DAILY TRADING ADVISORY 19-June-2009
Initial Claims at 608K, higher than expected and above 600K already 20 weeks, continuing Claims down for the first time since January, U.S. Leading indicators up 1.2%, Philadelphia area manufacturing contracted at its slowest pace in nine months and Geithner defending his plan to give Federal Reserve greater power
ECONOMIC DATA
None
EVENTS
June contracts expiration.
YESTERDAY’S MARKET
The E-min I SP started the session at 906.75, and after pulling back to 903.00, just above the Globex lows, and once secretary Geithner started his speech, markets pushed up strongly with the SP making its early high at 916.25. Once the rebound lost its momentum and the NQ started to retreat, the SP backed off to 911.00. The index bounced to 914.50 from where it pulled back to 911.50. Once the NQ started to move back to the upside, the SP checked the early 916.00 high. After sitting there for a while, the SP finally posted a new high at 917.75. With the Nasdaq failing to post new highs, the SP backed off to 914.50 showing good support, but after a few attempts to trade higher it pulled back to 912.25, the index bounced to 915.00 and continued to trade in a narrow range. After testing the 917.75 high, the index pulled back into the close. For the day, the SP added 8.25 points and settled at 913.25, the Nasdaq lost 3.00 points closing the day at 1449.50 and the Russell closed higher by 4.00 points at 507.10.
MARKET COMMENTARY AND OUTLOOK
Yesterday I wrote: “The SP pulled back strongly founding support at the “obvious”, and with yesterdays moderately lower close, after a session where prices fluctuated, it completed the parameters for a first degree countertrend move, three sessions. So we have a few possibilities for today before next Friday option expiration, the first one is that the markets show another balancing session with narrow trading ranges that could get expanded slightly above yesterday’s high and reach, maybe, the 918.00 area, or make a marginal new low just to bounce and close on the 905.50-910.00 band. Obviously, I can not predict what will happen, that analysis is for the astrology experts, so my work may be a bit easier, try to figure which of the previous scenarios has the higher probabilities to happen, we know, we could see balancing, rally and sell off in one session, but we will try to give a chance to the fact that the third negative session was mixed and bullish divergences were seen between the different markets. So, if the lows, whatever they are, get posted during the first hour of the session, I will be a buyer once the markets turn positive, only a double bottom at yesterday’s lows could signal a rally while markets are trading in the red, but if the markets rallied first and the bounce lost its momentum just below yesterday’s highs look for a double top and increased weakness once the markets turn negative.”
The SP posted the daily lows during the first hour of the session and once in traded in positive territory and despite the weakness on the NQ managed to stay in the green. Yesterday’s bounce could have been a one day countertrend reaction from the successful test of the 900.00, if that is the case, the downtrend may get resumed during today’s session, but keep in mind that the expiration may give way to wild and erratic moves, at the opening, and then at the close.
I normally avoid trading on expiration days; it’s just that I have more losing sessions on those dates, but that does not mean that the market won’t offer good trading opportunities.
The sell off that happened during the first three sessions of the week pushing the SP down more than 50.00 points from the highs may have been exhausted, so today, the index will have to show some follow through to the upside in order to negate the “one day bounce” that I described, and if this is the case, then the 925.00 area and maybe 931.00 could get reached.
The 912.00-910.50 areas will have to hold on a sell off attempt, so try to stay long above them in particular if the Nasdaq is over performing the SP, that is a good indicator of market direction. Also beware of a strong sell off if the SP starts to trade below yesterday’s 903.00 low, a close below it could indicate more selling in the next coming sessions.
For my real time subscribers, I will leave my desk just after the opening commentary, I have many pending issues before I fly next Monday, so, Monday you will receive the newsletter as usual ( I will dispatched it between Saturday and Sunday), until Wednesday there won’t be intraday updates and until Thursday no daily newsletter. Trade smart and with stops, good luck.
TODAY’S SESSION
There is resistance just below yesterday’s highs at 915.00-916.50 on the SP, 1453.00-1454.50 on the Nasdaq and 509.50-511.30 on the Russell, beware of a strong reversal from those areas, in particular if those are the initial highs as once the futures contract expired every scenario is possible. If those get exceeded look for the next areas at 919.00-921.00 on the SP, 1458.00-1460.00 on the Nasdaq and 513.70-514.20 on the Russell to get tested. If the trend is strong, then markets may test 924.00-926.00 on the SP, 1466.00-1468.50 on the Nasdaq and 517.70-519.10 on the Russell. Those where the SP’s intraday high last Tuesday.
There is support at 909.00-907.00on the SP, 1445.00-1444.00 on the Nasdaq and 505.20-504.20 on the Russell, if those can not hold look for a test of yesterday’s early lows at 904.50-903.00 on the SP, 1441.00-1439.00 on the Nasdaq and 502.60-501.50 on the Russell. Nothing good happens if the indexes start to trade below them, the last chance before a sell off will be 900.00-898.00 on the SP, 1433.00-1432.00 on the Nasdaq and 498.00-496.30 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 |
931.00-933.00 |
1472.00-1475.00 |
521.40-522.00 |
|
Resistance 3 |
924.00-926.00 |
1466.00-1468.50 |
517.70-519.10 |
|
Resistance 2 |
919.00-921.00 |
1458.00-1460.00 |
513.70-514.20 |
|
Resistance 1 |
915.00-916.50 |
1453.00-1454.50 |
509.50-511.30 |
|
PIVOT |
911.25 |
1451.75 |
505.20 |
|
Support 1 |
909.00-907.00 |
1445.00-1444.00 |
505.20-504.20 |
|
Support 2 |
904.50-903.00 |
1441.00-1439.00 |
502.60-501.50 |
|
Support 3 |
900.00-898.00 |
1433.00-1432.00 |
498.00-496.30 |
|
Support 4 |
894.50-893.00 |
1424.00-1422.00 |
492.20-490.40 |
