E-mini trading advisory

U.S. equity markets decline during the week as record oil prices hit consumers. On Friday, AIG reveals need for cash and FedEx cuts its profits forecast.

 

WEEKLY PIVOTS FOR WEEK
R3 1482.00
R2 1440.00
R1 1412.25
PP 1398.25
S1 1372.00
S2 1356.50
S3 1330.00

 

ECONOMIC DATA
2:00 PM Treasury Budget

WEEKLY RECAP
A difficult week for U.S. markets as the equity indexes ended lower and failed to sustain their recent gains. After making its high on May 2 , the markets started the week with a qui e t Monday where stocks were under pressure during all of the session. Microsoft pulling out its offer to buy Yahoo, UBS 1Q loss exceeding $11 billion, and Countrywide continued problems weighted more than the better than expected ISM services data. The session was extremely quite for the day, the E-mini S&P 500 lost 7.50 points and settled at 1408.25, the E-mini Nasdaq ended lower by 9.75 points at 1980.50 and the E-mini Russell closed the session at 723.90, minus 3.70 points for the day. The Dow cash ended the session at 12969 with a loss of 88 points.

Tuesday, the markets opened lower after Fannie Mae came out with a wider loss than estimated, crude oil hitting new record prices and U.S. business bankruptcy filings in April increased by 49 % from a year earlier. However, the markets managed to rally on the expectation of better that expected earnings from CISCO due to be announced after the close. For the session, the E-mini S&P 500 gained 12.50 points and settled at 1420.75, the E-mini Nasdaq , which rallied strong after the intraday lows ended the session higher by 18.50 points at 1999.00 and the E-mini Russell settled at 730.00, up 6.10 points. The Dow cash closed once more above the 13000 area at 13020 with a gain of 51 points.

Wednesday’s session the markets reversed all of Tuesday’s gains and broke down back bellow the 1400.00 technical point . The U.S. equity indexes sold off on record oil prices. Productivity was up 2.2% , but Pending Home Sales contracted another 1%.For the session, the E-mini S&P 500 lost 25.50 closing at 1395.25, the E-mini Nasdaq gave up 38.50 points finishing at 1960.50 and the E-mini Russell settled at 717.80, minus 12.20 points. The Dow cash closed near its first daily support level at 12814 with a loss of 206 points.

Thursday’s session the indexes started to consolidate the and managed to holds the previous day lows, but failed to gain any upside momentum, Initial Claims were down at 365K and Wholesale inventories decreased by .1% . Crude oil made another record high adding concern to the markets, for the day, the E-mini S&P 500 lost 3.25 and settled at 1392.00, the E-mini Nasdaq managed to close on positive territory at 1965.00, plus 4.50 points and the E-mini Russell closed at 713.00, losing 1.30 points. The Dow cash closed at 12866 up 52 points. The pullback and new highs for the crude oil continued into Friday. In another tight range session, with extremely low volumes the indexes traded on a sideways pattern and indecision about the next move. AIG wider than expected loss and Citigroup announcing its plan to sell $400 billion in non core assets showed the difficult situation on the financial sector that fell 6.3% for the week. For the session all the indexes were under pressure and by the end, the E-mini S&P 500 lost 3.00 points at 1389.00, the E-mini Nasdaq was down by 1.75 points at 1963.25 and the E-mini Russell settled at 719.10, plus 3.2 points for the day. The Dow cash settled at 12745 with a loss of 120 points, near the critical 12700 support level. For the week the S&P was down 1.8% and the Dow cash 2.4%.

 

FRIDAY’S MARKETS
Markets opened lower in another sideways consolidation session. The E-mini S&P 500 opened at 1385.25> after holding above our support levels and unable to reach the Globex lows at 1381.75, the index bounced reaching the 1388.50 area. Another pullback, which held support at 1385.25, resulted in a double bottom. Unable to push lower the index finally broke up above 1389.00 and rallied to make its daily high 1393.25. the lack of volume and the absence of buyers failed to move higher and the E-mini S&P 500 get sold testing the 1385.50 area, the index bounced a few points but the move was met with selling and the index pushed down to 1384.25. Once more, shorts covered and another bounce, this time to 1389.50. As all the up moves, the indexes failed to gain momentum and pulled back to 1386.75. A quick move to the upside reached 1393.00 and unable to make a new high the double top was sold but the indexes bounced a little bit into the end. The E-mini S&P 500 lost 3.00 points closing at 1389.00 , the E-mini Nasdaq closed down by 1.75 points at 1963.25 and the E-mini Russell settled at 719.10 , plus 3. 2 points for the day. The Dow cash settled at 12745 with a loss of 120 points, near the critical 12700 support level. For the week all the indexes were down.

 

MARKET COMMENTARY AND OUTLOOK
Last week I wrote: “ Well, the markets have reached a short term high, that I suspect will hold for a few days. The index reached my 1424.00 upside objective and has confirmed , as the Dow cash, the upside breakout . W e have enter a market period where all the pullbacks will be a good buying opportunity all the time that the E-mini S&P 500 does not close for two consecutive sessions bellow the 1400.00’s and the Dow cash stays above 12800 . Breaking bellow those levels will point to a test of the 1380.00 on the E-mini S&P 500 and 12650 on the Dow cash. This upside move will have to get consolidated before the markets enter in a new wave, will it be another up leg, or a correction? I certainly don’t know , but I think that the indexes can move higher at least to the 1450.00’s on the E-mini S&P 500 before we have a decent correction. ” For those who hold a position for a longer period that the day trading activity, Friday’s highs have the chance to be the “highs” and we can expect that the indexes will setback moderately during the next couple of days, but we can not assume that the trend has changed.”

This pullback has the E -mini S&P 500 near the 1380.00 area and the Dow cash has closed already one session bellow 12800 in its way to the KEY support level at 12700, this level should be pivotal and if that index manage to hold above it, new highs will be seen soon in all the markets. Friday’s low on the E-mini is the first red light in this retracement from the last high, and if the index will break that support, sellers will start to press lower for a test of the 1370.00 area, level that if it gets broken will mark the end of the rally and point to much lower prices. So anything bellows 1380.00 will start to look bad. I can tell in favor of the bulls, that Friday’s close held above the38.2 Fibonacci retracement from the April 1324.75 low to the may 1324.75 high, and this down move can be considered a first degree pullback. Not only that, after Wednesday’s reversal from the highs, the down move been a struggling one, with very low volume , so it’s not that there is selling, it’s the absence of buying which has bring the markets down . This week is full of economic data from Retail Sales to CPI and Housing starts, and then we have the May option expiration on Friday, so expect volatility. Keep a close eye also on the crude oil futures as a profit taking there after 5 consecutive closes at new highs, could give the equity indexes the reason to complete this up leg that should reach prices near to 1450.00 by the end of the month. For today, the market s should start to show some buying interest after last week pullback or the risk for another wide range down day will be present, and if that happens, the downside could gain momentum. Monday’s is usually a low volume session, and the economic data starts to flow on Tuesday, so another consolidation session with an upside bias is what I am expecting, all the time that the E-mini S&P 500 holds above the 1380.00 support level I will be buying the breaks. May is usually a strong month for the markets, and I think this year will run higher during the next few weeks.

 

For today’s trading roadmap and intraday updates, please read the authors bio.

 

 

 

 

 

Support, Pivot and Resistance levels courtesy of Arturo Stern. He authors the E-mini Daily trading advisory which gives technical analysis on all of 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.