DAILY TRADING ADVISORY 28-August-2009
2Q GDP minus 1%, Initial Claims at 570K, Continuing Claims at 6.13 million and Boeing jumping 8% gave way to an initial sell off that was reversed to push markets up into the close posting a positive close.
ECONOMIC DATA
8:30 AM Personal Income
8:30 AM Personal Spending
9:55 AM Michigan Sentiment-rev.
YESTERDAY’S MARKET
With low trading volumes typical for the season, markets fluctuated during the Globex session, the E-mini SP started the day at 1026.50 and after testing the 1027.00 area it sold off to 1023.00. After a few minutes in which the SP tried to hold and leaded by the under performing Nasdaq, the SP continued to push down to the 1020.00 Globex low. Unable to rebound, the index continued to trade lower and tested my 1014.40 support area. The SP bounced to 1018.00, pulled back posting a higher low and bounced once more reaching 1019.75, the rebound continued with the SP pushing up to the 1024.50 intraday resistance, once the Treasury auction was done, markets turned positive pushing the SP up to 1032.75. Then markets pulled back a bit and traded in sideways pattern into the close. For the day, the SP added 2.25 points and settled at 1029.50, the Nasdaq added 2.00 points closing at 1638.50 and the Russell lost .30 closing at 582.60. The Dow added 37 points closing the day at 9580.
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MARKET COMMENTARY AND OUTLOOK
Last Friday I wrote: “This kind of early weakness in which buyers stand on line to jump in, may continue, and with three trading session in which the indexes consolidated after the initial moves, a breakout may be just around the corner. As we have a high on the SP just at my 1038.00 area, I can not rule out a wide range downside session, but if that happens today, I certainly think that it will be a buying opportunity, I don’t think that the markets are ready for a correction, support is coming in at very high levels and consolidations near the high have the tendency to get broken to the upside, so one negative session may be just an opportunity to join the long traders. I don’t see more than one day of selling, if that happens. If the markets continue to trade in this consolidating mood, buying the dips, in particular during the early morning may continue to be the way to go, but I will keep watching closely the 1018.50 area on the SP and the 1632.00-1630.00 on the Nasdaq in order to have a clue for markets direction, if the Nasdaq starts once more to over perform the SP, try to stay long.”
We considered that the toppy conditions of the markets could give way to a strong sell off, you never know until it happens, it took me by surprise. I wrote yesterday that the markets could have been ready for a one day sell off, the sell off lasted a few hours and markets reversed as traders continue to buy on the pullbacks.
Not too much has changed during the last three sessions, the indexes continue to consolidated after the SP posted its high at the 1038.00 upside objective, this consolidation that is taking place near the highs carries a bullish undertone, and despite that the felling of many traders is that we have a short term top, there is not evidence that longs are afraid of a reversal.
Today’s session, near the end of month cycle has the tendency to see a strong move, normally, the end of month markets push up, and after three consecutive session in which the indexes didn’t make anything, they may surprise us finally breaking out of the current range.
Earlier in the morning we have the Personal Income and spending data, spending, if increased may give way to another pre-opening spike, then the markets will have to trade against it, on a Friday, I would not be surprised if we have a wide range trading session, but despite my slightly bullishness based on the fact that the consolidation is taking place near the highs, there are not clues of what the markets will do, and with so low trading volumes, anything could happen, I think that I will continue to be a buyer on the pullbacks.
TODAY’S SESSION
There is resistance at yesterday’s late highs at 1031.00-1032.50 on the SP, 1643.00-1644.50 on the Nasdaq and 585.10-586.50 on the Russell. If those, which have been acted as strong resistance areas during the last few days, remain intact, look for another sell off attempt, but if they get exceeded, look for buyers to join the move pushing the markets up to 1035.00-1036.50 on the SP, 1648.00-1650.50 on the Nasdaq and 588.40.590.10 on the Russell. If those can not hold, then new highs may be posted during the last day of the week.
There is support at 1027.50-1026.00 on the SP; 1634.00-1632.00 on the Nasdaq and 581.00-579.70 on the Russell, failing to hold there will push the markets down to 1024.00-1022.00 on the SP, 1626.00-1624.00 on the Nasdaq and 577.40-576.10 on the Russell. If those are the lows, another 14.00-18.00 points rally on the SP could be seen, but if sellers win the battle, then the key 1019.50-1018.00 area on the SP will get tested while the other indexes visit 1618.00-1616.50 and 574.30-573.60 respectively. GOOD LUCK.
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TODAY’S SUPPORT, PIVOT AND RESISTANCE LEVELS |
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S&P |
NASDAQ |
RUSSELL |
|
Resistance 4 |
1043.50-1045.00 |
1662.00-1663.00 |
598.00-560.20 |
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Resistance 3 |
1039.50-1040.00 |
1656.50-1657.50 |
593.70-594.40 |
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Resistance 2 |
1035.00-1036.50 |
1648.00-1650.50 |
588.40.590.10 |
|
Resistance 1 |
1031.00-1032.50 |
1643.00-1644.50 |
585.10-586.50 |
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PIVOT |
1025.50 |
1630.75 |
579.60 |
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Support 1 |
1027.50-1026.00 |
1634.00-1632.00 |
581.00-579.70 |
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Support 2 |
1024.00-1022.00 |
1626.00-1624.00 |
577.40-576.10 |
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Support 3 |
1019.00-1018.50 |
1618.00-1616.50 |
574.30-573.60 |
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Support 4 |
1013.50-1011.00 |
1608.00-1607.50 |
569.20-568.00 |
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S&P |
NASDAQ |
RUSSELL |
|
FIBONACCI |
FIBONACCI |
FIBONACCI |
|
1109.25 |
1783.75 |
648.5 |
|
1079.87 |
1729.89 |
624.3 |
|
1061.87 |
1696.89 |
609.5 |
|
1050.75 |
1676.50 |
600.4 |
|
1043.87 |
1663.89 |
594.7 |
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1032.75 |
1643.50 |
585.6 |
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1025.87 |
1630.89 |
579.9 |
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1023.75 |
1627.00 |
578.2 |
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1021.63 |
1623.11 |
576.5 |
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1014.75 |
1610.50 |
570.8 |
|
1003.63 |
1590.11 |
561.7 |
|
996.75 |
1577.50 |
556.0 |
|
985.63 |
1557.11 |
546.9 |
|
967.63 |
1524.11 |
532.1 |
|
938.25 |
1470.25 |
507.9 |
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DAILY PROJECTIONS |
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S&P |
NASDAQ |
RUSSELL |
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AS DAILY HIGH |
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1040.00 |
1658.00 |
584.00 |
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AS DAILY LOW |
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1022.00 |
1625.00 |
569.20 |
