DAILY TRADING ADVISORY 04-June-2009
ADP Employment data indicates a loss of another 532K jobs in the private sector. MBA mortgage application Index drops 16% on higher rates. ISM Services Index shrinks at slowest pace, Factory orders up .7% after the march data get revised down to 1.9%. Bernanke: recovery will be slow. Markets sold off but managed to close with moderate losses.
ECONOMIC DATA
8:30 AM Initial Claims
8:30 AM Productivity- Rev.
8:30 AM Unit Labor Cost
YESTERDAY’S MARKET
With the global markets taking a breath after the recent rally, the E-mini SP started the session at 935.75. After making its early high at 936.50, the index pushed lower to 932.00 from where it bounced back to 935.50 just to get sold to the 928.00 support are. On the market held it bounced back to 932.25, backed off to 929.00 and bounced to 933.50. Unable to break above my 934.00 area, the SP pushed down to new lows to 927.70. After trying to bounce and unable to trade back above the 930.00 area, the SP pushed down to new lows at 924.25, it bounced a couple of points and made a new low at 923.00.after trading in a sideways pattern the index posted a higher low and rallied to 927.50 where a double top gave way to a sell off that reached 922.50. Unable to trade lower the index rallied strong into the close. For the day, the SP lost VVVV points and settled at 931.75, the Nasdaq lost 1.00 point finishing the session at 1477.50 and the Russell ended at 524.30, minus 1.90 points. The Dow gave back 65 points closing the session at 8675.00.
MARKET COMMENTARY AND OUTLOOK
Yesterday I wrote: “I don’t see any reason for the markets to sell off before they complete the 90 days cycle from the March lows, but if that happen, then tomorrow may be a wide range down session. When the markets rallied during the early May, I wrote that it would be unusual, after such a strong rally, not to test the January highs, and right now the SP has traded above it, obviously this is a point in price and time when the rally is at risk, but there is no evidence that the markets will turn down. A “V” bottom after the march lows? I am not so sure but for now it looks like the indexes may be able to push higher, above the 960.00 area that I mentioned since last month on the SP and 9000 on the Dow. For today’s trading session, I may continue to try to stay with the trend and be a buyer expecting another wide range positive session, that if it happens, certainly will place the SP on its way to the 1000.00 level, that will be a 50% Fibonacci extension from the March lows and a good objective for this 90 days old rally.”
No matter what I see or what I don’t see, the markets sold off as traders took some profits during this Bull Run. I was wrong on yesterday pretending that after a day where the markets consolidated and balanced another wide range upside session was in the cards, it happens.
Yesterday’s sell off and close below the 937.75 Friday’s highs, in a time period, almost 90 days from the lows, after a marginal high at 949.00, when the rally has all the conditions to be at risk, has placed its possible extension and continuation in jeopardy. However, there is not evidence that the trend has changed yet and the bulls are not out of the game.
The late bounce shows that there is lot of buying power on the setbacks, and that maybe, another run to the highs, a lower high or anew high is still possible. Yesterday’s sell off in which the major indexes closed with moderate losses may be normal in front of next Friday unemployment figures, but the indexes will have to fight against the risk conditions that I mentioned in the previous paragraph.
Yesterday’s bounce came from important support areas, on the SP, NQ and Russell, so despite that we could see some more back and forth action between the 925.00 and 949.00 levels on the SP, I can not take a short position, at least until yesterday’s low hold. If yesterday’s low get broken, it could signal more downside pressure, not necessarily a strong downtrend near the march lows, but maybe more sideways trading between the 875.00 and 950.00 levels on the SP.
For today’s trading session, markets may continue to fluctuate, but a double bottom near yesterday’s lows could offer a good long entry, on the other side of the coin, the SP will have to trade above 937.75 in order to resume the uptrend.
TODAY’S SESSION
There is initial resistance above yesterday’s close at 934.00-936.00 on the SP, 1480.00-1482.00 on the Nasdaq and 525.40-526.60. The SP failed to break above them during yesterday’s session, so for some short covering to be seen, markets will have to break above them and then reach 938.00-940.50 on the SP, 1488.50-1491.00 on the Nasdaq and 528.90-530.10. Those may offer good resistance at least the first time they get tested, so if the bounce stalls there, look for a short position, but if those can not hold, then the indexes may be able to reach 944.00-945.50 on the SP, 1498.00-1499.00 on the Nasdaq and 532.00-533.60 on the Russell.
There is support at 927.00-926.00 on the SP, 1472.50-1470.00 on the NQ and 523.20-522.00 on the Russell. If those fail to hold the selling pressure look for some buying to appear at 924.00-923.00 on the SP, 1463.00-1462.50 on the Nasdaq and 519.80-517.50 on the Russell, failing there could add momentum to the profit taking move pushing the markets down to their next support areas at yesterday’s lows 921.25-919.50 on the SP, 1455.00-1453.00 on the Nasdaq and 515.30-514.20 on the Russell. GOOD LUCK.
|
TODAY’S SUPPORT, PIVOT AND RESISTANCE LEVELS |
|||
|
S&P |
NASDAQ |
RUSSELL |
|
|
Resistance 4 |
950.00-951.00 |
1505.00-1507.00 |
535.70-538.80 |
|
Resistance 3 |
944.00-945.50 |
1498.00-1499.00 |
532.00-533.60 |
|
Resistance 2 |
938.00-940.50 |
1488.50-1491.00 |
528.90-530.10 |
|
Resistance 1 |
934.00-936.00 |
1480.00-1482.00 |
525.40-526.60 |
|
PIVOT |
933.50 |
1473.50 |
523.00 |
|
Support 1 |
927.00-926.00 |
1472.50-1470.00 |
523.20-522.00 |
|
Support 2 |
924.00-923.00 |
1463.00-1462.50 |
519.80-517.50 |
|
Support 3 |
921.25-919.50 |
1455.00-1453.00 |
515.30-514.20 |
|
Support 4 |
916.00-915.50 |
1448.00-1447.00 |
510.60-509.50 |
|
S&P |
NASDAQ |
RUSSELL |
|
FIBONACCI |
FIBONACCI |
FIBONACCI |
|
1044.56 |
1593.94 |
581.2 |
|
1006.62 |
1551.91 |
561.0 |
|
983.37 |
1526.16 |
548.6 |
|
969.00 |
1510.25 |
540.9 |
|
960.12 |
1500.41 |
536.2 |
|
945.75 |
1484.50 |
528.5 |
|
936.87 |
1474.66 |
523.8 |
|
934.13 |
1471.63 |
522.3 |
|
931.38 |
1468.59 |
520.8 |
|
922.50 |
1458.75 |
516.1 |
|
908.13 |
1442.84 |
508.4 |
|
899.25 |
1433.00 |
503.7 |
|
884.88 |
1417.09 |
496.0 |
|
861.63 |
1391.34 |
483.6 |
|
823.69 |
1349.31 |
463.4 |
|
DAILY PROJECTIONS |
S&P |
NASDAQ |
RUSSELL |
|
AS DAILY HIGH |
938.75 |
1481.00 |
526.40 |
|
AS DAILY LOW |
915.50 |
1455.25 |
514.00 |
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