Daily Trading Advisory
DAILY TRADING ADVISORY 22-September-2008
Stocks extend their rally on Government rescue plan. SEC bans short selling for 799 financial stocks.
WEEKLY PIVOTS FOR WEEK ENDING 26-September-2008
R3 1312.00
R2 1288.75
R1 1274.50
PP 1224.00
S1 1231.00
S2 1203.00
S3 1157.75
ECONOMIC DATA
None
WEEKLY RECAP
A difficult week for the world markets as fear plagued the financial system. The equity indexes started the week under strong pressure as a result of the failed negotiations to save Lehman Brothers which was forced to apply for bankruptcy before the markets opened and the news of the Merrill Lynch sell in order to avoid the same destiny. Besides this, Washington Mutual was downgraded and AIG was placed near insolvency as a result of huge losses on their bond insurance business. The NY Empire Index was down by 7.4% and all the news resulted in one of the worst sessions in markets history, the SP lost 62.50 points closing the session at 1196.00, the Nasdaq ended lower by 58.25 points and the E-mini Russell settled at 691.00 losing32.70 points in the session. The Dow lost 504 points closing the session at 10917. Tuesday’s session opened with great expectations for a possible solution on the AIG issue and the FOMC meeting, in which the public was anticipating a .25 rate reduction. The session was a rollercoaster and the FOMC statements and rate policy were the main event. Earlier on the session the CPI came out as expected showing a small reduction in consumer inflation. Against all the expectation the rates were not reduced and at the end of the day the expected help to AIG was a fact as the FED took 80% of the company and injected $80 billion. At the end of the session, the E-mini SP ended higher by 20.25 points and settled at 1216.25, the Nasdaq advanced 11.75 points ending the session at 1733.00 and the Russell gained 21.90 points and settled at 712.90. The Dow ended higher by 141 points finishing the session at 11059. Another lower opening fir Wednesday’s session despite the fact that Morgan Stanley reported better than expected earnings and the risk of failure on AIG was already history, Building Permits and Housing Start data showed that the bottom on the housing crisis has not been reached yet. Markets continued to be extremely nervous and the markets sold off strongly during the last hour of the session. The SP lost another 53.25 points ending the session at 1163.00, the Nasdaq lost 86 points and settled at 1647.00 and the E-mini Russell gave back 36.50 points ending the session at 676.40. The Dow lost 449 points ending the day at 10609.The carnage continued into Thursday’s trading session as fear about a possible collapse of more financial institutions have investors selling everything and ready to visit the banks to take out their money. After an initial huge sell off and as the news about a government plan to take all the bad debt from the banks started to be released, the indexes posted one of their most incredible rallies, the SP rallied almost 80 points from its mid day lows to the daily highs and for the session, ended up 40.50 points and settled at 1203.25, the Nasdaq gain 61.50 points closing the session at 1708.50 and the Russell finished the session at 711.70, up 34.30 points. The Dow closed also with a huge 410 points gain at 11019. Late Thursday, the SEC announced a ban on short selling on shares from 799 financial institutions, this resulted in a continuation of the session rally until the opening of Friday’s session was the September futures and option expiration squeezed every short on the markets. The nightly rally was furious but once the expiration passed, the indexes pulled back holding strong gains. The financial sector recovered all of the weekly losses ending the week more than 7% higher. The SP ended higher by 42.75 points and settled at 1246.00, the E-mini Nasdaq added 31.00 points closing at 1739.50 and the E-mini Russell gained 38.90 points closing the week at 750.60. The Dow extended its gains finishing the session up by 368 points at 11388.
FRIDAY’S MARKETS
The ban on short selling on 799 financial firms, resulted in a huge nightly short covering rally, that after many years even place the E-mini SP on “limit up” for its opening. An early spike to 1291.25 was rejected once shorts were forced to cover. The E-mini SP started the session at 1282.00 were fresh sellers stepped in pushing the index down all the way to 1255.50 were the index bounced 10 full points, the rally was sold and the SP pushed lower to new intraday lows at 1241.50, bounced back up to 1250.00 and sold off to new daily lows at 1237.50. Buyers stepped in and the SP rallied all the way to 1254.50, another pullback to 1245.50 was strongly bided pushing the SP up to 1268.50. The rally lost its momentum and the weakness returned. The SP pulled back to 1255.00, bounced to 1261.00 and traded lower reaching 1247.00. A sideways pattern was resolved to the upside but the index failed short of our updated intraday resistance at 1255.50 and pushed lower during the last hour of the session testing the early lows. The double bottom was bought and the markets rallied once more. The SP rallied to 1247.00, pulled back to 1241.00 and bounced strong reaching 1253.50. The last pullback held the 1250.00 bounced to 1253.50 but sat back into the end of the session. For the day, the SP ended higher by 42.75 points and settled at 1246.00, the E-mini Nasdaq added 31.00 points closing at 1739.50 and the E-mini Russell gained 38.90 points closing the week at 750.60. The Dow extended its gains finishing the session up by 368 points at 11388.
MARKET COMMENTARY AND OUTLOOK
Last Friday I wrote:” Markets conditions continue to be extremely volatile as the indexes have difficult to find a direction , yesterday’s bounce from below the 1220.00 area has posted a short term low, and if the rally continues, the 1264.00 area may be reached during today’s session. The fact that the SP did not spend too much time below the 1220.00 area must be considered mildly bullish in this long term consolidation that continues to build a triangle formation on the daily charts. Regarding to the Dow, the higher low seen during yesterday’s early hours and the vigorous rally, call for another test of the 11600 area before that index gets back in troubles. Yesterday’s important test of the lows could result, this time in a continuation of the rally and move the SP in a fast rally to much higher prices, however if today is a negative session, the July low will be broken during the next week. Yesterday “outside” day where higher highs and lower lows were posted could also result in a consolidation of the wide range session and only next week gets definitive market direction, however if yesterday’s rally is all that the markets can done, then the bearish trend will be intact.
The indexes ended the session on a strong uptrend and many sellers should be trapped at lower levels, so if today’s important economic reports show better than expected economic conditions, the short squeezing that started yesterday during the last hour of trading should continue, but if the data disappoints, expect more sideways action between yesterday’s highs and the 1230.00 level.”
Last week was one of the wildest since the 1987 crash. The huge volatility sure damaged longs and shorts. The Wednesday huge down day and capitulation that seemed to have placed a low after Thursday’s morning opening gap, resulted to be only a bull trap as the SP fell 50 points from its early highs, but the incredible reversal from Thursday melt down that printed the 1133.00 for the SP on the daily chart while the VIX was at 40 turned to be a huge buying opportunity no matter the fact that it was news induced. The steps that the SEC took during Thursday’s night and the September option expiration gave the shorts the last squeeze.
Technically, the indexes had left a huge gap well below Friday’s opening prices, that, believe me, will have to get filled, and, also a low at the 1133.00 that at some moment will be retested; the only circumstance that will avoid filling the gap and retesting the lows in the short term, is the SP trading above the 1300 area, and that could project the SP up to 1340.00; however, that won’t eliminate completely the risk o another sharp drop but could result in a long term consolidation for the markets.
Friday’s opening price has also printed a top for this huge news related short covering rally and the markets should consolidate the last two days move by trading sideways during today’s session unless the rally evaporates as fast as it happened. Traders and investors will have to continue to deal with uncertainty, not only about the bailing plan but also its dramatic consequences on the US battered economy and credit markets, which will have additional pressure derivate from a another player demanding huge amounts of money, higher interest rates with inflation and recession, it’s possible.
So we come into a new week with the same problems, should the market test Friday’s highs, or it is due to fill the gap before that happens, I don’t know, but unless we have a reversal of Friday’s gains during today’s trading session, the indexes should continue to trade with big ranges and some wildness. Are they many shorts trapped at lower levels waiting for a pullback to get out of their positions, I am not so sure because last Friday expiration probably already erased them.
So for today’s trading session, the lower opening could result in an early rally, but the Globex current lows at 1223.50 on the SP could be tested, so be ready to sell the first hour highs or an initial rally when stalled, but look for strong support at my 1225.50-1223.00 areas on the SP, those should hold and result in a good rally, however if the markets trade lower wait to be a buyer only when the SP trades back above those levels.
TODAY’S SESSION
There is resistance above Friday’s late highs at 1253.50-11255.00 on the SP, 1748.50-1750.00 on the Nasdaq and 755.20-756.60 on the Russell. At the moment that I am writing my report, markets are trading lower, so if they get to those levels, many sellers should be waiting there the first time it gets tested, that’s a good shoring opportunity. But If they break higher, expect the indexes to go for their next levels at 1262.00-1263.25 on the SP, 1757.50-1759.00 on the Nasdaq and 759.90-761.00 on the Russell. If those do not hold, then the markets should try to reach 1270.00-1271.50 on the SP, 1768.25-1780 on the Nasdaq and 764.50-765.40 on the Russell.
There is support at 1238.50-1237.00 on the SP, 1732.00-1730.25 on the Nasdaq and 746.00-745.00 on the Russell, breaking below them will place the indexes under pressure giving the control to the sellers, so expect to see more downside action pushing the indexes to 1231.00-1229.75 on the SP, 1722.00-1720.50 on the Nasdaq and 742.50-740.30 on the Russell. If those can not hold, then a test of 1224.50-1223.00 on the SP, 1712.00-1710.00 on the Nasdaq and 736.70-734.60 on the Russell could be seen before the session is over. 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[/QUOTE]
DAILY TRADING ADVISORY 22-September-2008
Stocks extend their rally on Government rescue plan. SEC bans short selling for 799 financial stocks.
WEEKLY PIVOTS FOR WEEK ENDING 26-September-2008
R3 1312.00
R2 1288.75
R1 1274.50
PP 1224.00
S1 1231.00
S2 1203.00
S3 1157.75
ECONOMIC DATA
None
WEEKLY RECAP
A difficult week for the world markets as fear plagued the financial system. The equity indexes started the week under strong pressure as a result of the failed negotiations to save Lehman Brothers which was forced to apply for bankruptcy before the markets opened and the news of the Merrill Lynch sell in order to avoid the same destiny. Besides this, Washington Mutual was downgraded and AIG was placed near insolvency as a result of huge losses on their bond insurance business. The NY Empire Index was down by 7.4% and all the news resulted in one of the worst sessions in markets history, the SP lost 62.50 points closing the session at 1196.00, the Nasdaq ended lower by 58.25 points and the E-mini Russell settled at 691.00 losing32.70 points in the session. The Dow lost 504 points closing the session at 10917. Tuesday’s session opened with great expectations for a possible solution on the AIG issue and the FOMC meeting, in which the public was anticipating a .25 rate reduction. The session was a rollercoaster and the FOMC statements and rate policy were the main event. Earlier on the session the CPI came out as expected showing a small reduction in consumer inflation. Against all the expectation the rates were not reduced and at the end of the day the expected help to AIG was a fact as the FED took 80% of the company and injected $80 billion. At the end of the session, the E-mini SP ended higher by 20.25 points and settled at 1216.25, the Nasdaq advanced 11.75 points ending the session at 1733.00 and the Russell gained 21.90 points and settled at 712.90. The Dow ended higher by 141 points finishing the session at 11059. Another lower opening fir Wednesday’s session despite the fact that Morgan Stanley reported better than expected earnings and the risk of failure on AIG was already history, Building Permits and Housing Start data showed that the bottom on the housing crisis has not been reached yet. Markets continued to be extremely nervous and the markets sold off strongly during the last hour of the session. The SP lost another 53.25 points ending the session at 1163.00, the Nasdaq lost 86 points and settled at 1647.00 and the E-mini Russell gave back 36.50 points ending the session at 676.40. The Dow lost 449 points ending the day at 10609.The carnage continued into Thursday’s trading session as fear about a possible collapse of more financial institutions have investors selling everything and ready to visit the banks to take out their money. After an initial huge sell off and as the news about a government plan to take all the bad debt from the banks started to be released, the indexes posted one of their most incredible rallies, the SP rallied almost 80 points from its mid day lows to the daily highs and for the session, ended up 40.50 points and settled at 1203.25, the Nasdaq gain 61.50 points closing the session at 1708.50 and the Russell finished the session at 711.70, up 34.30 points. The Dow closed also with a huge 410 points gain at 11019. Late Thursday, the SEC announced a ban on short selling on shares from 799 financial institutions, this resulted in a continuation of the session rally until the opening of Friday’s session was the September futures and option expiration squeezed every short on the markets. The nightly rally was furious but once the expiration passed, the indexes pulled back holding strong gains. The financial sector recovered all of the weekly losses ending the week more than 7% higher. The SP ended higher by 42.75 points and settled at 1246.00, the E-mini Nasdaq added 31.00 points closing at 1739.50 and the E-mini Russell gained 38.90 points closing the week at 750.60. The Dow extended its gains finishing the session up by 368 points at 11388.
FRIDAY’S MARKETS
The ban on short selling on 799 financial firms, resulted in a huge nightly short covering rally, that after many years even place the E-mini SP on “limit up” for its opening. An early spike to 1291.25 was rejected once shorts were forced to cover. The E-mini SP started the session at 1282.00 were fresh sellers stepped in pushing the index down all the way to 1255.50 were the index bounced 10 full points, the rally was sold and the SP pushed lower to new intraday lows at 1241.50, bounced back up to 1250.00 and sold off to new daily lows at 1237.50. Buyers stepped in and the SP rallied all the way to 1254.50, another pullback to 1245.50 was strongly bided pushing the SP up to 1268.50. The rally lost its momentum and the weakness returned. The SP pulled back to 1255.00, bounced to 1261.00 and traded lower reaching 1247.00. A sideways pattern was resolved to the upside but the index failed short of our updated intraday resistance at 1255.50 and pushed lower during the last hour of the session testing the early lows. The double bottom was bought and the markets rallied once more. The SP rallied to 1247.00, pulled back to 1241.00 and bounced strong reaching 1253.50. The last pullback held the 1250.00 bounced to 1253.50 but sat back into the end of the session. For the day, the SP ended higher by 42.75 points and settled at 1246.00, the E-mini Nasdaq added 31.00 points closing at 1739.50 and the E-mini Russell gained 38.90 points closing the week at 750.60. The Dow extended its gains finishing the session up by 368 points at 11388.
MARKET COMMENTARY AND OUTLOOK
Last Friday I wrote:” Markets conditions continue to be extremely volatile as the indexes have difficult to find a direction , yesterday’s bounce from below the 1220.00 area has posted a short term low, and if the rally continues, the 1264.00 area may be reached during today’s session. The fact that the SP did not spend too much time below the 1220.00 area must be considered mildly bullish in this long term consolidation that continues to build a triangle formation on the daily charts. Regarding to the Dow, the higher low seen during yesterday’s early hours and the vigorous rally, call for another test of the 11600 area before that index gets back in troubles. Yesterday’s important test of the lows could result, this time in a continuation of the rally and move the SP in a fast rally to much higher prices, however if today is a negative session, the July low will be broken during the next week. Yesterday “outside” day where higher highs and lower lows were posted could also result in a consolidation of the wide range session and only next week gets definitive market direction, however if yesterday’s rally is all that the markets can done, then the bearish trend will be intact.
The indexes ended the session on a strong uptrend and many sellers should be trapped at lower levels, so if today’s important economic reports show better than expected economic conditions, the short squeezing that started yesterday during the last hour of trading should continue, but if the data disappoints, expect more sideways action between yesterday’s highs and the 1230.00 level.”
Last week was one of the wildest since the 1987 crash. The huge volatility sure damaged longs and shorts. The Wednesday huge down day and capitulation that seemed to have placed a low after Thursday’s morning opening gap, resulted to be only a bull trap as the SP fell 50 points from its early highs, but the incredible reversal from Thursday melt down that printed the 1133.00 for the SP on the daily chart while the VIX was at 40 turned to be a huge buying opportunity no matter the fact that it was news induced. The steps that the SEC took during Thursday’s night and the September option expiration gave the shorts the last squeeze.
Technically, the indexes had left a huge gap well below Friday’s opening prices, that, believe me, will have to get filled, and, also a low at the 1133.00 that at some moment will be retested; the only circumstance that will avoid filling the gap and retesting the lows in the short term, is the SP trading above the 1300 area, and that could project the SP up to 1340.00; however, that won’t eliminate completely the risk o another sharp drop but could result in a long term consolidation for the markets.
Friday’s opening price has also printed a top for this huge news related short covering rally and the markets should consolidate the last two days move by trading sideways during today’s session unless the rally evaporates as fast as it happened. Traders and investors will have to continue to deal with uncertainty, not only about the bailing plan but also its dramatic consequences on the US battered economy and credit markets, which will have additional pressure derivate from a another player demanding huge amounts of money, higher interest rates with inflation and recession, it’s possible.
So we come into a new week with the same problems, should the market test Friday’s highs, or it is due to fill the gap before that happens, I don’t know, but unless we have a reversal of Friday’s gains during today’s trading session, the indexes should continue to trade with big ranges and some wildness. Are they many shorts trapped at lower levels waiting for a pullback to get out of their positions, I am not so sure because last Friday expiration probably already erased them.
So for today’s trading session, the lower opening could result in an early rally, but the Globex current lows at 1223.50 on the SP could be tested, so be ready to sell the first hour highs or an initial rally when stalled, but look for strong support at my 1225.50-1223.00 areas on the SP, those should hold and result in a good rally, however if the markets trade lower wait to be a buyer only when the SP trades back above those levels.
TODAY’S SESSION
There is resistance above Friday’s late highs at 1253.50-11255.00 on the SP, 1748.50-1750.00 on the Nasdaq and 755.20-756.60 on the Russell. At the moment that I am writing my report, markets are trading lower, so if they get to those levels, many sellers should be waiting there the first time it gets tested, that’s a good shoring opportunity. But If they break higher, expect the indexes to go for their next levels at 1262.00-1263.25 on the SP, 1757.50-1759.00 on the Nasdaq and 759.90-761.00 on the Russell. If those do not hold, then the markets should try to reach 1270.00-1271.50 on the SP, 1768.25-1780 on the Nasdaq and 764.50-765.40 on the Russell.
There is support at 1238.50-1237.00 on the SP, 1732.00-1730.25 on the Nasdaq and 746.00-745.00 on the Russell, breaking below them will place the indexes under pressure giving the control to the sellers, so expect to see more downside action pushing the indexes to 1231.00-1229.75 on the SP, 1722.00-1720.50 on the Nasdaq and 742.50-740.30 on the Russell. If those can not hold, then a test of 1224.50-1223.00 on the SP, 1712.00-1710.00 on the Nasdaq and 736.70-734.60 on the Russell could be seen before the session is over. GOOD LUCK.
TODAY’S SUPPORT, PIVOT AND RESISTANCE LEVELS
S&P NASDAQ RUSSELL
Resistance 4 1274.00-1275.00 1791.00-1792.00 772.20-773.80
Resistance 3 1270.00-1271.50 1768.25-1780.00 764.50-765.40
Resistance 2 1262.00-1263.25 1757.50-1759.00 759.90-761.00
Resistance 1 1253.50-1255.00 1748.50-1750.00 755.20-756.60
PIVOT 1246.50 1748.25 743.60
Support 1 1238.50-1237.00 1732.00-1730.25 746.00-745.00
Support 2 1231.00-1229.75 1722.00-1720.50 741.50-740.30
Support 3 1224.50-1223.00 1712.00-1710.00 736.70-734.60
Support 4 1218.00-1217.25 1702.00-1699.50 727.70-726.00
S&P NASDAQ RUSSELL
FIBONACCI FIBONACCI FIBONACCI
1434.85 1959.26 847.53
1413.90 1936.25 835.57
1380.00 1899.00 816.20
1346.10 1861.76 796.83
1325.15 1838.75 784.87
1291.25 1801.50 765.50
1257.35 1764.26 746.13
1246.88 1752.75 740.15
1236.40 1741.25 734.17
1202.50 1704.00 714.80
1168.60 1666.76 695.43
1147.65 1643.75 683.47
1113.75 1606.50 664.10
1079.85 1569.26 644.73
1058.90 1546.25 632.77
DAILY PROJECTIONS S&P NASDAQ RUSSELL
AS DAILY HIGH 1313.00 1819.00 783.40
AS DAILY LOW 1224.25 1721.75 732.70
S&P NASDAQ RUSSELL
Resistance 4 1274.00-1275.00 1791.00-1792.00 772.20-773.80
Resistance 3 1270.00-1271.50 1768.25-1780.00 764.50-765.40
Resistance 2 1262.00-1263.25 1757.50-1759.00 759.90-761.00
Resistance 1 1253.50-1255.00 1748.50-1750.00 755.20-756.60
PIVOT 1246.50 1748.25 743.60
Support 1 1238.50-1237.00 1732.00-1730.25 746.00-745.00
Support 2 1231.00-1229.75 1722.00-1720.50 741.50-740.30
Support 3 1224.50-1223.00 1712.00-1710.00 736.70-734.60
Support 4 1218.00-1217.25 1702.00-1699.50 727.70-726.00
S&P NASDAQ RUSSELL
FIBONACCI FIBONACCI FIBONACCI
1434.85 1959.26 847.53
1413.90 1936.25 835.57
1380.00 1899.00 816.20
1346.10 1861.76 796.83
1325.15 1838.75 784.87
1291.25 1801.50 765.50
1257.35 1764.26 746.13
1246.88 1752.75 740.15
1236.40 1741.25 734.17
1202.50 1704.00 714.80
1168.60 1666.76 695.43
1147.65 1643.75 683.47
1113.75 1606.50 664.10
1079.85 1569.26 644.73
1058.90 1546.25 632.77
DAILY PROJECTIONS S&P NASDAQ RUSSELL
AS DAILY HIGH 1313.00 1819.00 783.40
AS DAILY LOW 1224.25 1721.75 732.70
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[/QUOTE]