DAILY TRADING ADVISORY 29-June-2009

Personal Income up 1.4% on stimulus checks and Personal Spending up .3%, Consumer sentiment slightly better than expected; markets fluctuated in a narrow range.

WEEKLY PIVOTS FOR WEEK ENDING 03-July-2009

R3 940.00

R2 933.25

R1 917.00

PP 905.75

S1 894.75

S2 881.00

S3 870.50

ECONOMIC DATA

None

FRIDAY’S MARKET

With the markets trading quietly during the night, the E-mini SP started the session at 913.50 and after making an early low at 910.50 it bounced back to 914.25, pulled back a couple of points and leaded by the Nasdaq which turned positive pushed up to 916.25. The SP pulled back to 912.50 bounced to 915.00 and pushed lower to 909.75. The markets held and the SP bounced back to 914.50 but failed to break higher and pulled back once more to the lows. After posting a new marginal low at 909.50 the index managed to post a feeble bounce but failed once more to push higher and made a new low at 908.50. With the Nasdaq holding, the SP continue to trade above the pivot point and bounced to 914.50. After trading for many hours on a narrow range, the SP made a breakout attempt that reached 916.00 but failed to gain the necessary momentum and kept trading between the daily ranges, for the day, the SP lost 2.50 points and settled at 914.00, the Nasdaq added 3.75 points closing the session at 1476.75 and the Russell closed higher by 1.40 points at 507.10. The Dow lost 34 points closing another negative week, Friday’s settlement at 8438.

MARKET COMMENTARY AND OUTLOOK

Last Friday I wrote: “The SP failed short of the 918.00 area, the Dow couldn’t make it to the 8500 level and the Nasdaq stalled at the 1473.00-1475.00 resistance levels. All these are very important price levels, for the rally to continue into the end of the month, all three markets have to close above them, otherwise, yesterday’s rally may give way to a consolidation or narrow range session during today’s trading session and maybe for the rest of the month. If we look at the daily charts we can see the huge sell off that happened last Monday that came after three days of a weak rally and that pushed markets to a new low, below the June 17 low, then we have a narrow range session with a positive close and then two positive sessions with yesterday’s solid move. So three days up, a one day sell off and another three days of rally. This may look positive, but for the move to get extended and not fall under a first degree countertrend in a down trending market, a few things have to happen, first, if today markets consolidate yesterday’s big move, it will be normal, but the close can not be weak, even taking into account that it is a Friday and traders may avoid a long position for the weekend; second, nothing good happens if the SP does not break and close above the 918.50 area; and third, the June 16 924.75 on the SP from where the recent pullback gained momentum has to get exceeded in a solid way. Yesterday’s rally looks a bit different, volumes were better and the Dow joined the move, so I will be very surprised if today’s session reverses yesterday’s gains, but we could see back and forth action between the 908.50 area and the 918.50 break or made high.”

Markets consolidated the previous session strong rally and they traded in a narrow range closing mixed for the day, the strength in the Nasdaq helped the SP, the low for the session was at my 908.50 and the Globex high was just half point above my 918.50 level.

Last week sell off attempt may have not ended yet, the SP is facing two strong resistance areas, the first one around the 918.00 area and the second one on the 924.00-926.00 band; for this market to give a try at the 950.00 area or higher, the index has to close above those areas, until then, there area great chances that last Monday’s lows or a bit lower will get tested.

This week is full of economic data, is also a shortened holiday week as markets will be closed next Friday for an extended weekend honoring the Independence Day, so the main economic numbers, the unemployment figures will get released next Thursday. Also we have the end of the second quarter, I suspect that fund managers will try to keep the markets at reasonable levels and the markets will rebound if there are some daily or intraday sell offs. Additional to this, as the unemployment figures are a lagging indicator, I think that bad economic data will get accepted by the market players and the markets will hold, at least for the week.

Saying this, early weakness or a weak close on Monday, may turn to be a buying opportunity for the rest of the week, and maybe, the SP will show more consolidation between the 900.00 and 925.00 levels, but take into account that initial weakness will be present below the 908.50 to 905.75, and it could see additional selling coming into the markets if that index trades below 898.00-896.00.

TODAY’S SESSION

There is resistance at 918.00-919.00 on the SP, 1480.00-1482.00 on the Nasdaq and 509.00-509.90 on the Russell, those levels on the SP are critical for that market to push up, if the Nasdaq is strong it may help the SP to push higher and test 924.00-925.00 while the NQ reaches 1486.00-1488.00 and the Russell 512.10-512.70. Those areas on the SP may fail the first time they get tested; many sellers are ready to take a chance there, however, if they get exceeded look for the indexes to press higher reaching 928.00-929.50 on the SP, 1492.50-1494.00 on the Nasdaq and 517.30-518.50 on the Russell.

There is some support above Friday’s consolidation levels at 912.00-911.00 on the SP, 1473.50-1471.75 on the Nasdaq and 505.20-504.30 on the Russell. Failing there may result in a test of last Friday’s lows at 908.50-907.50 on the SP, 1466.00-1464.00 on the Nasdaq and 501.90-501.50 on the Russell. If buyers do not step in there and the markets post a double bottom, expect the selling to get some momentum pushing the indexes down to 904.25-903.25 on the SP, 1457.50-1456.00 on the Nasdaq and 497.50-496.80 on the Russell. If the markets trade below them we may see another wide range downward session. GOOD LUCK.

TODAY’S SUPPORT, PIVOT AND RESISTANCE LEVELS

S&P

NASDAQ

RUSSELL

Resistance 4

935.00-936.00

1501.75-1504.00

522.10-523.70

Resistance 3

928.00-929.50

1492.50-1494.00

517.30-518.50

Resistance 2

924.00-925.00

1486.00-1488.00

512.10-512.70

Resistance 1

918.00-919.00

1480.00-1482.00

509.00-509.90

PIVOT

913.75

1474.00

506.90

Support 1

912.00-911.00

1473.50-1471.75

505.20-504.30

Support 2

908.50-907.50

1466.00-1464.00

501.90-501.50

Support 3

904.25-903.25

1457.50-1456.00

497.50-496.80

Support 4

898.00-896.00

1444.00-1442.00

492.00-490.60