DAILY TRADING ADVISORY 30-July-2009

Durable Good orders down 2.5%, overseas markets sell off and Fed’s Beige book pointing that some stabilization has been seen in some regions gave way to a narrow range session with moderate ,losses.

ECONOMIC DATA

8:30 AM Initial Claims

YESTERDAY’S MARKET

After trading under pressure during the Globex session, the E-mini SP started the day at 969.50 and after testing 968.50 it bounced to 971.00, unable to break higher and with the other indexes under pressure, the SP pulled back to 966.50, just above yesterday’s lows. The index held, and leaded by the NQ it pushed up all the way to 975.00, the short covering rally failed and the SP pulled back to 969.00 and after two failed attempt to break above 973.00 it sold off to 966.25, just above the previous session low. While trading in the range, the SP bounced to 972.00 and as the release of the Beige book approached the index pushed lower to a new marginal low at 965.25. Once more the SP held and bounced to 970.50, but after holding near that area, it failed and pushed lower to 965.50 from where a late rally started. The SP and the other markets came back, for the session, the SP lost 1.00 point and settled at 975.00, the Nasdaq ended lower by 1.50 points at 1600.00 and the Russell lost 2.10 points finishing the session at 547.50. The Dow lost 26 points closing the session at 9070.

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MARKET COMMENTARY AND OUTLOOK

Yesterday I wrote: “But the chart is the only valid tool, and if we consider yesterday’s negative close as the first down day of a correction, I may recall that a profit taking move can not exceed more than 3-4 trading sessions or the chances that a short term top has been posted will be in play. My favorite scenario continues to be bullish, the great come back seen on the Nasdaq which has been the leading force in this rally was impressive during yesterday’s session, and unless that index starts to trade lower, I don’t see a reason why higher prices won’t be seen. Meanwhile unless that happens, buying the dips continues to be the way to go, during today’s trading session, more volatility may be seen, late in the session we have the latest Fed’s beige Book report, certainly that will move the markets.”

Downside pressure and narrow trading ranges continued to be what the markets showed during the last two sessions. Once more the session saw some sell off attempts that get resolved with limited bounces that at the end pushed the markets to a close with only moderate losses.

Monday the market closed slightly higher and at the highs, giving way to some short term exhaustion, Tuesday and Wednesday, the indexes stood under pressure, they failed to trade settlement, a bearish sign, but the selling pressure failed to gain the necessary momentum, the opposite, some buying was seen on the pullbacks. The 3-4 session pullbacks that I wrote about is taking place in perfect order, markets are struggling to push down, HOWEVER, the SP is trading against Monday’s high and all the time that that level does not get exceeded, there is chance of a stronger correction. The Nasdaq, the stronger of all the indexes, have found strong resistance at the 1600.00-1608.00 band.

So the markets are at an important point, or they continue with this rally, or they start to trade down calling a short term top. For the rally to resume, markets may avoid a wide range negative session, which will look problematic for the bulls, if it happens, it could be followed by a failed rally and a new low, and then the rally may be over. On the other side of the coin, this narrow range sessions will have to get resolved with a wide range session, and if the indexes break higher, then the way will be open for the SP to test the 1000.00 area and higher. The conclusion is that despite the toping signs, the uptrend remains intact and in a strong position.

Today’s trading session is very important, even that a definition of this consolidation could take a few more days, the move could happen today. During the last sessions we have not seen a trend session, so if today, a low or a high are posted during the first 60 minutes of the session, don’0t fight the trend, stay with it.

TODAY’S SESSION

There is resistance at 975.50-977.00 on the SP, 1602.75-1604.00 on the Nasdaq and 549.10-550.50 on the Russell, all the time that the markets are trading below them, shorts area quite, but if the indexes break higher look for a test of Monday’s highs at 979.00-980.50 on the SP, 1608.25-1610.00 on the Nasdaq and 551.80-552.40 on the Russell. If finally bulls regain control, look for the markets to press higher reaching 983.50-984.00 on the SP, 1613.50-1615.00 on the Nasdaq and 554.80-556.10 on the Russell.

There is support at 973.00-972.00 on the SP, 1596.00-1594.50 on the on the Nasdaq and 545.70-544.40 on the Russell. If the markets trade lower look for a test of the important 970.00-968.50 on the SP, 1591.00-1589.00 on the Nasdaq and 542.10-541.20 on the Russell. I think I already wrote it during the week, if those hold, we could see a good rally to new highs, but if that not happens and the intraday selling pressure continues, look for the markets to push lower and reach 965.00-963.50 on the SP, 1582.00-1581.00 on the Nasdaq and 539.00-538.20 on the Russell. A close below those areas that does not get reversed the next session could give way to lower prices during the next few days. GOOD LUCK.

TODAY’S SUPPORT, PIVOT AND RESISTANCE LEVELS

S&P

NASDAQ

RUSSELL

Resistance 4

988.50-989.50

1624.00-1625.00

558.50-559.80

Resistance 3

983.50-984.00

1613.50-1615.00

554.80-556.10

Resistance 2

979.00-980.50

1608.25-1610.00

551.80-552.40

Resistance 1

975.50-977.00

1602.75-1604.00

549.10-550.50

PIVOT

971.50

1596.75

546.50

Support 1

973.00-972.00

1596.00-1594.50

545.70-544.40

Support 2

970.00-968.50

1591.00-1589.00

542.10-541.20

Support 3

965.00-963.50

1582.00-1581.00

539.00-538.20

Support 4

961.00-959.50

1575.00-1573.00

535.60-534.80

S&P

NASDAQ

RUSSELL

FIBONACCI

FIBONACCI

FIBONACCI

1047.38

1720.63

593.4

1022.08

1677.38

577.4

1006.58

1650.88

567.6

997.00

1634.50

561.5

991.08

1624.38

557.8

981.50

1608.00

551.7

975.58

1597.88

548.0

973.75

1594.75

546.8

971.92

1591.62

545.6

966.00

1581.50

541.9

956.42

1565.12

535.8

950.50

1555.00

532.1

940.92

1538.62

526.0

925.42

1512.12

516.2

900.13

1468.88

500.3

DAILY PROJECTIONS

S&P

NASDAQ

RUSSELL

AS DAILY HIGH

978.75

1618.00

555.60

AS DAILY LOW

963.50

1591.50

545.80