DAILY TRADING ADVISORY 15-September-2009
Stocks started the day lower on Lehman’s collapse anniversary but turned up closing with moderate gains.
ECONOMIC DATA
8:30 AM Core PPI
8:30 AM PPI
8:30 AM Retail Sales
8:30 AM Retail Sales, exclude auto
8:30 AM NY Empire Manufacturing Index
10:00 AM Business Inventories
YESTERDAY’S MARKET
Markets traded on the red during the Globex session. The E-mini SP started the day at 1029.75 and rallied to 1032.75 from where it pulled back to 1030.00 and rallied back to 1035.00. The index pulled back once more and while trading with lack of direction reached 1036.50. As the markets continued to hold, the SP posted a new high at 1040.00, then, the SP pulled back to 1036.25. With the markets trading in a narrow range for a long period the indexes showed support at very high levels, this, gave way to a spike that reached the 1043.25 area on the SP. Once more, markets traded in a sideways pattern, during the last hour of the session the SP pushed to new highs reaching 1045.25 before pulling back into the close, for the day, the SP added 6.25 points and settled at 1043.50, the Nasdaq gained 4.50 points closing at 1688.00 and the Russell added 4.70 points closing the day at 595.30. The Dow managed to extend the rally by 21 points closing at 9626.
MARKET COMMENTARY AND OUTLOOK
Yesterday I wrote: “Markets continued to trade in the same pattern, new highs, narrow ranges and a “good” close for the week. This low volume narrow range trading sessions have placed the indexes in a breakout position, the 1040.00 area on the SP which get exceeded during Friday’s session, its reversal below that level and the failure to close above it may be indicating that a short term top has been posted, however, there is still no evidence that the trend has changed, and until that happens, a negative session won’t be more than that, a profit taking session. After five consecutive sessions in which the markets closed with gains, on a struggling rally that posted a spike during last Friday, the index could be in a fragile position, but it needs to break support in order to start a first degree correction, that means a 2-3 negative sessions. If those negative days will show limited losses and volumes will continue to be low, it should translate in a good buying opportunity, but if a negative session is a wide range red session and shows some follow through during the next day, then a correction that push the SP below the 1000.00 area may be in the cards.”
Early weakness in front of the Obama’s speech was not able to gain any downside momentum; finally the lack of selling gave way to higher prices during the day.
I have mentioned that despite the topping conditions on the markets, yesterday’s session, the indexes posted double tops and closed at the daily highs, there is not still evidence of trending lower, however, the slow struggling push to new highs could be pointing to a strong breakout that place all the markets at new highs. I have also mentioned that two consecutive sessions in which the SP closes above the 1040.00 area will probably gave way to a new upside leg, but, there is still some indecision at the current levels, and the flow of new money, typically increased during new highs has not been seen.
All this against the reality, that is clearly printed on the charts, and that maintains the uptrend intact may place us on a defending position against any short trade, but should also keep us suspicious against any upside move, so let’s avoid short trades unless the SP gets back below the 1040.00-1038.50 area and, if that happens, do not insist too much on the long side.
In conclusion, a second close above the 1040.00area on the SP will give more credibility to yesterday’s marginal new highs, and for today, a bunch of economic news will get released before the opening, so if the opening takes place below 1040.00 selling the rallies all the time that the SP is trading below that area is the way to go, otherwise, the rally may continue. FOR SURE, I DON’T WANT TO BE SHORT IF THE SP IS TRADING ABOVE 1040.00.
TODAY’S SESSION
There is resistance above yesterday’s highs at 1045.25-1047.00 on the SP, 1696.00-1698.00 on the Nasdaq and 596.70-598.00 on the Russell, trading above them may indicate more upside follow through as the indexes reach 1049.00-1050.50 on the SP, 1702.50-1703.00 on the Nasdaq and 599.40-601.10 on the Russell. I assume that the first time that area gets tested on the SP, the index could show some profit taking that pushes down to 1042.00, but if the markets are strong the 1050.00 area will get exceeded giving way to a strong breakout that push the SP up to the 1055.00 area.
There is support at 1041.00-1039.50 on the SP, 1685.00-1683.00 on the Nasdaq and 592.60-591.20 on the Russell. I don’t want to be short all the time that the markets are trading above those levels, if those cannot hold, then a test of 1036.00-1034.00 on the SP, 1676.00-1675.00 on the Nasdaq and 589.10-587.50 on the Russell may be in the cards, if those fail, look for a test of yesterday’s early lows. GOOD LUCK.
|
TODAY’S SUPPORT, PIVOT AND RESISTANCE LEVELS |
|||
|
|
S&P |
NASDAQ |
RUSSELL |
|
Resistance 4 |
1057.00-1058.00 |
1725.00-1726.50 |
606.80-607.40 |
|
Resistance 3 |
1054.00-1055.00 |
1708.00-1710.00 |
603.50-604.00 |
|
Resistance 2 |
1049.00-1050.50 |
1702.50-1703.00 |
599.40-601.10 |
|
Resistance 1 |
1045.25-1047.00 |
1696.00-1698.00 |
596.70-598.00 |
|
PIVOT |
1038.00 |
1681.00 |
591.90 |
|
Support 1 |
1041.00-1039.50 |
1685.00-1683.00 |
592.60-591.20 |
|
Support 2 |
1036.00-1034.00 |
1676.00-1675.00 |
589.10-587.50 |
|
Support 3 |
1031.00-1030.00 |
1670.00-1668.00 |
585.30-584.20 |
|
Support 4 |
1026.50-1025.00 |
1652.00-1650.00 |
579.10-578.00 |
|
S&P |
NASDAQ |
RUSSELL |
|
FIBONACCI |
FIBONACCI |
FIBONACCI |
|
1129.19 |
1804.38 |
661.0 |
|
1096.96 |
1761.13 |
636.7 |
|
1077.21 |
1734.63 |
621.8 |
|
1065.00 |
1718.25 |
612.6 |
|
1057.46 |
1708.13 |
606.9 |
|
1045.25 |
1691.75 |
597.7 |
|
1037.71 |
1681.63 |
592.0 |
|
1035.38 |
1678.50 |
590.3 |
|
1033.04 |
1675.37 |
588.5 |
|
1025.50 |
1665.25 |
582.8 |
|
1013.29 |
1648.87 |
573.6 |
|
1005.75 |
1638.75 |
567.9 |
|
993.54 |
1622.37 |
558.7 |
|
973.79 |
1595.87 |
543.8 |
|
941.56 |
1552.63 |
519.5 |
|
|
DAILY PROJECTIONS |
|
S&P |
NASDAQ |
RUSSELL |
|
|
AS DAILY HIGH |
|
1054.25 |
1703.00 |
604.00 |
|
|
AS DAILY LOW |
|
1034.50 |
1676.00 |
589.10 |
