIBONACCI
FIBONACCI
FIBONACCI
1049.13
1720.31
596.2
1022.20
1674.21
577.9
1005.70
1645.96
566.7
995.50
1628.50
559.8
989.20
1617.71
555.5
979.00
1600.25
548.6
972.70
1589.46
544.3
970.75
1586.13
543.0
968.80
1582.79
541.7
962.50
1572.00
537.4
952.30
1554.54
530.5
946.00
1543.75
526.2
935.80
1526.29
519.3
919.30
1498.04
508.1
892.38
1451.94
489.8
DAILY PROJECTIONS
S&P
NASDAQ
RUSSELL
AS DAILY HIGH
986.50
1612.00
553.80
AS DAILY LOW
970.50
1584.50
542.60
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.