DAILY TRADING ADVISORY 23-September-2009
Home prices in the U.S. increased .3% during July. Markets continue to fluctuate trading in a narrow range.
ECONOMIC DATA
10:35 AM Crude Inventories
2:15 PM FOMC Rate Decision and Policy Statement
YESTERDAY’S MARKET
With the markets trading higher during the night, the E-mini SP started the session at 1066.00 and pulled back to 1064.00. The index bounced, reached 1066.50 but backed off once more, this time to the 1063.25 level. After holding for a few minutes, the SP made a new intraday low at 1061.50, then it bounced to 1066.00, posted a double top and pushed lower to test the lows. The index bounced once more and reached 1068.75, later, it traded in a sideways pattern and posted a new intraday high at 1069.25. With the Nasdaq showing relative weakness, the move stalled and the markets continue to trade in a sideways pattern, the SP pulled back to 1065.25 but bounced and fluctuated into the end of the session. For the day, the SP added 6.75 points and settled at 1067.25, the Nasdaq closed at 1734.25, up 6.50 points for the day and the Russell added 4.90 points and settled at 618.70. The Dow closed higher by 51 points at 9829.
MARKET COMMENTARY AND OUTLOOK
Yesterday I wrote: “In yesterday’s newsletter I wrote about the possibilities of a short time correction, a first degree pullback that does not exceed three to four trading sessions, however, yesterday’s action calls for a consolidation and not a correction. This low volume and slow action could continue also during today, and may change after next Wednesday’s FOMC meeting. So, yesterday’s trading action does not give as a clue for the next important move, a trading range with the 1067.00 area on the upper boundary and 1052.00 on the lower border, so trading both sides of the markets could result, however, if the Nasdaq is over performing the SP, look for this index to show some short covering in front of the Wednesday announcement.”
Markets continue to consolidate and traded in another narrow range as investors wait for Wednesday’s FOMC meeting. This last two days correction attempt has failed to gain the necessary momentum to push down; support continues to come at very high levels. But that can change after today’s rate decision, not because rates will suffer any change, just because this tight ranges, normally give way to a strong breakout. Odds favor the chance of another push to the upside, but if the SP trades below yesterday’s lows at 1059.50, that could change and give way to a test of the 1045.00 or 1038.00 areas. So all the time that yesterday’s low remains intact chances favor a final move to the 1100.00-1102.00 mark during the next coming sessions.
Today, we have the FOMC rate decision, rates will stay lower, no changes expected. As in every date in which the market expects a rate decision, the indexes will probably make an early trend move, after that, volumes will be ultra light as traders wait for the news. Many times, the early move gets reversed about 20 minutes before the release of the announcement. Once the news gets released, we normally have three different moves, the first one, a false impulsive move that gets exhausted, its reversal and then, after 30 to 40 minutes after the release, a third move that we should try to follow, that is normally a trend move; traders with limited funds on their accounts, may avoid trading during the day. Look for an up move if the Nasdaq is over performing the SP.
TODAY’S SESSION
There is resistance around yesterday’s highs at 1068.50-1070.00 on the SP; 1737.00-1738.50 on the Nasdaq and 619.40-620.60 on the Russell, trading above them will push the indexes up to the most recent highs at 1073.00-1075.00 on the SP, 1741.50-1743.00 on the Nasdaq and 622.50-623.10 on the Russell. A double top up there could get resolved with a strong profit taking move, but if the indexes breakout the last two days consolidation, look for new highs around 1078.00-1079.50 on the SP, 1749.50-1751.00 on the Nasdaq and 624.50-624.80 on the Russell.
There is support at 1065.50-1064.50 on the SP, 1732.00-1730.00 on the Nasdaq and 617.60-617.00 on the Russell. If those fail, look for the markets to test 1063.00-1061.50 on the SP, 1726.00-1725.50 on the Nasdaq and 615.10-614.90 on the Russell. Those held nicely during yesterday’s trading session, if buyers step in there, look for a strong bounce, but if those do not hold, then the 1057.50-1055.50 areas on the SP and 1718.00-1716.00 on the Nasdaq and 611.10-610.70 on the Russell will have to hold or the SP may visit Monday’s lows. GOOD LUCK.
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TODAY’S SUPPORT, PIVOT AND RESISTANCE LEVELS |
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|
S&P |
NASDAQ |
RUSSELL |
|
Resistance 4 |
1083.00-1084.50 |
1758.00-1760.00 |
628.30-628.90 |
|
Resistance 3 |
1078.00-1079.50 |
1749.50-1751.00 |
624.50-624.80 |
|
Resistance 2 |
1073.00-1075.00 |
1741.50-1743.00 |
622.50-623.10 |
|
Resistance 1 |
1068.50-1070.00 |
1737.00-1738.50 |
619.40-620.60 |
|
PIVOT |
1065.25 |
1733.50 |
617.80 |
|
Support 1 |
1065.50-1064.50 |
1732.00-1730.00 |
617.60-617.00 |
|
Support 2 |
1063.00-1061.50 |
1726.00-1725.50 |
615.10-614.90 |
|
Support 3 |
1057.50-1055.50 |
1718.00-1716.00 |
611.10-610.70 |
|
Support 4 |
1051.50-1050.00 |
1710.00-1708.00 |
604.40-603.80 |
|
S&P |
NASDAQ |
RUSSELL |
|
FIBONACCI |
FIBONACCI |
FIBONACCI |
|
1110.69 |
1808.19 |
649.1 |
|
1094.78 |
1782.48 |
638.1 |
|
1085.03 |
1766.73 |
631.4 |
|
1079.00 |
1757.00 |
627.3 |
|
1075.28 |
1750.98 |
624.7 |
|
1069.25 |
1741.25 |
620.6 |
|
1065.53 |
1735.23 |
618.0 |
|
1064.38 |
1733.38 |
617.3 |
|
1063.22 |
1731.52 |
616.5 |
|
1059.50 |
1725.50 |
613.9 |
|
1053.47 |
1715.77 |
609.8 |
|
1049.75 |
1709.75 |
607.2 |
|
1043.72 |
1700.02 |
603.1 |
|
1033.97 |
1684.27 |
596.4 |
|
1018.06 |
1658.56 |
585.4 |
|
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DAILY PROJECTIONS |
|
S&P |
NASDAQ |
RUSSELL |
|
|
AS DAILY HIGH |
|
1073.00 |
1745.00 |
623.10 |
|
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AS DAILY LOW |
|
1063.25 |
1729.50 |
616.40 |
