DAILY TRADING ADVISORY 01-October-2008
Markets rallied recovering some of Monday’s huge losses as investors search for bargains, and optimism that Congress will reach an agreement on a financial relief plan before the end of the week. Consumer Confidence up and Chicago PMI down.
ECONOMIC DATA
8:15 AM ADP Employment
10:00 AM Construction Spending
10:00 AM ISM Index
10:35 AM Crude Inventories
12:00 AM Car Sales
12:00 AM Truck Sales
YESTERDAY’S MARKETS
Markets bounce after Monday’s huge sell off. A higher opening managed to hold during all of the trading session. The E-mini SP opened well above Monday’s settlement at 1139.50 and bounced to 1142.00 where sellers stepped in pushing the index down to 1132.00. The old low at 1133.00 held the test and markets rallied. The SP pushed up to the 1149.00 area, pulled back to 1144.25 and rallied all the way up to 1152.00 where the rally lost its momentum. The SP backed off to 1142.00 and after holding there for a few minutes rallied all the way back up to 1153.75, just below the 1154.50 Globex high. Another profit taking move pushed the index down to 1143.75 where buyers stepped in back once more and drove the index back up to 1152.00. The sideways pattern with a slightly upward bias continued, the SP pulled back to 1146.25 and rallied reaching new highs at 1161.75. Another pullback to 1156.00 was met with additional buying pushing the index up to new highs at 1162.75. As support was coming in near the highs, the indexes continued to print new highs on the charts with the SP reaching 1166.50 and the Nasdaq 1587.00. Once more the 1160.00-1158.00 intraday support areas and the SP held and the index rallied to new marginal highs at 1167.50. A last run during the last hour of the session reached 1175.75 before pulling back into the end. For the day the SP gained 48.75 points and settled at 1167.50, the Nasdaq recovered 82.25 points closing the day at 1594.25 and the Russell settled at 678.00, up 27.90 points for the session. The Dow came back strong closing at 10850, up 485 points.
MARKET COMMENTARY AND OUTLOOK
Yesterday I wrote: “The SP has reached levels below the 1133.00 area, one of the scenarios that we discussed yesterday, is this down move the false break of the lows that we were expecting? Is this the moment to go long the markets as something will have to be done immediately to restore confidence or is this just a temporary low in a market that at some moment could go for the 1093.00 area on the SP and 10000 on the Dow? Yesterday’s sell off should see a relief rally, maybe a huge relief rally that takes the SP back to 1163.00 or higher and the Dow back to the 10700-10800 band before the markets get back in troubles; it will happen today? I don’t know, but certainly these huge chaotic moves will continue making difficult for day traders to play the markets with reasonable stops. So keep in mind that when you place a trade, and you find yourself on the right side of the markets, you may adjust your stop loss orders or take a profit at the first sign of failure, and if you are on the wrong side, be quick to take your loss.”
Yesterday’s strong rally is what usually happens after a huge drop, buyers look for bargains and shorts cover taking their profits. Many times I have described that most of the huge one day moves do not have any importance on the daily charts until there is a follow through during the next sessions, wide range days, like those that we are experiencing in the current market conditions, have a lot of probabilities to get reversed during the next session as they usually exhaust a move. The markets are on a bearish trend and susceptible to dramatic changes on every piece of news, so trying to figure if yesterday’s rally is only a “dead cat bounce” or the best buying opportunity of the year is still premature for a call.
Traders will be waiting for the vote on the new version of the bailout plan, that probably will result in a rally, that I suspect will get reversed as the plan do not correct the current credit crisis; it will be like a day when the FED comes out with a rate decision, an exaggerated move that fails and then a clear trend, that may happen if the vote is during the regular trading hours, if not an upside gap should be seen for the next opening. Yesterday’s rally, from the 1133.00 area, that resulted in an inside day on the daily charts will have to show during today’s trading session a continuation pattern to the upside to convince me that a short term multi day rally that reaches at least the 1221.00 area on the SP during the next few sessions is in the cards, otherwise, the index will continue to trade lower with this bear market typical furious rallies. Another possibility for today’s session is to see the indexes consolidate on a relative narrow range, but it seems that narrow range sessions are not possible under this market conditions.
There are a few economic reports during today’s trading session and the rest of the week is also busy, we get the unemployment figures next Friday, so expect volatility to continue unless another strong upside session is seen today or the markets trade on a relative narrow range. The 1160.00 area on the SP will be pivotal for today’s trading session, the index will start to get weak if it trades too much time below that level, but if it breaks below it and then it goes over it once more, the trend should be upwards.
TODAY’S SESSION
There is initial resistance at yesterday’s highs at 1173.50-1175.00 on the SP, 1603.00-1604.50 on the Nasdaq and 682.00-683.50 on the Russell. If yesterday’s uptrend are due to continue, those levels should get exceeded easily pushing prices up to 1179.00-1180.00 on the SP, 1612.00-1613.75 on the Nasdaq and 688.00-689.90 on the Russell. If the rally is strong and massive, the indexes should be able to test 1185.50-1188.00 on the SP, 1621.75-1623.00 on the Nasdaq and 695.10-696.60 on the Russell. Trading above them will point for a test of the 1200.00 area on the SP once the last resistance band at 1191.50-1193.00 gets exceeded.
There is strong support at 1161.00-1159.00 on the SP, 1585.00-1584.00 on the Nasdaq and 671.30-670.00 on the Russell. Those held yesterday’s selling attempts and may be pivotal for today’s trading session, if they get broken look for additional support at 1155.00-1153.50 on the SP, 1574.50-1573.00 on the Nasdaq and 666.10-664.50. Failing to rally from those levels will push the indexes lower to 1149.25-1148.00 on the SP, 1539.00-1537.00 on the Nasdaq and 654.20-653.30 on the Russell. If the markets can not recovered from those areas, look for the sell off to continue until another test of the 1133.00 area on the SP is seen. 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
Markets rallied recovering some of Monday’s huge losses as investors search for bargains, and optimism that Congress will reach an agreement on a financial relief plan before the end of the week. Consumer Confidence up and Chicago PMI down.
ECONOMIC DATA
8:15 AM ADP Employment
10:00 AM Construction Spending
10:00 AM ISM Index
10:35 AM Crude Inventories
12:00 AM Car Sales
12:00 AM Truck Sales
YESTERDAY’S MARKETS
Markets bounce after Monday’s huge sell off. A higher opening managed to hold during all of the trading session. The E-mini SP opened well above Monday’s settlement at 1139.50 and bounced to 1142.00 where sellers stepped in pushing the index down to 1132.00. The old low at 1133.00 held the test and markets rallied. The SP pushed up to the 1149.00 area, pulled back to 1144.25 and rallied all the way up to 1152.00 where the rally lost its momentum. The SP backed off to 1142.00 and after holding there for a few minutes rallied all the way back up to 1153.75, just below the 1154.50 Globex high. Another profit taking move pushed the index down to 1143.75 where buyers stepped in back once more and drove the index back up to 1152.00. The sideways pattern with a slightly upward bias continued, the SP pulled back to 1146.25 and rallied reaching new highs at 1161.75. Another pullback to 1156.00 was met with additional buying pushing the index up to new highs at 1162.75. As support was coming in near the highs, the indexes continued to print new highs on the charts with the SP reaching 1166.50 and the Nasdaq 1587.00. Once more the 1160.00-1158.00 intraday support areas and the SP held and the index rallied to new marginal highs at 1167.50. A last run during the last hour of the session reached 1175.75 before pulling back into the end. For the day the SP gained 48.75 points and settled at 1167.50, the Nasdaq recovered 82.25 points closing the day at 1594.25 and the Russell settled at 678.00, up 27.90 points for the session. The Dow came back strong closing at 10850, up 485 points.
MARKET COMMENTARY AND OUTLOOK
Yesterday I wrote: “The SP has reached levels below the 1133.00 area, one of the scenarios that we discussed yesterday, is this down move the false break of the lows that we were expecting? Is this the moment to go long the markets as something will have to be done immediately to restore confidence or is this just a temporary low in a market that at some moment could go for the 1093.00 area on the SP and 10000 on the Dow? Yesterday’s sell off should see a relief rally, maybe a huge relief rally that takes the SP back to 1163.00 or higher and the Dow back to the 10700-10800 band before the markets get back in troubles; it will happen today? I don’t know, but certainly these huge chaotic moves will continue making difficult for day traders to play the markets with reasonable stops. So keep in mind that when you place a trade, and you find yourself on the right side of the markets, you may adjust your stop loss orders or take a profit at the first sign of failure, and if you are on the wrong side, be quick to take your loss.”
Yesterday’s strong rally is what usually happens after a huge drop, buyers look for bargains and shorts cover taking their profits. Many times I have described that most of the huge one day moves do not have any importance on the daily charts until there is a follow through during the next sessions, wide range days, like those that we are experiencing in the current market conditions, have a lot of probabilities to get reversed during the next session as they usually exhaust a move. The markets are on a bearish trend and susceptible to dramatic changes on every piece of news, so trying to figure if yesterday’s rally is only a “dead cat bounce” or the best buying opportunity of the year is still premature for a call.
Traders will be waiting for the vote on the new version of the bailout plan, that probably will result in a rally, that I suspect will get reversed as the plan do not correct the current credit crisis; it will be like a day when the FED comes out with a rate decision, an exaggerated move that fails and then a clear trend, that may happen if the vote is during the regular trading hours, if not an upside gap should be seen for the next opening. Yesterday’s rally, from the 1133.00 area, that resulted in an inside day on the daily charts will have to show during today’s trading session a continuation pattern to the upside to convince me that a short term multi day rally that reaches at least the 1221.00 area on the SP during the next few sessions is in the cards, otherwise, the index will continue to trade lower with this bear market typical furious rallies. Another possibility for today’s session is to see the indexes consolidate on a relative narrow range, but it seems that narrow range sessions are not possible under this market conditions.
There are a few economic reports during today’s trading session and the rest of the week is also busy, we get the unemployment figures next Friday, so expect volatility to continue unless another strong upside session is seen today or the markets trade on a relative narrow range. The 1160.00 area on the SP will be pivotal for today’s trading session, the index will start to get weak if it trades too much time below that level, but if it breaks below it and then it goes over it once more, the trend should be upwards.
TODAY’S SESSION
There is initial resistance at yesterday’s highs at 1173.50-1175.00 on the SP, 1603.00-1604.50 on the Nasdaq and 682.00-683.50 on the Russell. If yesterday’s uptrend are due to continue, those levels should get exceeded easily pushing prices up to 1179.00-1180.00 on the SP, 1612.00-1613.75 on the Nasdaq and 688.00-689.90 on the Russell. If the rally is strong and massive, the indexes should be able to test 1185.50-1188.00 on the SP, 1621.75-1623.00 on the Nasdaq and 695.10-696.60 on the Russell. Trading above them will point for a test of the 1200.00 area on the SP once the last resistance band at 1191.50-1193.00 gets exceeded.
There is strong support at 1161.00-1159.00 on the SP, 1585.00-1584.00 on the Nasdaq and 671.30-670.00 on the Russell. Those held yesterday’s selling attempts and may be pivotal for today’s trading session, if they get broken look for additional support at 1155.00-1153.50 on the SP, 1574.50-1573.00 on the Nasdaq and 666.10-664.50. Failing to rally from those levels will push the indexes lower to 1149.25-1148.00 on the SP, 1539.00-1537.00 on the Nasdaq and 654.20-653.30 on the Russell. If the markets can not recovered from those areas, look for the sell off to continue until another test of the 1133.00 area on the SP is seen. GOOD LUCK.
TODAY’S SUPPORT, PIVOT AND RESISTANCE LEVELS
S&P NASDAQ RUSSELL
Resistance 4 1191.50-1193.00 1631.00-1633.00 700.60-701.80
Resistance 3 1185.50-1188.00 1621.75-1623.00 695.10-696.60
Resistance 2 1179.00-1181.00 1612.00-1613.75 688.00-689.90
Resistance 1 1173.50-1175.00 1603.00-1604.50 682.00-683.50
PIVOT 1151.75 1568.50 672.00
Support 1 1161.00-1159.00 1585.00-1584.00 671.30-670.00
Support 2 1155.00-1153.50 1574.50-1573.00 666.10-664.50
Support 3 1149.25-1148.00 1566.00-1564.50 662.00-660.80
Support 4 1132.00-1130.75 1539.00-1537.00 654.20-653.30
S&P NASDAQ RUSSELL
FIBONACCI FIBONACCI FIBONACCI
1278.90 1767.55 727.35
1263.85 1743.95 720.15
1239.50 1705.75 708.50
1215.15 1667.55 696.85
1200.10 1643.95 689.65
1175.75 1605.75 678.00
1151.40 1567.55 666.35
1143.88 1555.75 662.75
1136.35 1543.95 659.15
1112.00 1505.75 647.50
1087.65 1467.55 635.85
1072.60 1443.95 628.65
1048.25 1405.75 617.00
1023.90 1367.55 605.35
1008.85 1343.95 598.15
DAILY PROJECTIONS S&P NASDAQ RUSSELL
AS DAILY HIGH 1203.50 1650.00 706.00
AS DAILY LOW 1139.75 1550.00 662.80
S&P NASDAQ RUSSELL
Resistance 4 1191.50-1193.00 1631.00-1633.00 700.60-701.80
Resistance 3 1185.50-1188.00 1621.75-1623.00 695.10-696.60
Resistance 2 1179.00-1181.00 1612.00-1613.75 688.00-689.90
Resistance 1 1173.50-1175.00 1603.00-1604.50 682.00-683.50
PIVOT 1151.75 1568.50 672.00
Support 1 1161.00-1159.00 1585.00-1584.00 671.30-670.00
Support 2 1155.00-1153.50 1574.50-1573.00 666.10-664.50
Support 3 1149.25-1148.00 1566.00-1564.50 662.00-660.80
Support 4 1132.00-1130.75 1539.00-1537.00 654.20-653.30
S&P NASDAQ RUSSELL
FIBONACCI FIBONACCI FIBONACCI
1278.90 1767.55 727.35
1263.85 1743.95 720.15
1239.50 1705.75 708.50
1215.15 1667.55 696.85
1200.10 1643.95 689.65
1175.75 1605.75 678.00
1151.40 1567.55 666.35
1143.88 1555.75 662.75
1136.35 1543.95 659.15
1112.00 1505.75 647.50
1087.65 1467.55 635.85
1072.60 1443.95 628.65
1048.25 1405.75 617.00
1023.90 1367.55 605.35
1008.85 1343.95 598.15
DAILY PROJECTIONS S&P NASDAQ RUSSELL
AS DAILY HIGH 1203.50 1650.00 706.00
AS DAILY LOW 1139.75 1550.00 662.80
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