DAILY TRADING ADVISORY 17-August-2009
CPI unchanged; Industrial Production rises for first time since October 2008. Michigan sentiment falls giving way to an early sell off on concern the rally is overdone, markets closed in the red.
WEEKLY PIVOTS FOR WEEK ENDING 21-August-2009
R3 1032.00
R2 1019.00
R1 1011.25
PP 1002.50
S1 997.00
S2 989.00
S3 972.50
ECONOMIC DATA
8:30 AM NY Empire Manufacturing Index.
WEEKLY RECAP
Markets started the week under some profit taking pressure, with no economic news to get released, despite the selling pressure that was present during all the session, the indexes traded on a narrow range and posted a mixed close, for the day, the SP closed higher by one point at 1007.50, the Nasdaq lost 7.00 points and settled at 1612.75 and the Russell closed higher by 2.90 points at 571.80. The Dow lost 32 points and settled at 9337. Tuesday’s session was not better; Productivity reported a 6.4% increase, the highest in more than six years, wholesale inventories were down 1.7% and weakness on the financials kept the markets under pressure. For the day, the SP lost 14.50 points and settled at 993.00, the Nasdaq lost 16.00 points closing the session at 1596.50, and the Russell closed lower by 8.90 points at 562.40. The Dow lost 96 points closing at 9241. Tuesday’s close on the lows, after two days of weakness and with the FOMC Policy statements to get released late Wednesday, markets opened and started to push higher, the FED, leaved rates unchanged and stretched its long term bonds acquisitions which will end in October, also indicated that recession is easing. The rally was solid and strong but the markets gave back some of their earnings into the close. 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. Thursday was a bullish session, as stocks fluctuated during the day, the SP closed at its highest point and near the daily highs, the Nasdaq closed at its short term resistance area. On the economic and corporate news, Wal-Mart reported as expected, Retail Sales unexpectedly fell by .1%, Initial Claims climbed to 588K and Business Inventories were down 1.1%. For the day, the SP gained11.25 points and settled at 1013.50, the Nasdaq closed at 1631.50, up 12.75 points and the Russell added 5.30 points finishing the session at 575.60. The Dow closed higher by 36 points at 9398. Bulls get hammered during Friday’s session, Consumer prices came out unchanged, industrial Production rose for the first time since October 2008 but the Michigan sentiment preliminary report, which measures consumer confidence unexpectedly dropped for August to 63.2 from 66.0 in July. The earlier profit taking gained strong momentum and the markets sold off strongly, later in the session they managed to come back closing on the red. For the day, the SP lost 7.75 points and settled at 1005.75, the Nasdaq lost 16.75 points finishing the session at 1615.00, and the Russell closed lower by 9.60 points at 565.90. The Dow ended lower by 76 points at 9321. For the week the main indexes closed with losses.
FRIDAY’S MARKET
With the Nasdaq trading under pressure during the Globex session, the E-mini SP started the day at 1010.75, and after trading only one tick above the opening price, it started to push lower. The selling pressure coming from the weak Nasdaq and the profit taking move before the release of the economic data, drove the SP all the way down to 994.00. Finally, after a period of consolidation in which the markets traded on a narrow range and tried to bounce, the bears gain and new lows where posted, the SP reached 992.25, the KEY support level. After sitting for most of the session near the lows and trading in a narrow range patter, the SP bounced to 998.00 pulled back to 995.00 and pushed upwards into the end of the session managing to break back above the 1000.00 mark reaching 1004.50 . For the day, the SP lost 7.75 points and settled at 1005.75, the Nasdaq lost 16.75 points finishing the session at 1615.00, and the Russell closed lower by 9.60 points at 565.90. The Dow ended lower by 76 points at 9321.
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MARKET COMMENTARY AND OUTLOOK
Last Friday I wrote: “Markets made their daily highs during the Globex session and sold off, the SP founded support at my 998.50 area keeping the uptrend intact. There is not too much to add to yesterday’s newsletter, the trend is strong, intact and on every pullback buyers appear. However, the SP has to trade above the 1016.00 area and the Nasdaq has to hold above the 1630.00-1632.00 levels in order to press higher, otherwise the double top on the SP and the ceiling on the Nasdaq may give way to more sideways trading between the 998.00 and 1016.00 levels. If you are holding a long position, you may be selling the rallies and reestablish your longs on the pullbacks, but if the economic reports to get released today give way to new buying a strong breakout or an uptrend session may be seen. I continue to favor the long side and I think the next stop will be between the 1032.00 to 1038.00 areas on the SP and 1675.00 on the Nasdaq. For today’s trading session, the trend remains intact unless the SP breaks below the 1002.00 area; I will try my first long trade around 1008.50, obviously with a tight stop.”
Markets sold off from their resistance levels but managed to come back into the end of the session. I went Thursday night to sleep with the wrong idea that the markets were ready for their next and maybe last upside leg, and that resulted wrong. Finally the rally posted a top from where it get severely sold, this sell off came after the SP almost reached the 38.2 percent Fibonacci level measured from the all time highs to the March low, and the Nasdaq respected the 1632.00 ceiling that have frozen during almost a month any attempt to break higher.
During all the week the index traded in a range that has not been broke to either side, on the support area, we have the 992.00 level on the SP and around 1590.00 on the NQ, on the upper side, the 1016.00 and 1632.00 areas, so until the markets make the breakout of this wide consolidation, this sideways pattern will continue to be in play.
Last Friday’s wide sell off may be an indication that the markets could correct from these levels, however, the strong support that the markets have been showing in which buyers appear on every pullback, still don’t give validity to the argument that the markets may turn down, more else, it may be showing us the possible extension that the next upside leg, if it happens, could demonstrate, My projections continue to be the same, 1032.00 to 1038.00 areas on the SP and 1675.00 on the Nasdaq.
For today’s trading session, Friday’s wide trading range session, may give way to an inside day, I may be selling the rallies and buying the dips, however, and its not that I want to insist too much with my still bullish scenario, I will try to play the green if the Nasdaq is trading in positive territory, but I will be forced to change this light bullishness if the SP will trade below the 992.00 area.
TODAY’S SESSION
There is at 1008.50-1010.00 on the SP, 1618.50-1621.00 on the Nasdaq and 567.90-569.20 on the Russell. If the markets do not break above them or those get rejected, try to play the short side until they get exceeded, those are near last Friday’s early highs, but if they trade higher, expect a test of 1012.50-1014.00 on the SP, 1624.50-1625.00 on the Nasdaq and 571.80-572.30 on the Russell. If those do not hold, then the SP may push to new highs while the Nasdaq reaches once more it resistance area at 1629.00-1631.
There is support at 1003.50-1001.50 on the SP, 1611.50-1609.75 on the Nasdaq and 563.20-562.00 on the Nasdaq. If the markets are strong those may hold, but if they will try once more to push lower and the next levels at 999.25-997.50 on the SP, 1606.00-1604.50 on the Nasdaq and 560.00-558.60 on the Russell do not hold, then expect another visit to 993.50-992.00 on the SP, 1599.50-1598.00 on the Nasdaq and 555.70-554.20 on the Russell. GOOD LUCK.
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TODAY’S SUPPORT, PIVOT AND RESISTANCE LEVELS |
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|
S&P |
NASDAQ |
RUSSELL |
|
Resistance 4 |
1020.75-1022.00 |
1634.00-1636.50 |
581.80-583.50 |
|
Resistance 3 |
1017.00-1018.50 |
1629.00-1631.00 |
577.00-578.50 |
|
Resistance 2 |
1012.50-1014.00 |
1624.50-1625.00 |
571.80-572.30 |
|
Resistance 1 |
1008.00-1010.00 |
1618.50-1621.00 |
567.90-569.20 |
|
PIVOT |
1004.50 |
1614.50 |
566.80 |
|
Support 1 |
1003.50-1001.50 |
1611.50-1609.75 |
563.20-562.00 |
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Support 2 |
999.25-997.50 |
1606.00-1604.50 |
560.00-558.60 |
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Support 3 |
993.50-992.00 |
1599.50-1598.00 |
555.70-554.20 |
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Support 4 |
989.25-987.50 |
1594.00-1593.00 |
550.60-550.30 |
|
S&P |
NASDAQ |
RUSSELL |
|
FIBONACCI |
FIBONACCI |
FIBONACCI |
|
1115.63 |
1799.75 |
668.4 |
|
1077.27 |
1736.10 |
633.7 |
|
1053.77 |
1697.10 |
612.4 |
|
1039.25 |
1673.00 |
599.2 |
|
1030.27 |
1658.10 |
591.1 |
|
1015.75 |
1634.00 |
577.9 |
|
1006.77 |
1619.10 |
569.8 |
|
1004.00 |
1614.50 |
567.3 |
|
1001.23 |
1609.90 |
564.7 |
|
992.25 |
1595.00 |
556.6 |
|
977.73 |
1570.90 |
543.4 |
|
968.75 |
1556.00 |
535.3 |
|
954.23 |
1531.90 |
522.1 |
|
930.73 |
1492.90 |
500.8 |
|
892.38 |
1429.25 |
466.1 |
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DAILY PROJECTIONS |
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S&P |
NASDAQ |
RUSSELL |
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AS DAILY HIGH |
|
1010.75 |
1625.50 |
571.90 |
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AS DAILY LOW |
|
987.25 |
1585.00 |
550.60 |
