DAILY TRADING ADVISORY 25-June-2009

Durable Goods Orders up by 1.8%, New Home Sales down 0.6%. Fed maintains the benchmark interest rates between zero and .25% and leaves the bond purchases unchanged as it said that inflation will remain subdued for some time. Markets closed mixed for the session.

ECONOMIC DATA

8:30 AM Initial Claims

8:30 AM Q1 GDP- Final

YESTERDAY’S MARKET

After trading slightly higher for most of the nightly session, the E-mini SP started the day at 897.00 and leaded by the strength on the Nasdaq continued to push upward reaching 900.50. After a small pullback that held above 898.00, the index broke higher reaching 903.50. As the short covering continued the SP made a new high at 905.00 where the rally halted. The SP consolidated near the highs, and, finally it continued to press higher and reached 906.50. Once the early part of the session was over, markets traded with less volume as they wait for the later release of the FOMC rate decision and policy. The SP pulled back to 901.25 and held bouncing back to 904.50, once more, the index tested the late lows. Just as the FOMC policy statement was released the SP pushed down to 899.25 bounced back to 904.25 and traded in that range for the next minutes, finally, the markets sold off, the Dow entered into negative territory and the SP pushed down to 893.75. The SP bounced back to 899.25, failed to trade higher, made a new low at 891.75 and bounced to 896.25. The SP tested once more the lows and pushed up to 897.25 trading quietly into the end of the session. For the day the SP added 7.75 points closing the day at 898.00, the Nasdaq gained 23.25 points and settled at 1447.25 and the Russell was up 6.50 points at 493.00. The Dow finished the session at 8299 after giving back early gains, a loss of 23 points during the session.

MARKET COMMENTARY AND OUTLOOK

After Monday’s downtrend session where the daily highs were done at the opening, the normal Tuesday’s narrow range session where markets consolidated the previous day sell off and yesterday’s early rally in front of the FOMC policy statement and rate decision and late sell off attempt that managed to hold above the weekly lows, markets may have found a short term bottom.

Yesterday’s trading volumes where not higher than in the previous session, so if we were waiting for some kind of exhausting low, even it may have putted in on yesterday session ,I would had preferred higher volumes and settlements near the daily lows.

Just seven days ago I wrote about the probabilities to test the 887.00 area on the SP, which was after the indexes posted triple tops and intraday failures to hold their gains, the weakest of the indexes, the Dow; after this area was tested on the SP, it is probable that the profit taking will hold, and the markets will keep a neutral position in front of the end of the 2Q, fund manager have to show something better than three months ago.

At the moment that I am writing my newsletter, markets have a nightly rally, the 907.00-908.00 areas on the SP, and the 918.00 level which showed strong resistance during the last week will have to get exceeded in the next 48 hours if that markets wants to deal with the 924.00-926.00 band from which the last sell off started, until that, there is a chance that instead of moving higher, this market will consolidate for a few days and then resume the downtrend, obviously all the time that the index holds this week lows, the markets area OK, but the other main markets, leaded by the Nasdaq will have to join the rebound and show some follow through to the upside in order to avoid another wide range downside session. Take into account that 908.50 are the 61.8 Fibonacci between the weekly highs and lows, so this area has to get exceeded and hold on a pullback for this rebound to gain additional momentum.

For today’s trading session, early strength may fail to hold all the time that the SP does not break above the 908.50 level, if markets sell off from an early bounce, look for the downside pressure top increase once the index trades below 897.50.

TODAY’S SESSION

There is resistance at 901.00-903.00 on the SP, 1452.00-1454.00 on the Nasdaq and 494.20-496.10on the Russell. If markets trade higher, look for them to test 907.00-908.00 on the SP, 1460.00-1462.50 on the Nasdaq and 499.40-500.40 on the Russell. Those levels on the SP are the 61.8 Fibonacci retracement between the weekly lows and highs, so for the markets to resume their uptrend, those will have to get exceeded pushing the indexes up to 911.25-912.50 on the SP, 1468.00-1470.00 on the Nasdaq and 504.00-505.80on the Russell.

There is strong support at 894.50-893.00 on the SP, 1442.50-1440.00 on the Nasdaq and 490.50-489.30 on the Russell. Nothing bad happens all the time that the indexes hold above them, but if they fail, look for the key areas to get tested at 888.75-888.00 on the SP, 1435.00-1433.00 on the Nasdaq and 486.00-485.60 on the Russell. If the markets can not rally from there, these week double bottom on the SP at 887.00 will have to hold on the close or more downside action could happen during the next few sessions. GOOD LUCK

TODAY’S SUPPORT, PIVOT AND RESISTANCE LEVELS

S&P

NASDAQ

RUSSELL

Resistance 4

917.75-918.00

1476.00-1478.00

508.50-509.40

Resistance 3

911.25-912.50

1468.00-1470.00

504.00-505.80

Resistance 2

907.00-908.00

1460.00-1462.50

499.40-500.40

Resistance 1

901.00-903.00

1452.00-1454.00

494.20-496.10

PIVOT

897.50

1441.50

492.40

Support 1

894.50-893.00

1442.50-1440.00

490.50-489.30

Support 2

888.75-888.00

1435.00-1433.00

486.00-485.60

Support 3

882.00-881.50

1426.75-1425.00

481.20-479.00

Support 4

889.00-878.00

1418.00-1416.00

473.00-472.60