TRADING ADVISORY 13-January-2008
UBS AG may post a $7.2 billion Q4 loss and Citigroup may earn as much as $10 billion by selling control of its brokerage to Morgan Stanley, Citi shares fall sharply. Obama asks Bush to request the remaining $350 billion TARP fund from congress. Markets fall on earnings concern.
.
ECONOMIC DATA
2:00 PM Treasury Budget
YESTERDAY’S MARKET
After a slightly bearish but quite Globex session, markets opened the day with lithe change. The E-mini SP started the session at 883.50 bounced a point and after a few minutes into the session pushed lower to 877.25, the index bounced back to 879.50 and pushed lower to a new marginal low at 877.00. After posting a small double to at 880.50, the E-mini SP printed a higher low at 877.50; however the weakness on all the other indexes pushed the SP to a new low at 874.00, just below our 874.50 support level. Once the markets hold our support levels on both, the SP and Nasdaq, the markets tried hard to bounce, the SP tested 879.50 where the bounce failed as the lack of upside momentum and low volumes frustrate the move. The SP pulled back to the early lows but failed to hold pushing lower to new lows at 869.75. As the overall weakness continued to be present, markets held the lows for a couple of hour and traded in a narrow range, and after a test of the daily lows another rally attempt took place. The SP failed to break above 875.00 and pushed to a new low at 864.75 as markets continue to erode. Once more the SP try to held but with the same pattern of trading traded at 863.00. After holding at our fourth support level, exactly at 863.00, the SP bounced up to 867.00 but got reversed posting a new marginal low at 862.00, then a double bottom, and bounced to 866.25 but failed once more and pushed to new lows at 860.25 before bouncing strongly into the end of the session reaching the Key 868.00 level. For the day, the SP settled at 868.00 losing 17.50 points, the Nasdaq lost 15.50 points ending the session at 1206.00 and the Russell ended lower by 9.80 points at 466.80. The Dow lost 125 points closing the day at 8473.
MARKET COMMENTARY AND OUTLOOK
Yesterday I wrote:” Markets posted their daily high during the Globex session and held most of the day but get sold strongly into the close. The three day negative sessions will have to prove that the down move after last week false break to new highs has already been exhausted. The fact that the indexes closed at their daily lows open the door for this possibility to be true, but the index will have to close higher during today’s trading session or another test of the 850.00 area will be the next move. If that happens and the markets hold we will have another intermediate rally that in front of the prevalent weakness I doubt that it will be able to post new highs before the downtrend gets resumed. On the daily charts, the Dow is already testing the lower boundary of the triangle formation, the same will happen in the SP at the 870.00-867.00 levels, so today and the next couple of days are important to redefine market direction, it will be short term bullish, if the markets are able to rally for more that three days; does the transition of power on the United States and next week Martin Luther King holiday will result in a rally? It is very difficult to forecast right now. But surely, another negative session will point for a test of the levels at just mentioned or a test of the 850.00 level. It will be highly positive if the SP can rally more than 15.0-0 points from its daily low and close above the 891.00-892.00 area. This week, is full of important economic reports, with retail sales and inflation numbers to be closely watched by traders, but today the way is open for the markets to act without any news, many days like this, when the markets are trading down, bears have the control, and so the importance of a rally will be greater. For today’s trading session, markets have a lot of work to be done just to get back in a neutral position, our pivot levels, are well above Friday’s weak settlements, and all the time that the indexes do not trade above those pivot areas, they should be considered in a weak position, however if the Globex lows whatever they area, hold for the first hour of the session, buying the pullbacks could be the way to go.”
Markets opened once more with overall weakness and traded lower for the rest of the session. The indexes were not able to post any decent rebound during all the session, and despite that the volumes were a bit higher than last week and good for a Monday’s session, prices continued to erode. For a second straight session, the indexes traded down all the session. Are the markets in front of another capitulation that will push prices much lower? Is the late rebound well above the daily lows a short term indication that markets will reverse the last decline?
Both scenarios are possible, however the selling has been done without any panic, and volumes have been really low since last week, so if the trend is still down, today’s trading session will have to show a wide range downside day, some panic selling with higher volumes. If the selling is coming to an end, no matter how the markets open, the first sign will have to show a consolidation during today’s session, a reversal from early weakness or a close above the 875.50 level. The late bounce from the 860.25 low in the SP that managed to reach 867.00 and the relatively strength in the Nasdaq that broke the selling pattern that was present during all the session, may be seen as moderately bullish, the fact that the close on the SP was above 868.00, may be seen as moderately bullish. The close on the Nasdaq, which recovered half of its early losses may be seen also with some bullishness. Was this late recovery a short covering rally in front of the Alcoa earnings report, it may be, but all the time that yesterday’s lows can hold, this “moderately bullish factors” have to be considered to try and figure what will be the next move for the markets. However, even if today’s trading session shows this consolidation or manages to end a bit higher, some follow through will have to be seen for the markets to start once more to push higher. So any important clues related to a change in the pattern will have to wait.
Many times, in this bear campaign, a negative session on a Friday, has been followed by a negative session the next Monday, but it has been strongly reversed during the next trading session or at least have been followed by a consolidation that last a few days, if this pattern will come into play for today’s session, the selling should be limited and when I mean limited, it means a double bottom at yesterday’s lows or a marginal low without any follow through.
The Dow is getting close to its strong support level at 8350 and probably it will be tested if the current weakness continues, but if it bounces from there or it starts to trade above the 8560 level, some “strength” could be seen.
For today’s trading session, we have to take into account that the trend remains negative, and that markets could show an extension of this declines by posting a strong negative session, a capitulation. Do only a double bottom or a strong short covering rally that exceeds 875.50 and holds above it on a pullback will change the short term pattern. So unless that happens selling the rallies seems to be the lower risk play.
TODAY’S SESSION
Initial resistance at 871.50-872.50 on the SP, 1210.00-1212.00 on the Nasdaq and 468.30-469.80 on the Russell. If those get exceeded look for the indexes to push a bit higher reaching 874.50-875.50 on the SP, 1214.50-1216.50 on the Nasdaq and 472.30-473.70 on the Russell. Nothing good happens all the time that the indexes keep trading below those levels, so if an initial rally fails there look to get short with tight stops, however, if the markets finally show some bullishness look for them to test their next resistance areas at 881.00-882.50 on the SP, 1225.00-12227.00 on the Nasdaq and 476.00-476.90 on the Russell. Trading above them will indicate that the current decline probably has ended.
Look for support at 865.50-863.50 on the SP, 1202.50-1201.00 on the Nasdaq and 465.30-463.80 on the Russell, if those areas hold and a higher low gets printed in the daily charts, should be considered mildly bullish, but if those levels get broken look for the markets to test yesterday’s lows at 861.00-859.50 on the SP, 1198.00-1196.00 on the Nasdaq and 461.50-460.40 on the Russell. Obviously a double bottom will be a strong buying signal for the markets, but if those do not hold, look for the indexes to continue to slide testing 856.00-854.00 on the SP, 1186.00-1184.00 on the Nasdaq and 457.70-456.10 on the Russell before some buyers start to come in. a double bottom there on the Nasdaq could also result in a good short covering rally. GOOD LUCK.
.
TODAY’S SUPPORT, PIVOT AND RESISTANCE LEVELS
S&P NASDAQ RUSSELL
Resistance 4 886.50-888.00 1236.00-1238.00 480.50-482.00
Resistance 3 881.00-882.50 1225.00-1227.00 476.00-476.90
Resistance 2 874.50-875.50 1214.50-1216.50 472.30-473.70
Resistance 1 871.50-872.50 1210.00-1212.00 468.30-469.80
PIVOT 871.25 1206.00 470.50
Support 1 865.50-863.50 1202.50-1201.00 465.30-463.80
Support 2 861.00-859.50 1198.00-1196.00 461.50-460.40
Support 3 856.00-854.00 1186.00-1184.00 457.70-456.10
Support 4 846.00-844.00 1176.00-1175.00 453.00-451.80
S&P NASDAQ RUSSELL
FIBONACCI FIBONACCI FIBONACCI
926.35 1028.52 518.46
920.40 1042.73 512.94
910.75 1065.75 504.00
901.10 1088.77 495.06
895.15 1102.98 489.54
885.50 1126.00 480.60
875.85 1149.02 471.66
872.88 1156.13 468.90
869.90 1163.23 466.14
860.25 1186.25 457.20
850.60 1209.27 448.26
844.65 1223.48 442.74
835.00 1246.50 433.80
825.35 1269.52 424.86
819.40 1283.73 419.34
DAILY PROJECTIONS S&P NASDAQ RUSSELL
AS DAILY HIGH 876.75 1216.00 473.70
AS DAILY LOW 851.50 1176.25 457.20
Futures and options trading have large potential rewards, but also LARGE POTENTIAL RISK. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don't trade with money you can't afford to lose. This is neither a solicitation nor an offer to buy or sell futures or options. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed in this document. The past performance of any trading system or methodology is not necessarily indicative of futures results.
DAY TRADING INVOLVES HIGH RISK AND YOU CAN LOSE A LOT OF MONEY.
Every effort has been made to accurately represent all of our products and it's potential. As with any business there is a risk of loss of capital and there is no guarantee that you will earn any money. The financial markets are risky .Investing is risky. The foregoing has been prepared only and solely for informational purposes and is not a solicitation or an offer to buy or sell any security, option or futures contract. Opinion is based on historical research but there is not guarantee that futures results will be profitable. We are not advocating or recommending trading futures and our services, notes and entry and exit prices to the markets only reflects our opinion an a manner how markets can be traded. We mention many indexes like the S&P, NASDAQ, Russell, Dow Jones as T-Bonds only because they are the most known and liquid markets, and not because we recommend in any way to be traded.
You can lose more than your initial investment.
We are not Brokers, Registered Trading Advisors, Registered Investment Advisors or Commodity Trading Advisors. All the material contained here or in any communication is only for information purposes and part of our thoughts and personal conclusions.
Copyright © by theminitrade.com
UBS AG may post a $7.2 billion Q4 loss and Citigroup may earn as much as $10 billion by selling control of its brokerage to Morgan Stanley, Citi shares fall sharply. Obama asks Bush to request the remaining $350 billion TARP fund from congress. Markets fall on earnings concern.
.
ECONOMIC DATA
2:00 PM Treasury Budget
YESTERDAY’S MARKET
After a slightly bearish but quite Globex session, markets opened the day with lithe change. The E-mini SP started the session at 883.50 bounced a point and after a few minutes into the session pushed lower to 877.25, the index bounced back to 879.50 and pushed lower to a new marginal low at 877.00. After posting a small double to at 880.50, the E-mini SP printed a higher low at 877.50; however the weakness on all the other indexes pushed the SP to a new low at 874.00, just below our 874.50 support level. Once the markets hold our support levels on both, the SP and Nasdaq, the markets tried hard to bounce, the SP tested 879.50 where the bounce failed as the lack of upside momentum and low volumes frustrate the move. The SP pulled back to the early lows but failed to hold pushing lower to new lows at 869.75. As the overall weakness continued to be present, markets held the lows for a couple of hour and traded in a narrow range, and after a test of the daily lows another rally attempt took place. The SP failed to break above 875.00 and pushed to a new low at 864.75 as markets continue to erode. Once more the SP try to held but with the same pattern of trading traded at 863.00. After holding at our fourth support level, exactly at 863.00, the SP bounced up to 867.00 but got reversed posting a new marginal low at 862.00, then a double bottom, and bounced to 866.25 but failed once more and pushed to new lows at 860.25 before bouncing strongly into the end of the session reaching the Key 868.00 level. For the day, the SP settled at 868.00 losing 17.50 points, the Nasdaq lost 15.50 points ending the session at 1206.00 and the Russell ended lower by 9.80 points at 466.80. The Dow lost 125 points closing the day at 8473.
MARKET COMMENTARY AND OUTLOOK
Yesterday I wrote:” Markets posted their daily high during the Globex session and held most of the day but get sold strongly into the close. The three day negative sessions will have to prove that the down move after last week false break to new highs has already been exhausted. The fact that the indexes closed at their daily lows open the door for this possibility to be true, but the index will have to close higher during today’s trading session or another test of the 850.00 area will be the next move. If that happens and the markets hold we will have another intermediate rally that in front of the prevalent weakness I doubt that it will be able to post new highs before the downtrend gets resumed. On the daily charts, the Dow is already testing the lower boundary of the triangle formation, the same will happen in the SP at the 870.00-867.00 levels, so today and the next couple of days are important to redefine market direction, it will be short term bullish, if the markets are able to rally for more that three days; does the transition of power on the United States and next week Martin Luther King holiday will result in a rally? It is very difficult to forecast right now. But surely, another negative session will point for a test of the levels at just mentioned or a test of the 850.00 level. It will be highly positive if the SP can rally more than 15.0-0 points from its daily low and close above the 891.00-892.00 area. This week, is full of important economic reports, with retail sales and inflation numbers to be closely watched by traders, but today the way is open for the markets to act without any news, many days like this, when the markets are trading down, bears have the control, and so the importance of a rally will be greater. For today’s trading session, markets have a lot of work to be done just to get back in a neutral position, our pivot levels, are well above Friday’s weak settlements, and all the time that the indexes do not trade above those pivot areas, they should be considered in a weak position, however if the Globex lows whatever they area, hold for the first hour of the session, buying the pullbacks could be the way to go.”
Markets opened once more with overall weakness and traded lower for the rest of the session. The indexes were not able to post any decent rebound during all the session, and despite that the volumes were a bit higher than last week and good for a Monday’s session, prices continued to erode. For a second straight session, the indexes traded down all the session. Are the markets in front of another capitulation that will push prices much lower? Is the late rebound well above the daily lows a short term indication that markets will reverse the last decline?
Both scenarios are possible, however the selling has been done without any panic, and volumes have been really low since last week, so if the trend is still down, today’s trading session will have to show a wide range downside day, some panic selling with higher volumes. If the selling is coming to an end, no matter how the markets open, the first sign will have to show a consolidation during today’s session, a reversal from early weakness or a close above the 875.50 level. The late bounce from the 860.25 low in the SP that managed to reach 867.00 and the relatively strength in the Nasdaq that broke the selling pattern that was present during all the session, may be seen as moderately bullish, the fact that the close on the SP was above 868.00, may be seen as moderately bullish. The close on the Nasdaq, which recovered half of its early losses may be seen also with some bullishness. Was this late recovery a short covering rally in front of the Alcoa earnings report, it may be, but all the time that yesterday’s lows can hold, this “moderately bullish factors” have to be considered to try and figure what will be the next move for the markets. However, even if today’s trading session shows this consolidation or manages to end a bit higher, some follow through will have to be seen for the markets to start once more to push higher. So any important clues related to a change in the pattern will have to wait.
Many times, in this bear campaign, a negative session on a Friday, has been followed by a negative session the next Monday, but it has been strongly reversed during the next trading session or at least have been followed by a consolidation that last a few days, if this pattern will come into play for today’s session, the selling should be limited and when I mean limited, it means a double bottom at yesterday’s lows or a marginal low without any follow through.
The Dow is getting close to its strong support level at 8350 and probably it will be tested if the current weakness continues, but if it bounces from there or it starts to trade above the 8560 level, some “strength” could be seen.
For today’s trading session, we have to take into account that the trend remains negative, and that markets could show an extension of this declines by posting a strong negative session, a capitulation. Do only a double bottom or a strong short covering rally that exceeds 875.50 and holds above it on a pullback will change the short term pattern. So unless that happens selling the rallies seems to be the lower risk play.
TODAY’S SESSION
Initial resistance at 871.50-872.50 on the SP, 1210.00-1212.00 on the Nasdaq and 468.30-469.80 on the Russell. If those get exceeded look for the indexes to push a bit higher reaching 874.50-875.50 on the SP, 1214.50-1216.50 on the Nasdaq and 472.30-473.70 on the Russell. Nothing good happens all the time that the indexes keep trading below those levels, so if an initial rally fails there look to get short with tight stops, however, if the markets finally show some bullishness look for them to test their next resistance areas at 881.00-882.50 on the SP, 1225.00-12227.00 on the Nasdaq and 476.00-476.90 on the Russell. Trading above them will indicate that the current decline probably has ended.
Look for support at 865.50-863.50 on the SP, 1202.50-1201.00 on the Nasdaq and 465.30-463.80 on the Russell, if those areas hold and a higher low gets printed in the daily charts, should be considered mildly bullish, but if those levels get broken look for the markets to test yesterday’s lows at 861.00-859.50 on the SP, 1198.00-1196.00 on the Nasdaq and 461.50-460.40 on the Russell. Obviously a double bottom will be a strong buying signal for the markets, but if those do not hold, look for the indexes to continue to slide testing 856.00-854.00 on the SP, 1186.00-1184.00 on the Nasdaq and 457.70-456.10 on the Russell before some buyers start to come in. a double bottom there on the Nasdaq could also result in a good short covering rally. GOOD LUCK.
.
TODAY’S SUPPORT, PIVOT AND RESISTANCE LEVELS
S&P NASDAQ RUSSELL
Resistance 4 886.50-888.00 1236.00-1238.00 480.50-482.00
Resistance 3 881.00-882.50 1225.00-1227.00 476.00-476.90
Resistance 2 874.50-875.50 1214.50-1216.50 472.30-473.70
Resistance 1 871.50-872.50 1210.00-1212.00 468.30-469.80
PIVOT 871.25 1206.00 470.50
Support 1 865.50-863.50 1202.50-1201.00 465.30-463.80
Support 2 861.00-859.50 1198.00-1196.00 461.50-460.40
Support 3 856.00-854.00 1186.00-1184.00 457.70-456.10
Support 4 846.00-844.00 1176.00-1175.00 453.00-451.80
S&P NASDAQ RUSSELL
FIBONACCI FIBONACCI FIBONACCI
926.35 1028.52 518.46
920.40 1042.73 512.94
910.75 1065.75 504.00
901.10 1088.77 495.06
895.15 1102.98 489.54
885.50 1126.00 480.60
875.85 1149.02 471.66
872.88 1156.13 468.90
869.90 1163.23 466.14
860.25 1186.25 457.20
850.60 1209.27 448.26
844.65 1223.48 442.74
835.00 1246.50 433.80
825.35 1269.52 424.86
819.40 1283.73 419.34
DAILY PROJECTIONS S&P NASDAQ RUSSELL
AS DAILY HIGH 876.75 1216.00 473.70
AS DAILY LOW 851.50 1176.25 457.20
Futures and options trading have large potential rewards, but also LARGE POTENTIAL RISK. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don't trade with money you can't afford to lose. This is neither a solicitation nor an offer to buy or sell futures or options. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed in this document. The past performance of any trading system or methodology is not necessarily indicative of futures results.
DAY TRADING INVOLVES HIGH RISK AND YOU CAN LOSE A LOT OF MONEY.
Every effort has been made to accurately represent all of our products and it's potential. As with any business there is a risk of loss of capital and there is no guarantee that you will earn any money. The financial markets are risky .Investing is risky. The foregoing has been prepared only and solely for informational purposes and is not a solicitation or an offer to buy or sell any security, option or futures contract. Opinion is based on historical research but there is not guarantee that futures results will be profitable. We are not advocating or recommending trading futures and our services, notes and entry and exit prices to the markets only reflects our opinion an a manner how markets can be traded. We mention many indexes like the S&P, NASDAQ, Russell, Dow Jones as T-Bonds only because they are the most known and liquid markets, and not because we recommend in any way to be traded.
You can lose more than your initial investment.
We are not Brokers, Registered Trading Advisors, Registered Investment Advisors or Commodity Trading Advisors. All the material contained here or in any communication is only for information purposes and part of our thoughts and personal conclusions.
Copyright © by theminitrade.com