DAILY TRADING ADVISORY 06-August-2009
ADP Employment data which measures the private jobs market down another 371K jobs, ISM services down to 46.4 and June factory Orders up .4% gave way to a profit taking session. The SP held above the 1000.00 mark. After hours: CISCO revenue and earnings decline.
ECONOMIC DATA
8:30 AM Initial Claims
YESTERDAY’S MARKET
After making its highs at 1006.50 during the Globex session, the E-mini SP started the day at 1003.75 and pulled back to 1000.50 from where a bounce to 1004.00 failed to break up giving way to an early profit taking move. The index fell reaching 991.75, then, bounced to 995.75, backed off to anew marginal low at 991.25 and held bouncing to 996.25. Unable to break higher and with the Nasdaq under strong pressure, the SP traded on a narrow range that finally made a few failed attempts to break higher reaching 997.00, after pulling back to 992.75 it bounced back to 998.00 where it held and after a feeble set back it rallied to 1003.75 where the short covering rally ended. The SP pulled back to 998.25 just to bounce back into the end of the session. For the day, the SP lost 4.00 points and settled at 1000.75, the Nasdaq ended lower by 16.00 points at 1614.25 and the Russell gave back 5.30 points finishing the session at 565.40. The Dow closed lower by
.
.
MARKET COMMENTARY AND OUTLOOK
Last Friday I wrote: “Yesterday’s consolidating session is something normal after big moves, like the one that we saw last Monday where the SP was able to trade above the 1000.00 mark. Despite the fact that during the last two weeks I was writing about the possibilities that the SP will test the 1000.00 area, I am really surprised that the pullbacks that happened during the last two weeks have been very limited. We know that this strong rally is based in expectations of better economic indicators, this summer rally has been able to hold in price and time, and that makes very difficult to take a short position. However, the wide up gap opening sessions, the several closes near the daily highs, not only indicate that the trend is strong, they also indicate that the rally may be on its exhausting phase, at some point we will have to get a wider correction. But the trend is strong and intact, and if SP may be able to reach the 1008.00, and if that does not place a temporal top, then 1038.00 or even 1060.00 may be seen before this rally is over.”
Markets traded under pressure during all the session, the weakest of the indexes was the Nasdaq which has been the leading index in this rally. Despite the sell off attempts, the SP only broke by three ticks the previous session lows, we can consider it a double bottom, on the other side, the highs were posted during the Globex session, just at my first resistance areas, and they should get tested in the next few days, obviously if the trend is still to the upside.
In the same way that we have seen during the last two weeks, any pullback or sell off attempt has been a buying opportunity, and despite that traders may be cautious or even take some profits in front of next Friday important job market numbers, the trend remains intact and in a strong position, any pullback that manages to hold the 963.00 area on the SP and 9000 on the Dow should be considered a buying opportunity.
So taking into account that players may be waiting for next Friday data, and that new money continues to enter into the markets on any pullback, and that trapped shorts are desperate to cover, more sideways trading, another session of consolidation may be seen, however, the key seems to be in the Nasdaq and if that index starts to trade below the 1596.00 area followed by the SP below 986.50, the correction may get a bit more extended in price and time, this we will only know next Friday.
For today’s trading session, early weakness has resulted in good short covering rallies, if the CISCO news does not give way to a strong sell off, then, as yesterday, the first hour lows may get bought, but be careful if the SP starts to trade below 988.00 where I may be a buyer with stops just below the 986.50 areas.
TODAY’S SESSION
There is resistance above yesterday’s late highs at 1002.50-1004.50 on the SP, 1618.00-1620.00 on the Nasdaq and 1618.00-1620.00 on the Russell. If those get reached during the first hour of the session and the markets fail to break above them look for the indexes to trade in the same range as yesterday, but if those surrender, then the SP may be able to reach my 1007.00-1008.00 first upside objective levels, those may coincide with 1624.00-1625.00 on the Nasdaq and 570.80-571.90 on the Russell. If those do not hold a strong short covering move in front of Friday’s data, then the rally may reach 1012.00-1014.00 on the SP, 1629.50-1631.50 on the Nasdaq and 574.20-575.00 on the Russell.
There is support at yesterday’s late resistance at 999.00-997.50 on the SP, 1610.00-1608.00 on the Nasdaq and 564.20-563.00 on the Russell. If the opening is below those levels, once more, they may act as good resistance areas during the session, so the markets may be considered weak on an intraday base below those levels, if that is the case and they trade below them, a visit to the short term support levels at 994.50-992.50 on the SP, 1604.00-1602.00 on the Nasdaq and 560.00-558.20 on the Russell may happen. If the markets trade below them and then turn back above, it may be a good idea to go long with tight stops, but if they fail, then the next areas are at 989.00-988.00 on the SP, 1598.00-1596.00 on the Nasdaq and 555.40-554.10 on the Russell. If those do not hold, I may consider not trying and catching an intraday bottom. GOOD LUCK.
TODAY’S SUPPORT, PIVOT AND RESISTANCE LEVELS |
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|
S&P |
NASDAQ |
RUSSELL |
Resistance 4 |
1021.50-1022.00 |
1638.00-1640.00 |
578.20-579.50 |
Resistance 3 |
1012.00-1014.00 |
1629.50-1631.50 |
574.20-575.00 |
Resistance 2 |
1007.00-1008.00 |
1624.00-1625.00 |
570.80-571.90 |
Resistance 1 |
1002.50-1004.50 |
1618.00-1620.00 |
567.20-568.40 |
PIVOT |
999.50 |
1616.00 |
565.20 |
Support 1 |
999.00-997.50 |
1610.00-1608.00 |
564.20-563.00 |
Support 2 |
994.50-992.50 |
1604.00-1602.00 |
560.00-558.20 |
Support 3 |
989.00-988.00 |
1598.00-1596.00 |
555.40-554.10 |
Support 4 |
986.00-984.00 |
1591.00-1589.50 |
552.10-551.50 |
S&P |
NASDAQ |
RUSSELL |
FIBONACCI |
FIBONACCI |
FIBONACCI |
1071.31 |
1754.75 |
627.3 |
1046.42 |
1707.42 |
605.9 |
1031.17 |
1678.42 |
592.8 |
1021.75 |
1660.50 |
584.7 |
1015.92 |
1649.42 |
579.7 |
1006.50 |
1631.50 |
571.6 |
1000.67 |
1620.42 |
566.6 |
998.88 |
1617.00 |
565.1 |
997.08 |
1613.58 |
563.5 |
991.25 |
1602.50 |
558.5 |
981.83 |
1584.58 |
550.4 |
976.00 |
1573.50 |
545.4 |
966.58 |
1555.58 |
537.3 |
951.33 |
1526.58 |
524.2 |
926.44 |
1479.25 |
502.8 |
|
DAILY PROJECTIONS |
|
S&P |
NASDAQ |
RUSSELL |
|
AS DAILY HIGH |
|
1003.50 |
1623.00 |
568.80 |
|
AS DAILY LOW |
|
988.00 |
1594.00 |
555.70 |