TRADING ADVISORY 16-January-2009
Initial Claims up by 54K at 524K, continuing claims 4.5 million, PPI down by 1.9% and NY Empire State Index at 22.00 indicating weakness. JP Morgan post small profit and Apple’s Jobs health problems. BAC and Citigroup continue to plunge giving way to another sell off on the equity markets that was strongly reversed pushing the markets to a positive close once the news that Bank of America will receive another $20 billion to support Merrill deal was out. After hours, Intel reported that profit plunged 90 percent and sales slipped 23 percent during the last three months of the year.
.
ECONOMIC DATA
8:30: AM CPI
8:30 AM Core CPI
9:15 AM Capacity Utilization
9:15 AM Industrial Production
9:55 AM Michigan Sentiment–prel
YESTERDAY’S MARKET
Sideways action during the Globex session resulted in a slightly lower opening for the U.S. equity markets. The E-mini SP opened the session at 837.00 from where it sold off strongly reaching 824.75 just before the Philadelphia Fed numbers got release, the SP bounced to 830.50 and get sold once more reaching 817.00. A small double bottom at that level resulted in a bounce to 820.50 and a quick drop to a new low at 816.50. As the extreme selling pressure continued, the SP bounced a couple of points and pushed to a new marginal low at 815.75, just below our 816.00 support levels. As the selling pressure lost its momentum, the SP bounced to 821.50, backed off a bit and continued higher reaching 824.50.Unable to gain the momentum to continue higher, the SP pulled back all the way to the lows. After posting a new low at 812.75, the E-mini SP bounced to 820.50, pulled back two points and continued higher to 826.00 and then 837.00, all this leaded by the Nasdaq but joined by the other indexes. After trading at 838.50, the SP pulled back to 834.00 just to continue higher reaching Wednesday’s settlement and printing a new daily high at 843.25. As the huge reversal continued, the index pushed higher fueled by t late shorts reaching 848.50. After reaching that area the SP pulled back to 839.50 where buyers stepped back in pushing the index back to 847.00 from where it sold off during the last hour of the session reaching 829.50 just to bounce for the close, the SP ended the session with a half point loss at 839.25, the Nasdaq added 11.75 points and settled at 1177.25 and the Russell gained 7.50 points closing the session at 459.90. The Dow managed to close up by 12 points at 8212.
MARKET COMMENTARY AND OUTLOOK
Last Tuesday I wrote:“After holding since last November markets have accelerate their downtrend and this increased selling pressures with high volumes may continue once yesterday’s lows get broken. JP Morgan will report today and Citigroup tomorrow, both of them before their programmed date. None of this numbers will be good, and the consequences will be seen in the markets, the SP below 831.00 will indicate 818.00, 780.00 and 740.00; the Dow 8000, 7800 and 7500. However, markets have already posted a dramatic fall during the week and a countertrend rally could be near. The trading pattern has showed that the indexes have been trading the last months in a wide range, 850.00 to 920.00 on the SP and 8300 to 9000 on the Dow; so markets should try to return to the range, will it happen today after another down spike, or once President elected Obama occupies the chair and then a “honeymoon” rally began?, it may be. But meanwhile bears have the control and to be a buyer in these market traders will have to see some evidence that the sell off has dried and a short term low has been posted in the charts. Yesterday’s lows on the SP coincide with some other lows posted during last December; will the market rally from here? It can happen, but for those who maintain a long short term position and get hammered during this week, the exit may be near if yesterday’s lows get broken, when they will be forced out, you know the markets, they will rally without them; for those who want to get short at these levels for more than a simple intraday trade, it is probably too late, at the moment that a reversal will happen, they will only fuel the move, so the less risky trade is to stay on the sidelines or wait for a countertrend rally to get short, a confirmation that a low is in place will require a rally that last more than 11 days, if not any countertrend move will be only a selling opportunity as it seems that the bear campaign has resumed.”
Yesterday’s early sell off certainly exhausted the downtrend move leaving many late shorts trapped at levels well below the settlements, I clearly indicated that it was too late to take a short position and stick to it. This last downside move was done with better volumes and probably, the key reversal correction seen from yesterday’s lows has more room to go. Of curse, we can not call for a low until this rally exceeds three to five days, or push prices above the 888.00-892.00 areas on the SP and 8600-8800 on the Dow. So the scenario for these coming days is a countertrend rally that fails after three days or a strong move that makes all the way up to the last highs, and then probably fail as this bear campaign has not ended yet. Yesterday I wrote that the markets are trading in a wide range, obviously, they were broken during yesterday’s session, but the close was positive, and at least for today’s session and next week events, markets should be able to hold. The daily charts show that the markets posted a bullish reversal and if they can continue to move higher we could see a continuation pattern that could easily spark a big rally back to 868.50 during the next two sessions. The Nasdaq, the key for yesterday’s reversal has reached the resistance area seen in the daily charts and its sitting just below the trend line formed from the 1280.00’s high, so trading above the 1200.00 level could push that index at least to the 1250.00-1260.00 double top before that market start its next move.
For today’s trading session, Citigroup will report before the opening, how big are their losses, who knows, its situation is really bad. Later we get the CPI numbers which should continue to show deflation as falling asset prices are likely to continue for most of 2009. Also we will know the last figures for Industrial production, every new low in the manufacturing area, is another loss job that never will come back. An for the end, the January option expiration that could increase volatility during the second half of the session.
I personally don’t like to trade on expiration dates, but I will favor the long side on a successful test of yesterday’s late lows around 830.00 on the SP or a breakout above the 844.50 level.
TODAY’S SESSION
There is resistance at 842.50-844.00 on the SP, 1184.00-1186.00 on the Nasdaq and 463.40-464.90 on the Russell, if those get exceeded markets should be able to reach 848.00-849.00 on the SP, 1191.00-1193.00 on the Nasdaq and 468.40-470.30 on the Russell. Breaking above those areas will be a strong indication that this countertrend rally may be able to show another leg reaching 854.25-855.00 on the SP, 1206.00-1208.00 on the Nasdaq and 474.90-475.50 on the Russell.
Initial support is at 835.00-834.00 on the SP, 1173.00-1171.00 on the Nasdaq and 457.50-456.00 on the Russell, if the indexes do not hold a pullback to those levels look for yesterday’s late lows to be tested at 831.00-828.50 on the SP, 1165.00-1164.00 on the Nasdaq and 453.90-452.40 on the Russell. If the markets can not rally from those areas, then yesterday’s reversal will be in jeopardy as bears regain control pushing the markets down to 820.00-818.50 on the SP, 1160.00-1157.00 on the Nasdaq and 448.20-447.10 on the Russell. GOOD LUCK.
.
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
Initial Claims up by 54K at 524K, continuing claims 4.5 million, PPI down by 1.9% and NY Empire State Index at 22.00 indicating weakness. JP Morgan post small profit and Apple’s Jobs health problems. BAC and Citigroup continue to plunge giving way to another sell off on the equity markets that was strongly reversed pushing the markets to a positive close once the news that Bank of America will receive another $20 billion to support Merrill deal was out. After hours, Intel reported that profit plunged 90 percent and sales slipped 23 percent during the last three months of the year.
.
ECONOMIC DATA
8:30: AM CPI
8:30 AM Core CPI
9:15 AM Capacity Utilization
9:15 AM Industrial Production
9:55 AM Michigan Sentiment–prel
YESTERDAY’S MARKET
Sideways action during the Globex session resulted in a slightly lower opening for the U.S. equity markets. The E-mini SP opened the session at 837.00 from where it sold off strongly reaching 824.75 just before the Philadelphia Fed numbers got release, the SP bounced to 830.50 and get sold once more reaching 817.00. A small double bottom at that level resulted in a bounce to 820.50 and a quick drop to a new low at 816.50. As the extreme selling pressure continued, the SP bounced a couple of points and pushed to a new marginal low at 815.75, just below our 816.00 support levels. As the selling pressure lost its momentum, the SP bounced to 821.50, backed off a bit and continued higher reaching 824.50.Unable to gain the momentum to continue higher, the SP pulled back all the way to the lows. After posting a new low at 812.75, the E-mini SP bounced to 820.50, pulled back two points and continued higher to 826.00 and then 837.00, all this leaded by the Nasdaq but joined by the other indexes. After trading at 838.50, the SP pulled back to 834.00 just to continue higher reaching Wednesday’s settlement and printing a new daily high at 843.25. As the huge reversal continued, the index pushed higher fueled by t late shorts reaching 848.50. After reaching that area the SP pulled back to 839.50 where buyers stepped back in pushing the index back to 847.00 from where it sold off during the last hour of the session reaching 829.50 just to bounce for the close, the SP ended the session with a half point loss at 839.25, the Nasdaq added 11.75 points and settled at 1177.25 and the Russell gained 7.50 points closing the session at 459.90. The Dow managed to close up by 12 points at 8212.
MARKET COMMENTARY AND OUTLOOK
Last Tuesday I wrote:“After holding since last November markets have accelerate their downtrend and this increased selling pressures with high volumes may continue once yesterday’s lows get broken. JP Morgan will report today and Citigroup tomorrow, both of them before their programmed date. None of this numbers will be good, and the consequences will be seen in the markets, the SP below 831.00 will indicate 818.00, 780.00 and 740.00; the Dow 8000, 7800 and 7500. However, markets have already posted a dramatic fall during the week and a countertrend rally could be near. The trading pattern has showed that the indexes have been trading the last months in a wide range, 850.00 to 920.00 on the SP and 8300 to 9000 on the Dow; so markets should try to return to the range, will it happen today after another down spike, or once President elected Obama occupies the chair and then a “honeymoon” rally began?, it may be. But meanwhile bears have the control and to be a buyer in these market traders will have to see some evidence that the sell off has dried and a short term low has been posted in the charts. Yesterday’s lows on the SP coincide with some other lows posted during last December; will the market rally from here? It can happen, but for those who maintain a long short term position and get hammered during this week, the exit may be near if yesterday’s lows get broken, when they will be forced out, you know the markets, they will rally without them; for those who want to get short at these levels for more than a simple intraday trade, it is probably too late, at the moment that a reversal will happen, they will only fuel the move, so the less risky trade is to stay on the sidelines or wait for a countertrend rally to get short, a confirmation that a low is in place will require a rally that last more than 11 days, if not any countertrend move will be only a selling opportunity as it seems that the bear campaign has resumed.”
Yesterday’s early sell off certainly exhausted the downtrend move leaving many late shorts trapped at levels well below the settlements, I clearly indicated that it was too late to take a short position and stick to it. This last downside move was done with better volumes and probably, the key reversal correction seen from yesterday’s lows has more room to go. Of curse, we can not call for a low until this rally exceeds three to five days, or push prices above the 888.00-892.00 areas on the SP and 8600-8800 on the Dow. So the scenario for these coming days is a countertrend rally that fails after three days or a strong move that makes all the way up to the last highs, and then probably fail as this bear campaign has not ended yet. Yesterday I wrote that the markets are trading in a wide range, obviously, they were broken during yesterday’s session, but the close was positive, and at least for today’s session and next week events, markets should be able to hold. The daily charts show that the markets posted a bullish reversal and if they can continue to move higher we could see a continuation pattern that could easily spark a big rally back to 868.50 during the next two sessions. The Nasdaq, the key for yesterday’s reversal has reached the resistance area seen in the daily charts and its sitting just below the trend line formed from the 1280.00’s high, so trading above the 1200.00 level could push that index at least to the 1250.00-1260.00 double top before that market start its next move.
For today’s trading session, Citigroup will report before the opening, how big are their losses, who knows, its situation is really bad. Later we get the CPI numbers which should continue to show deflation as falling asset prices are likely to continue for most of 2009. Also we will know the last figures for Industrial production, every new low in the manufacturing area, is another loss job that never will come back. An for the end, the January option expiration that could increase volatility during the second half of the session.
I personally don’t like to trade on expiration dates, but I will favor the long side on a successful test of yesterday’s late lows around 830.00 on the SP or a breakout above the 844.50 level.
TODAY’S SESSION
There is resistance at 842.50-844.00 on the SP, 1184.00-1186.00 on the Nasdaq and 463.40-464.90 on the Russell, if those get exceeded markets should be able to reach 848.00-849.00 on the SP, 1191.00-1193.00 on the Nasdaq and 468.40-470.30 on the Russell. Breaking above those areas will be a strong indication that this countertrend rally may be able to show another leg reaching 854.25-855.00 on the SP, 1206.00-1208.00 on the Nasdaq and 474.90-475.50 on the Russell.
Initial support is at 835.00-834.00 on the SP, 1173.00-1171.00 on the Nasdaq and 457.50-456.00 on the Russell, if the indexes do not hold a pullback to those levels look for yesterday’s late lows to be tested at 831.00-828.50 on the SP, 1165.00-1164.00 on the Nasdaq and 453.90-452.40 on the Russell. If the markets can not rally from those areas, then yesterday’s reversal will be in jeopardy as bears regain control pushing the markets down to 820.00-818.50 on the SP, 1160.00-1157.00 on the Nasdaq and 448.20-447.10 on the Russell. GOOD LUCK.
.
TODAY’S SUPPORT, PIVOT AND RESISTANCE LEVELS
S&P NASDAQ RUSSELL
Resistance 4 858.00-860.00 1214.00-1216.50 480.50-480.70
Resistance 3 854.25-855.50 1206.00-1208.00 474.90-475.50
Resistance 2 848.00-849.00 1191.00-1193.00 468.40-470.30
Resistance 1 842.50-844.00 1184.00-1186.00 463.40-464.90
PIVOT 833.50 1169.00 453.40
Support 1 835.00-834.00 1173.00-1170.50 457.50-456.00
Support 2 831.00-828.50 1165.00-1164.00 453.90-452.40
Support 3 820.00-818.50 1160.00-1157.00 448.20-447.10
Support 4 810.00-808.50 1148.00-1146.00 444.30-443.00
S&P NASDAQ RUSSELL
FIBONACCI FIBONACCI FIBONACCI
906.34 1275.95 507.97
897.91 1263.56 501.53
884.25 1243.50 491.10
870.59 1223.45 480.67
862.16 1211.06 474.23
848.50 1191.00 463.80
834.84 1170.95 453.37
830.63 1164.75 450.15
826.41 1158.56 446.93
812.75 1138.50 436.50
799.09 1118.45 426.07
790.66 1106.06 419.63
777.00 1086.00 409.20
763.34 1065.95 398.77
754.91 1053.56 392.33
DAILY PROJECTIONS S&P NASDAQ RUSSELL
AS DAILY HIGH 843.75 1210.00 475.50
AS DAILY LOW 808.00 1157.00 458.20
S&P NASDAQ RUSSELL
Resistance 4 858.00-860.00 1214.00-1216.50 480.50-480.70
Resistance 3 854.25-855.50 1206.00-1208.00 474.90-475.50
Resistance 2 848.00-849.00 1191.00-1193.00 468.40-470.30
Resistance 1 842.50-844.00 1184.00-1186.00 463.40-464.90
PIVOT 833.50 1169.00 453.40
Support 1 835.00-834.00 1173.00-1170.50 457.50-456.00
Support 2 831.00-828.50 1165.00-1164.00 453.90-452.40
Support 3 820.00-818.50 1160.00-1157.00 448.20-447.10
Support 4 810.00-808.50 1148.00-1146.00 444.30-443.00
S&P NASDAQ RUSSELL
FIBONACCI FIBONACCI FIBONACCI
906.34 1275.95 507.97
897.91 1263.56 501.53
884.25 1243.50 491.10
870.59 1223.45 480.67
862.16 1211.06 474.23
848.50 1191.00 463.80
834.84 1170.95 453.37
830.63 1164.75 450.15
826.41 1158.56 446.93
812.75 1138.50 436.50
799.09 1118.45 426.07
790.66 1106.06 419.63
777.00 1086.00 409.20
763.34 1065.95 398.77
754.91 1053.56 392.33
DAILY PROJECTIONS S&P NASDAQ RUSSELL
AS DAILY HIGH 843.75 1210.00 475.50
AS DAILY LOW 808.00 1157.00 458.20
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