DAILY TRADING ADVISORY 13-August-2009
FED leaves rates unchanged and stretch its long term bonds acquisitions which will end in October, recession easing. Markets rallied but gave back some of their 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 markets fluctuating during the night, the E-mini SP started the session at 991.00 and immediately pushed up to 996.50 and then when the Nasdaq broke to new highs it reached 998.50. Easily, and leaded by the NQ, the SP continued to push higher reaching 1005.50. After a small pullback to 1003.00 and with continuing short covering, the SP made it to 1006.50. As traders waited for the FOMC Policy Statements release, the SP traded in a narrow range for a couple of hours in which it managed to push up to anew high at 1007.75. The index waited for the announcement near the intraday highs and once the news was out, the SP pulled back to 1003.00, after another test of the highs, the SP backed off to 1001.50 and bounced back to 1004.00. Once more sellers try to push lower but the SP held above the 1000.00 mark and rallied to 1011.25. After various attempts to break higher, the index pulled back to 1007.00, bounced once more and sold off into the end of the day. For the session, the SP added 9.25 points and settled at 1002.25, the Nasdaq closed higher by 22.25 at 1618.75 and the Russell added 8.00 points finishing the day at 570.40. The Dow closed at 9361 with a 120 point advance.
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MARKET COMMENTARY AND OUTLOOK
Last Friday I wrote: “Despite the recent weakness, the SP and Nasdaq managed to close above KEY short term support areas, the SP above the 992.00 level and the NQ at the 1596.00 level. This does not mean that the correction, profit taking move has finished, but holding the current areas will indicate the strength of the trend. Also, the Nasdaq has not showed a wide range downside session, typical in this index when a top has been reached. Friday’s failure to hold the gains, and Monday trading session in which the SP closed at the daily high and the sell off that took place yesterday look problematic on the charts, and if the markets won’t be able to bounce on the next 48 hours, a short term top that gives way to a wider correction or a sideways pattern could be seen before traders regroup to push higher or the markets finally start to give back some of the five month gains. So markets are at an important juncture, at the first break or make point, and despite that we have an FED’s meeting that many times give way to false or erratic moves, this coming 48 hours area critical for the markets. For today’s trading session, the early part of the session will depend on how the market opens and how the main indexes react to yesterday’s lows, trading below them will increase the chances of additional profit taking, but if the NQ is trading in positive territory and the SP manages to trade back above the 1000.00 area we may see some short covering during the first two hours. Once the first 2 hours of trading finish, the market should enter in a “Mexican Siesta or “midday sleep” period where nothing happens and everybody sleeps a couple of hours or go for and early lunch. In conclusion, let’s try to follow the NQ, in particular the long side IF both, the SP and Nasdaq are trading in positive territory, then later in the session, staying on the sidelines until the rate decision gets released may be the wiser thing to do.”
Markets reacted well to the 992.00 and 1596.00 areas on the SP and NQ, and despite the new Globex lows below those areas, the opening was bought and shorts covered, once the intraday resistance areas at 998.50 and 1602.00 on the Nasdaq were exceeded, kit was all for the shorts.
Yesterday’s rally and late pullback in which the Nasdaq managed to test once more the recent highs and the SP closed once more above the 1000.00 mark keeps the uptrend intact, it also gives validity to my short term bullish scenario in which I considered that the high has not been posted yet.
The 1630.00-1632.00 area on the NQ has been the ceiling for that index during the last 20 days, and If this index manages to break up solidly I will expect a test of the 1680.00 area, but meanwhile it just keep spending time in a narrow daily trading range.
In one of the previous sessions, I wrote that one of the ways to put an end to this rally will be a sharp sell off followed by a rebound that fails to make a new high, I don’t think that the two days sell off that we saw and yesterday’s rally and late pullback prints this scenario, but I will closely follow the direction of the markets during the rest of the week. I also want to remind you that next week we have the August option expiration, normally a bullish week, so I think that new highs on the SP and Nasdaq will be printed on the charts during the next trading sessions.
Tomorrow, before the opening, we get the weekly initial jobless claims and the important Retail sales data, if those come out better than expected, the markets should try to push higher, either way, in my short term bullish scenario I will try to play the long side all the time that the 998.50 area on the SP holds and all the time that the Nasdaq is trading in positive territory.
TODAY’S SESSION
There is resistance at 1004.50-1006.50 on the SP, 1623.00-1625.00 on the Nasdaq and 572.20-573.90 on the Russell. Those have snowed good resistance during the last sessions, so if the markets will resume the downtrend, they won’t get exceeded by much, but if we have a consolidating session or a run to yesterday’s highs; look for the markets to reach 1009.25-1010.00 on the SP, 1629.50-1631.00 on the Nasdaq and 575.70-576.00 on the Russell. If the Nasdaq finally trades solidly above those areas look for the uptrend to gain additional momentum pushing the markets up to 1014.50-1016.00 on the SP, 1638.25-1639.00 on the Nasdaq and 579.10-580.50 on the Russell.
There may be strong support at 1000.00-997.50 on the SP, 1613.00-1610.50 on the Nasdaq and 568.10-566.90, trading below them will be a concern for those holding a long position, if that happens look for the markets to push lower testing 995.25-994.00 on the SP, 1605.00-1603.00 on the Nasdaq and 564.80-564.10 on the Russell. If the markets hold there, they may push up to a neutral close, but if those fail, then yesterday’s Globex lows at 988.00-987.50 on the SP, 1593.75-1592.00 on the Nasdaq and 559.80-558.30 on the Russell may get visited. GOOD LUCK:
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TODAY’S SUPPORT, PIVOT AND RESISTANCE LEVELS |
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S&P |
NASDAQ |
RUSSELL |
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Resistance 4 |
1025.00-1025.50 |
1644.00-1645.00 |
583.50-585.00 |
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Resistance 3 |
1014.50-1016.00 |
1638.25-1639.00 |
579.10-580.50 |
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Resistance 2 |
1009.25-1010.00 |
1629.50-1631.00 |
575.70-576.00 |
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Resistance 1 |
1004.50-1006.50 |
1623.00-1625.00 |
572.20-573.90 |
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PIVOT |
999.75 |
1613.25 |
568.60 |
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Support 1 |
1000.00-997.50 |
1613.00-1610.50 |
568.10-566.90 |
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Support 2 |
995.25-994.00 |
1605.00-1603.00 |
564.80-564.10 |
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Support 3 |
988.00-987.50 |
1593.75-1592.00 |
559.80-558.30 |
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Support 4 |
982.00-981.00 |
1576.00-1574.00 |
555.60-544.70 |
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S&P |
NASDAQ |
RUSSELL |
|
FIBONACCI |
FIBONACCI |
FIBONACCI |
|
1119.63 |
1831.38 |
659.3 |
|
1078.01 |
1755.49 |
627.8 |
|
1052.51 |
1708.99 |
608.5 |
|
1036.75 |
1680.25 |
596.6 |
|
1027.01 |
1662.49 |
589.2 |
|
1011.25 |
1633.75 |
577.3 |
|
1001.51 |
1615.99 |
569.9 |
|
998.50 |
1610.50 |
567.7 |
|
995.49 |
1605.01 |
565.4 |
|
985.75 |
1587.25 |
558.0 |
|
969.99 |
1558.51 |
546.1 |
|
960.25 |
1540.75 |
538.7 |
|
944.49 |
1512.01 |
526.8 |
|
918.99 |
1465.51 |
507.5 |
|
877.38 |
1389.63 |
476.0 |
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DAILY PROJECTIONS |
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S&P |
NASDAQ |
RUSSELL |
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AS DAILY HIGH |
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1019.50 |
1649.50 |
583.50 |
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AS DAILY LOW |
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994.00 |
1603.00 |
563.20 |
