DAILY TRADING ADVISORY 29-July-2009
Office Depot wider than expected loss, Home prices posted their first monthly gain in three years in May; Consumer Confidence falls for second straight month gave way top a consolidating session as markets fluctuate.
ECONOMIC DATA
8:30 AM Durable Orders
10:30 AM Crude Inventories
2:00 PM Fed’s Beige Book
YESTERDAY’S MARKET
After trading lower during the night, the E-mini SP started the session at 972.25 and after holding the lows it bounced to 975.00. As the Nasdaq started to rebound, the SP made it to 979.25 but once the Consumer Confidence data get released it sold off failing to trade the previous session settlement. The index moved down all the way to 973.25, it bounced to 975.00 and pushed down to 969.50, just above the previous session lows. The markets held and the E-mini SP bounced back to 974.00, but without the momentum to turn the markets to the upside it failed and pushed lower to 966.00. Once more markets held at the support levels, the SP bounced back to 970.25. Then, the index backed off, bounced to 970.50, tested 967.75 and pushed up to 972.25. After holding there and with not selling coming into the markets, the SP pushed higher to 975.50. Once it broke higher, the SP reached 978.25, pulled back to 971.50 and bounced once more into the close. For the day, the SP lost 4.00 points and settled at 976.00, the Nasdaq closed marginally higher at 1601.50 and the Russell closed almost unchanged for the day. The Dow lost 12 points finishing the day at 9096.
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MARKET COMMENTARY AND OUTLOOK
Yesterday I wrote: “Yesterday’s session was the first one in which all the markets were under pressure, the back and forth action finally turned markets higher posting their closes near the daily highs, the intraday highs, because the Globex highs remained intact during all the day. As we look for signs of a correction I have mentioned that every time that the indexes close at their highs, some exhaustion seem to be present, but yesterday’s action seems to signal some accumulation that will get resolved pushing the markets higher, the SP may be able to trade above the 1000.00 level, another wide range positive session may be seen. Obviously, in this business everything is a possibility, not a “must”, so my work at this moment is to look for signs of weakness, of a turnaround in the trend, and those signs are not present.”
Every time that a market close on the high, there is the chance that the move has exhausted, Monday’s close posted a high, that, I still think is not the last high, but held the uptrend during yesterday’s session. While I look for signs of a correction and I see the action during the last two sessions, I still can not call a high; the action looks more like a consolidation that may give bulls a chance to regroup in order to press higher reaching at least the 1000.00 area on the SP.
But the chart is the only valid tool, and if we consider yesterday’s negative close as the first down day of a correction, I may recall that a profit taking move can not exceed more than 3-4 trading sessions or the chances that a short term top has been posted will be in play. My favorite scenario continues to be bullish, the great come back seen on the Nasdaq which has been the leading force in this rally was impressive during yesterday’s session, and unless that index starts to trade lower, I don’t see a reason why higher prices won’t be seen.
I don’t want to repeat on every report the possible ways in which this Bull Run may finish, but if today’s trading session is a wide range negative one and the next day the markets fail to push higher, then chances are that we’ll see a greater correction.
Meanwhile unless that happens, buying the dips continues to be the way to go, during today’s trading session, more volatility may be seen, late in the session we have the latest Fed’s beige Book report, certainly that will move the markets.
For today’s trading session, beware of selling pressure if the SP starts to trade below 968.50, but don’t fight the direction coming from the NQ, if everything works as expected, new highs may be seen today.
TODAY’S SESSION
There is resistance at 978.50-980.25 on the SP, 1604.00-1606.00 on the Nasdaq and 551.40-552.30 on the Russell, failing to break above them could indicate another negative session, but if the markets are strong they may reach 983.00-984.50 on the SP, 1610.00-1612.00 on the Nasdaq and 554.10-555.00 on the Russell. If those get exceeded, look for new buying pushing the indexes up to 987.00-988.00 on the SP, 1616.00-1618.00 on the Nasdaq and 557.20-558.50 on the Russell.
There is support at 974.50-973.00 on the SP, 1596.00-1594.00 on the on the Nasdaq and 547.80-546.90 on the Russell. Nothing good happens if those can not hold, the profit taking attempt seen yesterday could gain some momentum pushing the markets down top 971.00-969.00 on the SP, 1591.50-1590.00 on the Nasdaq and 544.20-543.80 on the Russell. If buyers do not step there, look for a test of 965.00-963.00 on the SP, 1586.00-1585.00 on the Nasdaq and 541.50-540.10 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 |
990.50-992.00 |
1623.50-1625.00 |
563.40-565.10 |
|
Resistance 3 |
987.00-988.00 |
1616.00-1618.00 |
557.20-558.50 |
|
Resistance 2 |
983.00-984.50 |
1610.00-1612.00 |
554.10-555.00- |
|
Resistance 1 |
978.50-980.25 |
1604.00-1606.00 |
551.40-552.30 |
|
PIVOT |
974.50 |
1597.00 |
547.70 |
|
Support 1 |
974.50-973.00 |
1596.00-1594.00 |
547.80-546.90 |
|
Support 2 |
971.00-969.00 |
1591.50-1590.00 |
544.20-543.80 |
|
Support 3 |
965.00-963.00 |
1586.00-1585.00 |
541.50-540.10 |
|
Support 4 |
959.00-958.50 |
1578.00-1576.00 |
537.90-536.70 |
|
S&P |
NASDAQ |
RUSSELL |
|
FIBONACCI |
FIBONACCI |
FIBONACCI |
|
1047.38 |
1720.63 |
593.4 |
|
1022.08 |
1677.38 |
577.4 |
|
1006.58 |
1650.88 |
567.6 |
|
997.00 |
1634.50 |
561.5 |
|
991.08 |
1624.38 |
557.8 |
|
981.50 |
1608.00 |
551.7 |
|
975.58 |
1597.88 |
548.0 |
|
973.75 |
1594.75 |
546.8 |
|
971.92 |
1591.62 |
545.6 |
|
966.00 |
1581.50 |
541.9 |
|
956.42 |
1565.12 |
535.8 |
|
950.50 |
1555.00 |
532.1 |
|
940.92 |
1538.62 |
526.0 |
|
925.42 |
1512.12 |
516.2 |
|
900.13 |
1468.88 |
500.3 |
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DAILY PROJECTIONS |
S&P |
NASDAQ |
RUSSELL |
|
AS DAILY HIGH |
978.75 |
1618.00 |
555.60 |
|
AS DAILY LOW |
963.50 |
1591.50 |
545.80 |
