DAILY TRADING ADVISORY 12-June-2009

Initial claims down to 601K and Continuing Claims at a new record high 6.82 million, Retail sales up for the first time in three months, .5%. Markets rallied but once more fail to hold the gains

ECONOMIC DATA

8:30 AM Initial Claims

8:30 AM Retail Sales

8:30 AM Retail Sales ex- auto

10:00 AM Business Inventories

YESTERDAY’S MARKET

With the rollover from the June to the September contract on the futures markets, the indexes fluctuated during the night. The E-mini SP started the session at 937.25 from where it bounced to 940.25, pulled back to 938.00 and rallied fast reaching 945.00. The index pulled back to 941.75 and bounced to 946.75 where the uptrend lost its momentum; the SP backed off to 941.50, tested 944.25 and pushed lower to 940.75. Once more, the index bounced testing the highs of the session. The markets continued to trade in a sideways pattern with the SP holding above the pivotal 940.50 area, once the consolidation get broke, the SP reached new highs at 948.50 and then at 950.25, it pulled back to 946.75 and it rallied to a new high at 952.75. The markets corrected during the last hour of the session, the SP tested 942.50 and bounced to 942.25 and get sold strongly making the lows into the end of the session. For the session, the E-mini SP added 1.75 points closing the session at 938.25; the Nasdaq lost 3.50 points and settled at 1491.00 and the Russell lost 1.40 points closing at 921.30. The Dow added 31 points and closed at 8770.

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MARKET COMMENTARY AND OUTLOOK

Yesterday I wrote: “Once more, the SP closed around the 940.00 area. Yesterday’s wide upside opening gap and Globex lower daily high may had the appearance that exhausted the rally. Yesterday I wrote that the lack of buying was a red light in the current rally, an once the SP repeated the same trading pattern that happened last week when the index reached during the nightly session the 956.50 area just to get sold off during the regular trading hours session, so for now, the market has printed a double top that certainly, looks like a short term high. The multiple closes around the 940.00 area and the failure of the SP to close above the November and January highs where obvious resistance exist, has become a real obstacle for the rally to continue. On the other side of the coin, the uptrend remains intact all the time that the SP holds on the close the 918.00 area, this is valid also for the Dow above the 8600, and for now, all the sell offs has been met with buyers ready to jump in to the markets. So until this happen, chances for higher prices still exist, obviously, once the highs get broke. What happens today will be very important, if the markets show some follow through to the downside, then the uptrend may be in jeopardy, but only a sell off that last for most than three consecutive session will give certainty to this scenario, also, two closes below the 918.00 area that o mentioned. With this uncertainty and with the pattern of trading unresolved, I still believe that the markets could move higher and reverse yesterday’s moderate losses, so for today’s trading session I will try to stay on the long side all the time that my screen is showing the green, but we may see more sideways action before the pattern gets resolved.”

With the markets showing bidding on the recent sell off attempts, which appeared to be a test of the most recent lows and not a change of the trend, the markets still have the probabilities to move higher. This week rollover from the June to the September contracts saw some erratic action, the Wednesday’s pre market spike to the early June highs and strong intraday sell off that are not normal during the rollover period, yesterday’s rally that posted a triple top ( I wrote that I don’t believe in triple tops but they happen) and the late correction, have the index trading in a sideways daily pattern which once it get resolved it could lead to a sharp move.

The fact that the recent lows have not been able to break below the late May’s high indicates strong support. They also maintain the markets in a solid position, but the multiple rejections from the highs that keep acting like a ceiling on the rally attempts show also fear to get trapped near the highs.

So uncertainty about the next move and which direction will follow the break out from the June 30.00 point range its all we have in the charts.

This trading range won’t last for too many more sessions, and if the breakout won’t happen to the upside, then the ranges will have to get expanded to the lower side of the charts. I have been mentioning the 918.00 area, as a bottom on any pullback to maintain the uptrend intact, so I want to stick to the possibility that the markets will finally break higher all the time that this level holds.

For today’s trading session, keeping in mind that is a Friday, everything could happen, but on this market conditions, more sideways trading action may be seen, so sell the rallies once they stall and buy the deeps with tight stops once the selling lost momentum.

TODAY’S SESSION

There is resistance at 942.00-943.75 on the SP, 1495.00-1497.00 on the Nasdaq and 523.40-524.40 on the Russell. Trading above them will push the markets up to 947.25-949.25 on the SP, 1504.00-1505.50 on the Nasdaq and 526.10-527.60 on the Russell. Those area key resistances before the highs, and they will have to get exceeded with strong momentum in order to try once more to break the highs, if that happens, look for the markets to test once more the recent highs at 955.00-955.50 on the SP, 1512.00-1514.00 on the Nasdaq and 530.10.531.70 on the Russell.

There is support at 934.50-932.75 on the SP, 1486.50-1484.00 on the Nasdaq and 519.20-518.30 on the Russell. If the markets won’t hold there, they probably will test the next levels at 929.75-928.50 on the SP, 1480.50-1478.00 on the Nasdaq and 516.90-515.00 on the Russell. Every new low below those levels carries the risk of pushing the SP to the 918.00 level, the last support areas before that area t 925.00-924.00 on the SP, 1472.00-1471.00 on the NQ and 512.50-511.20 on the Russell. GOOD LUCK.

TODAY’S SUPPORT, PIVOT AND RESISTANCE LEVELS

S&P

NASDAQ

RUSSELL

Resistance 4

959.00-961.25

1521.00-1524.00

535.30-537.00

Resistance 3

955.00-955.50

1512.00-1514.00

530.10.531.70

Resistance 2

947.25-949.25

1504.00-1505.50

526.10-527.60

Resistance 1

942.00-943.75

1495.00-1497.00

523.40-524.40

PIVOT

941.25

1496.50

523.90

Support 1

934.50-932.75

1486.50-1484.00

519.20-518.30

Support 2

929.75-928.50

1480.50-1478.00

516.90-515.00

Support 3

925.00-924.00

1472.00-1471.00

512.50-511.20

Support 4

921.25-919.75

1461.00-1458.50

506.40-505.10