DAILY TRADING ADVISORY 29-May-2009
Initial Claims lower than expected at 613K, Continuing Claims at its highest level since 1967 and Durable Good Orders up by 1.9%, New Home Sales up .3% less than expected, markets rallied, sold off and recovered after solid demand at a Treasury auction eased fears that the appetite for U.S. debt would dry up and force the government to pay higher interest rates to entice.
ECONOMIC DATA
8:30 AM GDP-Prel.
8:30 AM GDP Deflator
9:45 AM Chicago PMI
9:55AM Michigan Sentiment-Rev.
YESTERDAY’S MARKET
Markets started the day on the green, the E-mini SP started the session at 899.75 and after reaching 902.50 and pulled back to 898.50, after bouncing to 901.50 and pulling back to 898.75. Once the 898.00 area get broken the downside gained momentum pushing the SP to 892.50 and to 886.25.The SP bounced to 890.00, backed off to test the lows and rallied all the way up to 898.25, just at our updated resistance area. After a feeble pullback to 896.25 and once the Nasdaq broke above 1408.00, the SP reached 901.50. Unable to reach the early highs, the SP pulled back to 896.00. After holding near that area for a while it pushed lower to 891.75. Once the bond auction results get announced the SP rallied to new highs reaching 905.50, the index pulled back to 899.00 and rallied to a new intraday high at 908.75. After pulling back to 902.00 the SP tested the highs, pulled back once more to the 902.00 level. The markets held and traded in a narrow range above the 902.00 area on the SP into the close. For the day, the SP added 12.50 points and settled at 905.00, the Nasdaq ended higher by 14.25 points at 1418.25 and the Russell lagged but managed to close in the green at 489.90. The Dow closed higher by 103 points at 8403.
.
MARKET COMMENTARY AND OUTLOOK
Yesterday I wrote: “Markets consolidated posting a marginal new high, but the SP failed to trade above last week 915.75 and failed to hold the gains. Yesterday’s failure to show more upside follow through to Tuesday’s rally is a repetition of what has happened during the current month, the same pattern that we have seen after solid rallies during the last three weeks and since the high, posted on the first week of May, was repeated, no good, the SP has been sold off. We have two lower highs on the SP daily chart, the Dow is still having its problems around 8500 and the Nasdaq which has been the strongest of all the indexes, has not been able to break above the 1435.00 May’s high, also a topping picture. The main indexes may be in their process of topping, but after the 60 day’s rally it seems to be early for a turnover and fast drop so they may be able to continue with this sideways pattern in which the recent highs may be broken or the markets will finally trade lower. Yesterday’s close near the lows, after the huge rally continue to post exhausting sessions, when the markets move up or down, so once more, only when the markets will show some solid follow through we could call for higher prices or for the resume of the downtrend. Today’s economic data and the expected bond auction should dictate the price action, I may favor some rebound all the time that the 886.50 area on the SP remains intact.”
The SP has traded in a 50 points range during all the month and during this week higher lows and lower highs have been posted on the daily chart. The sideways pattern that has been formed and that may be printing a triangle formation will have to get resolved during the next 10 sessions, unless there is a clear breakout before that time window. The volatility seen at the highs may be signaling that a sizeable correction is on the cards, and that correction may be able to push the SP lower to the 830.00 level, but this is only a possibility as right now there is not clear evidence that this will happen.
On the other side of the coin, the Nasdaq, which has been the leading force of the rally from the March lows is trading near the most recent highs, and if that index starts to press higher, the other markets may follow it. A move like this one, could give way to a new high on the SP and another test of the 8600 area on the Dow.
There is a bunch of economic numbers to get released tomorrow, before and after the opening, the end of month traditional bullish bias, may keep the markets afloat despite what the numbers said, the GDP which showed a 6.1% decline the last quarter, if comes out better than expected could spark a strong rally that maybe this time will hold.
Remember that all the indexes are facing strong resistance levels, SP at 911.00 and 918.00, the NQ at 1430.00-1435.00, the Russell just above 502.00 and 510.00 and the Dow 8500 and 8600, so take into consideration that many stops may be building above those levels.
For today’s trading session, if the SP holds the 900.00 area, a new weekly high may get posted and possibly, a new high for the SP, so I will try to be a buyer down there once the selling dries, or I will get long above 902.50 on a reversal from lower prices after the first 90 minutes of the session.
TODAY’S SESSION
There is resistance just above yesterday’s highs at 907.00-909.00 on the SP, 1423.00-1424.50 on the Nasdaq and 491.40-492.10 on the Russell, trading above them may push the markets higher to 911.75-913.50 on the SP, 1429.00-1431.00 on the Nasdaq and 493.70-494.80.those areas on the SP and Nasdaq are around the weekly highs, so expect some resistance up there, but if the markets are trading solid, expect the rally to continue pushing the indexes up to 917.50-918.50 on the SP, 1437.50-1439.00 on the Nasdaq and 497.50-498.60 on the Russell.
There is support at 902.00-900.75 on the SP, 1412.00-1410.00 on the Nasdaq and 486.70-485.30 on the Russell, those were strong support during the last hour of yesterday’s session, so if the markets hold there, then new weekly highs may be seen for the SP, failing there will indicate a test of 898.00-896.00 on the SP, 1404.00-1402.00 on the Nasdaq and 482.90-481.50 on the Russell. If those can not hold, then the pullback will press the markets lower to 885.50-884.00 on the SP, 1396.00-1394.00 on the Nasdaq and 477.60-475.80 on the Russell. If those fail, then a strong negative Friday may be in the cards. GOOD LUCK.
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TODAY’S SUPPORT, PIVOT AND RESISTANCE LEVELS |
|||
|
S&P |
NASDAQ |
RUSSELL |
|
|
Resistance 4 |
922.50-924.00 |
1445.00-1446.50 |
501.30-503.00 |
|
Resistance 3 |
917.50-918.50 |
1437.50-1439.00 |
497.50-498.60 |
|
Resistance 2 |
911.75-913.50 |
1429.00-1431.00 |
493.70-494.80 |
|
Resistance 1 |
907.00-909.00 |
1423.00-1424.50 |
491.40-492.10 |
|
PIVOT |
900.00 |
1410.50 |
488.50 |
|
Support 1 |
902.00-900.75 |
1412.00-1410.00 |
486.70-485.30 |
|
Support 2 |
898.00-896.00 |
1404.00-1402.00 |
482.90-481.50 |
|
Support 3 |
892.50-891.50 |
1396.00-1394.00 |
477.60-475.80 |
|
Support 4 |
885.50-884.00 |
1386.25-1385.00 |
472.30-471.10 |
|
S&P |
NASDAQ |
RUSSELL |
|
FIBONACCI |
FIBONACCI |
FIBONACCI |
|
1004.38 |
1573.00 |
566.7 |
|
967.66 |
1515.88 |
539.6 |
|
945.16 |
1480.88 |
523.0 |
|
931.25 |
1459.25 |
512.7 |
|
922.66 |
1445.88 |
506.4 |
|
908.75 |
1424.25 |
496.1 |
|
900.16 |
1410.88 |
489.8 |
|
897.50 |
1406.75 |
487.8 |
|
894.85 |
1402.62 |
485.8 |
|
886.25 |
1389.25 |
479.5 |
|
872.35 |
1367.62 |
469.2 |
|
863.75 |
1354.25 |
462.9 |
|
849.85 |
1332.62 |
452.6 |
|
827.35 |
1297.62 |
436.0 |
|
790.63 |
1240.50 |
409.0 |
|
DAILY PROJECTIONS |
S&P |
NASDAQ |
RUSSELL |
|
AS DAILY HIGH |
918.00 |
1438.75 |
501.40 |
|
AS DAILY LOW |
895.50 |
1403.50 |
484.40 |
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