WEEKLY PIVOTS FOR WEEK ENDING 31-July-2009
R3 1008.75
R2 1001.00
R1 993.25
PP 963.50
S1 955.75
S2 948.00
S3 918.25
ECONOMIC DATA
10:00 AM New Home Sales
WEEKLY RECAP
Markets posted another strong week as they continue to push up, Monday’s trading session saw the markets higher as the Leading Indicator report showed a .7% increase, up beating earnings gave way to a positive session as the markets closed on the green. Tuesday’s session started with the Bernanke’s testimony, in which he indicated that the FED is still focused on the economic recovery. On the corporate arena, CIT said that it is still considering bankruptcy. For the day, the SP added 4.50 points and settled at 953.50, the Nasdaq closed higher by 14.25 points at 1554.75 and the Russell finished almost unchanged at 524.70. The Dow added 67 points finishing the session at 8915. Wednesday’s session started on the negative side but early weakness get reversed keeping the uptrend intact, Morgan Stanley wider than expected loss, Wells Fargo bad mortgage loans increased, stocks struggle for direction. Nasdaq extend its rally for the 11th consecutive session but markets closed mixed for the day, the SP lost 4.00 points and settled at 949.50, the Nasdaq added 2.50 points closing the session at 1556.50 and the Russell closed almost unchanged at 524.70. The Dow lost 34 points closing the session at 8881. Markets posted a strong and solid rally during Thursday session as they ignored the increase on the weekly Initial Claims data, ATT, 3M and Ford reported better than expected results, Initial Claims was up to 554K, Continuing Claims lower and Existing Home sales up 3.6%, much better than expected. Markets posted a strong session breaking above the resistance areas. For the day, the SP added 19.50 points and settled at 969.00, the Nasdaq closed higher by 27.50 points at 1584.00 and the Russell closed at 541.60, up 16.90 for the day. The Dow closed with a solid 188 points advance at 9069. Friday’s Globex session opened with losses, Microsoft weak outlook and Amazon 10% drop in profits kept the indexes under light pressure; the session saw some consolidation of the previous day rally. The Michigan Sentiment reported lower as growing unemployment eroded consumer confidence. However, there was not selling pressure and the indexes managed to come back pushing the futures to a higher close, the SP closed higher by 8.75 points at 977.75, the Nasdaq gained 13.25 points and settled at 1597.25 and the Russell added 6.20 points finishing the session at 547.80. The Dow added another 23 points finishing the week at 9093.
FRIDAY’S MARKET
After trading in a sideways pattern during the Globex session, the E-mini SP started the day at 967.50 and after pulling back to 966.25 it bounced to 969.50. After a few attempts and with the Nasdaq recovering from early losses, the SP reached 972.00. With the NQ failing to break above the Globex highs, the SP pulled back to 968.50 and once the economic report get released, the index pushed lower to 964.00 from where it bounced to 967.25. While trying to decide its direction, the index reached 968.00 and once more pulled back. The SP tested the Globex lows at 962.50. The markets held and the SP slowly rallied reaching 971.00, after pulling back to 968.00 and once it broke the 971.00 level, the index pushed up to 974.50, later, the index traded in a narrow range near the highs and reached 975.00. Finally, during the last half hour of the session, the markets broke higher reaching new highs. For the day, the SP closed higher by 8.75 points at 977.75, the Nasdaq gained 13.25 points and settled at 1597.25 and the Russell added 6.20 points finishing the session at 547.80. The Dow added another 23 points finishing the week at 9093.
.
.
MARKET COMMENTARY AND OUTLOOK
Last Friday I wrote: “After a few sessions where the market posted higher lows and highs and struggle to make a strong breakout, the markets finally posted another strong upside move, the SP broke the resistance areas and the Dow traded solidly above the 8900 level. What’s next? When does this rally will show some correction? It can happen at any moment, but a pullback that does not exceed more than three trading sessions may be considered a buying opportunity, it seems that the markets will continue to push up and that the rally may last for another 30 to 40 days, not a vertical move, but strong sessions, limited pullbacks and consolidating sessions that get resolved to the upside, that is what I think is the most probable scenario. So the SP rallied during eight consecutive sessions, then it posted a negative session with limited losses, and then it broke strongly above the obvious 956.50 resistance area, all this came after the index sold off for seven sessions but reversed and broke above the previous high, the high from where the sell off started, only in three trading sessions. All this indicate that the markets may continue to post new highs, the sideways pattern that started in early May and tested the breakout point forming a bottom between July 8th and July 13 has been resolved to the upside, and any coming pullback may be able to hold the 956.00-950.00 areas and get limited to no more than three days, until that pattern of trend gets broken, the rally will continue and probably will exceed the 1000.00 level.”
The rally continues with no signs of weakness and, as I pointed during the last few sessions, it seems that it will be able to push higher, there is not evidence that the move ended. I mentioned that the SP will have to show a pullback, which only if it exceed a three day period, may indicate that the rally has ended and the markets will trade in a sideways pattern.
But there area also other ways in which the rally could end, one of them, every time that the market close on the high it could show signs that the buying has exhausted, but in this case, we have seen during the last few sessions, many closes at or near the daily high, so I can not assume that this pattern of trend was exhausted by last Friday settlements.
Other way in which a move could end, is a wide opening gap (in this case an upper gap) in the same direction of the trend, that gap gets reversed and the market closes in the red; that could be an indication, normally it gets followed by a weak rally, that rally, if it fails to post a new high, and the next sessions the market starts to trade with losses, may indicate that a short term top has been posted.
We have not seen any signs that the rally has ended, markets tend to exaggerate their moves, and this one, could get extended. At this point is highly risky to take short, unless you want to catch a high by posting a stop loss order just above the late high. I personally prefer to stay with this strong trend until I see some signs of a correction.
For today’s trading session, beware of a wide up opening gap, wait to see if the index retreats and then on signs of support get long. If the opening does not show any strong move, wait for the first pullback in order to try to enter long, short trades, lets be careful and wait and see how the session take place. The recent pattern may continue to play.
TODAY’S SESSION
There is resistance above last Friday highs at 979.25-980.50 on the SP, 1600.00-1602.00 on the Nasdaq and 548.80-550.90 on the Russell. A double top may give way to some profit taking, but it may result a buying opportunity. Once if it happens, and the markets push higher, look for the next resistance areas at 982.50-983.50 on the SP, 1605.50-1607.00 on the Nasdaq and 553.80-554.00 on the Russell. If the markets open strong, the 986.00-986.50 areas on the SP, 1612.00-1612.50 on the Nasdaq and 555.80-556.80 on the Russell, may offer good resistance the first time they get tested.
There is support at 974.50-973.25 on the SP, 1594.00-1592.00 on the Nasdaq and 545.70-544.70 on the Nasdaq. If the indexes can not trade below these areas, we may see another vertical session, but if those fail, then the next support levels at 970.00-968.50 on the SP, 1588.00-1586.50 on the Nasdaq and 537.50-536.60 on the Russell will be visited and they are still a buy, but beware of a quick downside move that could reach 963.00-961.50 on the SP if those fail to hold. GOOD LUCK
|
TODAY’S SUPPORT, PIVOT AND RESISTANCE LEVELS |
|||
|
S&P |
NASDAQ |
RUSSELL |
|
|
Resistance 4 |
989.50-990.00 |
1618.00-1619.25 |
558.90-560.20 |
|
Resistance 3 |
986.00-986.50 |
1612.00-1612.50 |
555.80-556.80 |
|
Resistance 2 |
982.50-983.50 |
1605.50-1607.00 |
553.80-554.00 |
|
Resistance 1 |
979.25-980.50 |
1600.00-1602.00 |
548.80-550.90 |
|
PIVOT |
973.00 |
1589.75 |
544.60 |
|
Support 1 |
974.50-973.25 |
1594.00-1592.00 |
545.70-544.70 |
|
Support 2 |
970.00-968.50 |
1588.00-1586.50 |
542.10-540.60 |
|
Support 3 |
963.00-961.50 |
1583.00-1581.00 |
537.50-536.60 |
|
Support 4 |
958.00-956.50 |
1575.00-1573.00 |
533.40-532.80 |
|
S&P |
NASDAQ |
RUSSELL |
|
FIBONACCI |
FIBONACCI |
FIBONACCI |
|
1049.13 |
1720.31 |
596.2 |
|
1022.20 |
1674.21 |
577.9 |
|
1005.70 |
1645.96 |
566.7 |
|
995.50 |
1628.50 |
559.8 |
|
989.20 |
1617.71 |
555.5 |
|
979.00 |
1600.25 |
548.6 |
|
972.70 |
1589.46 |
544.3 |
|
970.75 |
1586.13 |
543.0 |
|
968.80 |
1582.79 |
541.7 |
|
962.50 |
1572.00 |
537.4 |
|
952.30 |
1554.54 |
530.5 |
|
946.00 |
1543.75 |
526.2 |
|
935.80 |
1526.29 |
519.3 |
|
919.30 |
1498.04 |
508.1 |
|
892.38 |
1451.94 |
489.8 |
|
DAILY PROJECTIONS |
S&P |
NASDAQ |
RUSSELL |
|
AS DAILY HIGH |
986.50 |
1612.00 |
553.80 |
|
AS DAILY LOW |
970.50 |
1584.50 |
542.60 |
