DAILY TRADING ADVISORY 02-June-2009
GM files for bankruptcy and gets $50 billion in government aid, Personal Spending down .1%, Personal Income up .5%. Construction Spending climbs .8%; ISM Index contracts at its slowest pace in eight months and comes out at 42.8. Markets reached new highs.
ECONOMIC DATA
10:00 AM Pending Home Sales
2:00 PM Auto Sales
2:00 PM Truck Sales
YESTERDAY’S MARKET
With the world markets trading in positive territory and the GM news behind us, markets rallied during the Globex session to new highs, the E-mini SP started the regular trading hour’s session at 932.00 and after pulling back to 930.25. After a few attempts to break lower, the index pushed up to 935.50. With the Nasdaq leading the move, the SP made a new high at 937.75. After testing the 935.50 area the market made a new high at 940.50 and then at 942.00. After holding above the 939.00 area, near the highs the SP pushed up to 943.00. With no signs of pulling back the SP continued to push up as shorts continued to get squeezed, the index reached 944.50. Finally the markets retraced a bit, the SP tested 941.50 and rallied to new highs at 947.25. With the Russell lagging at the highs, the SP pulled back to 938.50, ran to the highs and pulled back into the end of the session. For the day, the SP added 21.00 points and settled at 939.00, the Nasdaq gained 34.50 points closing at 1470.00 and the Russell gained 16.30 points closing the day at 517.60. The Dow added 221 points closing at 8721.
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MARKET COMMENTARY AND OUTLOOK
Yesterday I wrote: “Last Friday late spike and the settlement around the “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”, indicates that the markets may be able to push higher to new highs before they get reversed and correct or even continue to show another upside leg. Markets had many opportunities to break lower, the SP below 875.00, the NQ below 1350.00 and the Dow below the 8500 and showed strong support at those areas, and in the same way that the downtrend, the bear market that started last year was an abnormal move, in the same way this rally could surprise everybody, its clear that the yearly lows and probably the lows for the next couple of years have been posted. Despite that the volumes were not great during the last months, buying interest is present on any new high creating a phenomenon where traders fear to miss the move, and so no matter if markets will correct 10% from whatever the high is, the trend may be up. This week is full of corporate and economic reports, GM bankruptcy and the monthly job market reports will rule the markets, there is not too much weight of the GM shares on the Dow, practically if the go to zero nothing happens, but once the issue is out of investors mind, its psychological impact will be over; the monthly job report may surprise and come out not as worst as expected and give way to new highs or to the high of this rally during next Friday trading session.”
Markets made it, the break or make point at the 875.00 area held many selling attempts, and finally, the indexes posted new highs. The SP reached the 940.00-960.00 areas that I mentioned many times during the last month.
Yesterday’s opening gap, above the 8.00 points ( many times when a gap exceeds 8.00 full points on the SP) gave way to a continuing pattern pushing the index higher, the daily lows were posted early in the session and were above last Friday 937.75 high, this is a bullish sign.
However markets do not move only in one direction and some pullback may be seen before this rally continues, but with many trapped shorts at the 904.00, 918.00 and 930.00 areas, it won’t be easy to see a strong sell off happening during today’s session, the most probable scenario may be back and forth action giving way to a sideways pattern before the next leg, if it happens is seen. With the markets holding a strong position is probably that my 960.00 area will get tested during the week, but one or two session showing some congestion is also a probability. Either way, position traders holding a long trade may feel OK but may be ready to take profits after another wide range upside session.
So, for today’s trading session expects two side actions, the SP may found strong support around yesterday’s opening prices, the 930.00 area, so be ready to get long down there if the market holds.
TODAY’S SESSION
There is resistance above yesterday’s settlements at 941.50-943.00 on the SP, 1476.00-1478.00 on the Nasdaq and 519.70-521.80 on the Russell, if those do not hold, look for the markets to test yesterday’s highs at 946.00-947.00 on the SP, 1484.00-1485.00 on the Nasdaq and 524.90-526.10 on the Russell. A double top there could give a great shorting opportunity, but if those get exceeded look for the indexes to reach 952.00-953.00 on the SP, 1491.50-1493.00 on the Nasdaq and 530.20-532.00 on the Russell.
There is support at 936.00-933.50 on the SP, 1463.00-1461.50 on the Nasdaq and 515.50-513.40 on the Russell. Trading below them may push the markets down to their next levels at 930.00-928.00 on the SP, 1455.00-1453.00 on the Nasdaq and 511.30-510.50 on the Russell. If the markets will consolidate yesterday’s rally, get long there with tight stops, but if the profit taking move continues, then the pullback may reach 922.00-921.00 on the SP, 1448.00-1446.00 on the Nasdaq and 508.60-507.60 on the Russell. GOOD LUCK.
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TODAY’S SUPPORT, PIVOT AND RESISTANCE LEVELS |
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S&P |
NASDAQ |
RUSSELL |
|
|
Resistance 4 |
956.00-957.00 |
1499.00-1501.00 |
536.10-537.30 |
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Resistance 3 |
952.00-953.00 |
1491.50-1493.00 |
530.20-532.00 |
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Resistance 2 |
946.00-947.00 |
1484.00-1485.00 |
524.90-526.10 |
|
Resistance 1 |
941.50-943.00 |
1476.00-1478.00 |
519.70-521.80 |
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PIVOT |
934.25 |
1460.75 |
513.20 |
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Support 1 |
936.00-933.50 |
1463.00-1461.50 |
515.50-513.40 |
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Support 2 |
930.00-928.00 |
1455.00-1453.00 |
511.30-510.50 |
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Support 3 |
922.00-921.00 |
1448.00-1446.00 |
508.60-507.60 |
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Support 4 |
913.00-912.00 |
1441.50-1439.00 |
505.10-504.20 |
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S&P |
NASDAQ |
RUSSELL |
|
FIBONACCI |
FIBONACCI |
FIBONACCI |
|
1077.94 |
1704.31 |
619.8 |
|
1027.75 |
1619.04 |
582.5 |
|
997.00 |
1566.79 |
559.6 |
|
978.00 |
1534.50 |
545.4 |
|
966.25 |
1514.54 |
536.7 |
|
947.25 |
1482.25 |
522.5 |
|
935.50 |
1462.29 |
513.8 |
|
931.88 |
1456.13 |
511.1 |
|
928.25 |
1449.96 |
508.3 |
|
916.50 |
1430.00 |
499.6 |
|
897.50 |
1397.71 |
485.4 |
|
885.75 |
1377.75 |
476.7 |
|
866.75 |
1345.46 |
462.5 |
|
836.00 |
1293.21 |
439.6 |
|
785.81 |
1207.94 |
402.3 |
Support, Pivot and Resistance levels courtesy of Arturo Stern. He authors the E-mini Daily trading advisory which gives technical analysis on all 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.
