DAILY TRADING ADVISORY 20-November-2008
CPI record fall, Housing Starts lowest rate, a new slide on Building Permits, automakers begging for help at the Congress and the FOMC minutes talking about unemployment at 7.50% resulted in huge losses for the U.S. markets. The Banking index trades at its lowest value since 1995.
ECONOMIC DATA
8:30 AM Initial Claims
10:00 AM Leading Indicators
10:00 AM Philadelphia Fed
YESTERDAY’S MARKET
Bouncing from lower prices during the Globex session, the E-mini SP started the session at 854.75 and after holding above that level pushed higher to 863.50 where the short covering rally lost its steam. The SP pulled back all the way down to 848.00 where buyers stepped in driving the index back up to 864.50. The SP pulled back all the way down to 838.50 leaded by the weakness on the Russell. A feeble bounce to the 844.50 area resulted in another selling opportunity as the markets continue to collapse. The SP reached 827.50, bounced back up to 837.00 and got sold to 825.50 where the index held for an hour bouncing back to 834.00. The index then pulled back to 829.50 and bounced to our updated resistance area at 837.00 before falling to new lows at 822.50. Another bounce to 828.00 was met with additional selling pressure driving the SP to new intraday lows at 819.00. As the FOMC minutes got release, the SP rallied to 836.50 where a series of tops resulted in another sell off to 819.50 that finally resulted in a marginal new low at 817.50 just to bounce to 825.75 before collapsing into the close as it reached 804.25 from where it bounced a few point just to close at new 5 year lows. For the day the SP lost 54.25 points closing the session at 812.25, the Nasdaq ended lower by 83.25 points and settled at 1090.75 and the Russell gave back another 40.70 points ending the day at 413.60. The Dow ended lower by 427 points closing at 7997.
MARKET COMMENTARY AND OUTLOOK
Yesterday I wrote:”Yesterday’s successful test of the 832.00 area on the SP is encourage for the markets but must be seen with extreme precaution until the markets show some good follow through to the upside, the importance of yesterday’s late rally will be seen during today’s trading action, we need two consecutive sessions where the indexes move up, and the 866.00 pivotal level on the SP to get strongly exceeded for the markets to change their short term direction. If that not happens, then another test of that level or even lower may be seen during the next days. We have seen various attempts to move lower since October 27th, so the importance top hold the recent lows is critical or much lower prices will be seen. These lows have become obvious support, but I don’t expect another down move to hold, too many times that those levels are reached finally will result in a break down with strong momentum. Yesterday’s late action is bullish on the short term, but so much insistence near the lows should be considered extremely dangerous for the markets all the time that the SP keeps trading below the 915.00 area and the Dow below 9000. If the markets will break below yesterday’s lows the near term panorama will have only one direction, down. There is not real evidence that a short term low is in place, but this third test of the October lows could result in our expected rally to the 1040.00-1060.00 area during the next 45 days, and then another sharp down leg that completes the bear campaign during the first six months of the next year. So the risk of the markets to continue with the current downtrend will be present all the time that the SP keeps trading below the 915.00 area, we need to see a rally above that level or the current rally to hold for more than four sessions, that will take us to next Tuesday, until then, yesterday’s powerful reversal is only a one day countertrend move. For today’s trading session, a pullback that holds the 853.00-851.50 area during the first hour of the session, will be a good indication of higher prices, but take into account that the SP will have to hold the 866.00 area for this rally to gain some more upside momentum. A consolidation of yesterday’s move between the 866.00 and the 841.00 area is also possible. Evidence that yesterday’s rally is failing? It will be the SP below 832.00 and the Dow below 8120.”
Our 866.00 area on the SP resulted a wall after yesterday’s failure at the double top posted there, that was the key for the rally to fail, and the breakdown below 845.50 and then 832.00 on the SP the indication of a new low. Many occasions I have wrote the lack of importance of a one day move, no follow through, no evidence of trending, and that is what happened yesterday’s session. So, now we have in the charts a struggling sideways pattern developed by several tests of the previous low with several wild rallies that resulted in double tops, those double tops in a bear market usually indicate lower prices, and a wide range session that finally broke to new lows. That leaves open the possibility of another down wide day session, a capitulation that pushes the index down to 770.00 or lower. The other scenario is to consider yesterday’s sell off, that closed near the daily lows on the broad market indexes as a one day new low that could be reversed during today’s trading session, if that is the case, the 800.00 area on the SP, if visited, will have to hold and give way to a multi day rally. I am not so convinced, any countertrend move that does not last more than 4 days should be considered a natural bounce from oversold conditions, and of course, until the SP does not close twice above the huge and pivotal 866.00 level, there are not chances to move higher. Going back to the 770.00 level, that area is more or less the 50% Fibonacci retracement from the all time highs, and in all the other bear markets that 50% has held. That does not mean that this bear market is as the other ones, but there is a good chance that this area holds the first time it gets tested. That could be the panic sell off that the markets need to post a “low”, even with and intraday level below that price, until then only a 12 days rally or the SP above the 915.00 level will indicate that a low has been posted.
Yesterday’s lows, at critical support levels will have to hold during the initial 90 minutes of the session or get reversed from lower prices, if that not happens, then another down leg that drive prices much lower will be seen for tomorrows’ option expiration. Remember that at any moment we could see the indexes initiate a fast rally that runs in a vertical move.
For today’s trading, the nightly lows seem to be holding, and an early test of them or a reversal above the 800.00 area could result in the first step of a recovery rally now that almost all the weekly data has been released and the November option expiration is the next event.
.
TODAY’S SESSION
There is strong resistance is at 818.00-820.00 on the SP, 1103.00-1105.00 on the Nasdaq and 418.50-421.20 on the Russell, those are the previous lows and the downtrend should continue all the time that the indexes keep trading below them, nothing good happens unless those levels get exceeded, if we going to see a reversal from yesterday’s lows, those should have to get exceeded with force pushing the indexes up to 827.50-829.50 on the SP, 1116.50-1118.00 on the Nasdaq and 425.30-426.80 on the Russell. If yesterday’s strong sell off will get consolidated, the rally should stop at those levels, but if something good happens and the new low will result in a countertrend rally then the next areas at 839.25-840.00 on the SP, 1132.00-1134.00 on the Nasdaq and 436.00-437.50 on the Russell could be tested before the session is over.
Initial support is at yesterday’s lows at 806.00-804.50 on the SP, 1084.00-1082.50 on the Nasdaq and 409.00-407.80on the Russell. If those can not hold, then a quick test of 800.50-798.00 on the SP, 1073.00-1071.00 on the Nasdaq and 402.20-400.90 on the Russell will be seen. Those levels could hold the first time they get visited and maybe sparkle an 18 points rally on the SP, however if the selling pressure continues to be strong, then 791.00-789.50 on the SP, 1062.00-1059.50 on the Nasdaq and 396.20-394.10 are the only good support areas before the KEY 770.00 level on the SP gets reached. GOOD LUCK.
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
CPI record fall, Housing Starts lowest rate, a new slide on Building Permits, automakers begging for help at the Congress and the FOMC minutes talking about unemployment at 7.50% resulted in huge losses for the U.S. markets. The Banking index trades at its lowest value since 1995.
ECONOMIC DATA
8:30 AM Initial Claims
10:00 AM Leading Indicators
10:00 AM Philadelphia Fed
YESTERDAY’S MARKET
Bouncing from lower prices during the Globex session, the E-mini SP started the session at 854.75 and after holding above that level pushed higher to 863.50 where the short covering rally lost its steam. The SP pulled back all the way down to 848.00 where buyers stepped in driving the index back up to 864.50. The SP pulled back all the way down to 838.50 leaded by the weakness on the Russell. A feeble bounce to the 844.50 area resulted in another selling opportunity as the markets continue to collapse. The SP reached 827.50, bounced back up to 837.00 and got sold to 825.50 where the index held for an hour bouncing back to 834.00. The index then pulled back to 829.50 and bounced to our updated resistance area at 837.00 before falling to new lows at 822.50. Another bounce to 828.00 was met with additional selling pressure driving the SP to new intraday lows at 819.00. As the FOMC minutes got release, the SP rallied to 836.50 where a series of tops resulted in another sell off to 819.50 that finally resulted in a marginal new low at 817.50 just to bounce to 825.75 before collapsing into the close as it reached 804.25 from where it bounced a few point just to close at new 5 year lows. For the day the SP lost 54.25 points closing the session at 812.25, the Nasdaq ended lower by 83.25 points and settled at 1090.75 and the Russell gave back another 40.70 points ending the day at 413.60. The Dow ended lower by 427 points closing at 7997.
MARKET COMMENTARY AND OUTLOOK
Yesterday I wrote:”Yesterday’s successful test of the 832.00 area on the SP is encourage for the markets but must be seen with extreme precaution until the markets show some good follow through to the upside, the importance of yesterday’s late rally will be seen during today’s trading action, we need two consecutive sessions where the indexes move up, and the 866.00 pivotal level on the SP to get strongly exceeded for the markets to change their short term direction. If that not happens, then another test of that level or even lower may be seen during the next days. We have seen various attempts to move lower since October 27th, so the importance top hold the recent lows is critical or much lower prices will be seen. These lows have become obvious support, but I don’t expect another down move to hold, too many times that those levels are reached finally will result in a break down with strong momentum. Yesterday’s late action is bullish on the short term, but so much insistence near the lows should be considered extremely dangerous for the markets all the time that the SP keeps trading below the 915.00 area and the Dow below 9000. If the markets will break below yesterday’s lows the near term panorama will have only one direction, down. There is not real evidence that a short term low is in place, but this third test of the October lows could result in our expected rally to the 1040.00-1060.00 area during the next 45 days, and then another sharp down leg that completes the bear campaign during the first six months of the next year. So the risk of the markets to continue with the current downtrend will be present all the time that the SP keeps trading below the 915.00 area, we need to see a rally above that level or the current rally to hold for more than four sessions, that will take us to next Tuesday, until then, yesterday’s powerful reversal is only a one day countertrend move. For today’s trading session, a pullback that holds the 853.00-851.50 area during the first hour of the session, will be a good indication of higher prices, but take into account that the SP will have to hold the 866.00 area for this rally to gain some more upside momentum. A consolidation of yesterday’s move between the 866.00 and the 841.00 area is also possible. Evidence that yesterday’s rally is failing? It will be the SP below 832.00 and the Dow below 8120.”
Our 866.00 area on the SP resulted a wall after yesterday’s failure at the double top posted there, that was the key for the rally to fail, and the breakdown below 845.50 and then 832.00 on the SP the indication of a new low. Many occasions I have wrote the lack of importance of a one day move, no follow through, no evidence of trending, and that is what happened yesterday’s session. So, now we have in the charts a struggling sideways pattern developed by several tests of the previous low with several wild rallies that resulted in double tops, those double tops in a bear market usually indicate lower prices, and a wide range session that finally broke to new lows. That leaves open the possibility of another down wide day session, a capitulation that pushes the index down to 770.00 or lower. The other scenario is to consider yesterday’s sell off, that closed near the daily lows on the broad market indexes as a one day new low that could be reversed during today’s trading session, if that is the case, the 800.00 area on the SP, if visited, will have to hold and give way to a multi day rally. I am not so convinced, any countertrend move that does not last more than 4 days should be considered a natural bounce from oversold conditions, and of course, until the SP does not close twice above the huge and pivotal 866.00 level, there are not chances to move higher. Going back to the 770.00 level, that area is more or less the 50% Fibonacci retracement from the all time highs, and in all the other bear markets that 50% has held. That does not mean that this bear market is as the other ones, but there is a good chance that this area holds the first time it gets tested. That could be the panic sell off that the markets need to post a “low”, even with and intraday level below that price, until then only a 12 days rally or the SP above the 915.00 level will indicate that a low has been posted.
Yesterday’s lows, at critical support levels will have to hold during the initial 90 minutes of the session or get reversed from lower prices, if that not happens, then another down leg that drive prices much lower will be seen for tomorrows’ option expiration. Remember that at any moment we could see the indexes initiate a fast rally that runs in a vertical move.
For today’s trading, the nightly lows seem to be holding, and an early test of them or a reversal above the 800.00 area could result in the first step of a recovery rally now that almost all the weekly data has been released and the November option expiration is the next event.
.
TODAY’S SESSION
There is strong resistance is at 818.00-820.00 on the SP, 1103.00-1105.00 on the Nasdaq and 418.50-421.20 on the Russell, those are the previous lows and the downtrend should continue all the time that the indexes keep trading below them, nothing good happens unless those levels get exceeded, if we going to see a reversal from yesterday’s lows, those should have to get exceeded with force pushing the indexes up to 827.50-829.50 on the SP, 1116.50-1118.00 on the Nasdaq and 425.30-426.80 on the Russell. If yesterday’s strong sell off will get consolidated, the rally should stop at those levels, but if something good happens and the new low will result in a countertrend rally then the next areas at 839.25-840.00 on the SP, 1132.00-1134.00 on the Nasdaq and 436.00-437.50 on the Russell could be tested before the session is over.
Initial support is at yesterday’s lows at 806.00-804.50 on the SP, 1084.00-1082.50 on the Nasdaq and 409.00-407.80on the Russell. If those can not hold, then a quick test of 800.50-798.00 on the SP, 1073.00-1071.00 on the Nasdaq and 402.20-400.90 on the Russell will be seen. Those levels could hold the first time they get visited and maybe sparkle an 18 points rally on the SP, however if the selling pressure continues to be strong, then 791.00-789.50 on the SP, 1062.00-1059.50 on the Nasdaq and 396.20-394.10 are the only good support areas before the KEY 770.00 level on the SP gets reached. GOOD LUCK.
TODAY’S SUPPORT, PIVOT AND RESISTANCE LEVELS
S&P NASDAQ RUSSELL
Resistance 4 851.00-852.00 1148.75-1150.00 441.60-442.80
Resistance 3 839.25-840.00 1132.00-1134.00 436.00-437.50
Resistance 2 827.50-829.50 1116.50-1118.00 425.30-426.80
Resistance 1 818.00-820.00 1103.00-1105.00 418.50-421.20
PIVOT 827.50 1115.75 425.80
Support 1 806.00-804.50 1084.00-1082.50 409.00-407.80
Support 2 800.50-798.00 1073.00-1071.00 402.20-400.90
Support 3 791.00-789.50 1062.00-1059.50 396.20-394.10
Support 4 781.00-779.00 1043.50-1042.00 388.70-386.70
S&P NASDAQ RUSSELL
FIBONACCI FIBONACCI FIBONACCI
965.91 1316.41 525.98
951.34 1295.34 515.52
927.75 1261.25 498.60
904.16 1227.16 481.68
889.59 1206.09 471.22
866.00 1172.00 454.30
842.41 1137.91 437.38
835.13 1127.38 432.15
827.84 1116.84 426.92
804.25 1082.75 410.00
780.66 1048.66 393.08
766.09 1027.59 382.62
742.50 993.50 365.70
718.91 959.41 348.78
704.34 938.34 338.32
DAILY PROJECTIONS S&P NASDAQ RUSSELL
AS DAILY HIGH 839.25 1132.25 433.70
AS DAILY LOW 777.50 1043.00 389.40
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.S&P NASDAQ RUSSELL
Resistance 4 851.00-852.00 1148.75-1150.00 441.60-442.80
Resistance 3 839.25-840.00 1132.00-1134.00 436.00-437.50
Resistance 2 827.50-829.50 1116.50-1118.00 425.30-426.80
Resistance 1 818.00-820.00 1103.00-1105.00 418.50-421.20
PIVOT 827.50 1115.75 425.80
Support 1 806.00-804.50 1084.00-1082.50 409.00-407.80
Support 2 800.50-798.00 1073.00-1071.00 402.20-400.90
Support 3 791.00-789.50 1062.00-1059.50 396.20-394.10
Support 4 781.00-779.00 1043.50-1042.00 388.70-386.70
S&P NASDAQ RUSSELL
FIBONACCI FIBONACCI FIBONACCI
965.91 1316.41 525.98
951.34 1295.34 515.52
927.75 1261.25 498.60
904.16 1227.16 481.68
889.59 1206.09 471.22
866.00 1172.00 454.30
842.41 1137.91 437.38
835.13 1127.38 432.15
827.84 1116.84 426.92
804.25 1082.75 410.00
780.66 1048.66 393.08
766.09 1027.59 382.62
742.50 993.50 365.70
718.91 959.41 348.78
704.34 938.34 338.32
DAILY PROJECTIONS S&P NASDAQ RUSSELL
AS DAILY HIGH 839.25 1132.25 433.70
AS DAILY LOW 777.50 1043.00 389.40
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