DAILY TRADING ADVISORY 02-December-2008
Morgan Stanley and Goldman Sachs having their fourth quarter estimates cut by Credit Swiss, lower oil prices, and record highs for U.S bonds as investors look for protection and Construction Spending and ISM Index showing additional contraction for the U. S. economy result in a strong sell off for the U.S equity indexes. Consumer Spending remain a concern. Now official: U.S. economy in recession.
ECONOMIC DATA
12:00 AM Auto Sales
12:00 AM Truck Sales
YESTERDAY’S MARKET
After a nightly sell off, the futures indexes opened near their Globex lows. The E-mini SP started the session at 869.50 just to get immediately sold strongly not stopping until it reached 852.25. As traders waited for the release of the economic data, the SP bounced back to 856.50 where sellers stepped back in pressing the index to a new intraday low at 851.50. As the reaction to the worst than expected numbers started, the SP tried to form a bottom after making a new marginal low at 851.00 which resulted in another failed rally attempt to the 856.00 level. As the session and the selling pressure continued, the SP made new lows at 848.00, bounced to 852.50 and pushed down to 844.50 where the index held on a double bottom. As the markets tried hard to mount a rally, the 851.00 area on the SP was reached and get sold once more pushing the index to test its lows. Finally as the short covering rallies failed to gain the necessary momentum to push the markets higher, the SP made new lows at 841.50. As the same pattern of small bounces continued, the SP made new lows at 839.00 and then at 838.25. Two hours before the close, the markets tried to push higher, the SP reached 849.50 where sellers stepped back in with force pushing the index down in a free fall all the way to 813.00. For the day, the SP lost 79.50 points finishing the session at 815.75, the Nasdaq lost 91.50 and settled at 1094.50 and the Russell ended lower by 54.50 points at 418.20. The Dow sold off strongly losing 680 points finishing the day at 8149.
MARKET COMMENTARY AND OUTLOOK
Yesterday I wrote:” The daily charts continue to look good and only if Friday’s rally that closed on the daily highs exhausted the last run, we could see a negative session that I suspect will be only a one day countertrend or a few hours of profit taking before the SP tries to trade above the critical 900.00 area on its way to the obvious 918.00-920.00 resistance levels which will offer the real test for this upside move, those should be considered pivotal, once the market breaks above them, trade higher, sell offs for a test and holds, then the way to much higher prices will be open. Remember that the bear campaign is not over yet, and despite the fact that I am expecting a strong December, in the same way my studies point for another steep fall during January. The break below the 50% retracement from the high on the Dow, was extremely important and indicates a short term low, the upside swing from that low has already lasted six consecutive sessions, here is where the uptrend has some risk, that’s the main reason why I am expecting some selling, but as I wrote, nothing serious at this point. Take into account that I am not forecasting a move above the 940.00-960.00 areas, and I think the way to get there will be very volatile, not a trend move, so don’t try to chase prices as ups and downs will be seen.
For today’s trading session, if we have an early sell off that last most of the session, get ready to get long during the last two hours as I suspect that a few trapped shorts will give support to today’s low volume expected session, and, if the market tries to rally on the early going, look to be a seller near the resistance levels, obviously with tight stops.”
Yesterday’s failure to hold and trade above the 900 area on the SP and the critical 9000 level on the Dow has placed the markets back under difficult circumstances as they broke below important support areas, and, if the SP and Dow won’t be able to hold the 800.00 and 8000 levels respectively, we could see much more weakness ahead. We came into yesterday’s session looking for and early sell off that recovers during the last two hours of the session, what we got? A 10 point rally on the SP and a total collapse once last week lows failed to hold. After yesterday’s huge decline, we could see some consolidation during today’s trading session, however, there is a lot of work to be done in order to place the indexes in a neutral position. It seems that the 832.00 area on the SP and 8400 on the Dow will have to get exceeded and hold for the close for the markets to move higher, until- unless that happens, the bears are in complete control. This decline has formed lower highs on the daily charts and leaves the markets on a weak position and ready for another sharp decline. Yesterday’s declines with low volumes are not the best indication that the strong downtrend has resumed, but the extension of the decline really disappoint all of us that were expecting a few sessions where the indexes could consolidate the last week gains and then go for new highs.
The only positive things that I can see on the daily charts is an early sell off that holds the 800 area on the SP and then slowly, starts to move higher, or a successful test of yesterday’s late lows and the a run to have a higher close.
I wrote yesterday that traders will be cautious in front of next Friday unemployment data, but the true, I was expecting the SP to hold a pullback to the 863.00 level, and in the worst case, to respect the 832.00 support level, so only if that index breaks above it I will start to look at the markets as a buy for the rest of the month, meanwhile they are chances of a another steep decline.
For today’s trading session, an early sell off that holds at the 800.00 and 8000 areas on the SP and Dow respectively, or a break below them that get reversed, could offer a good long entry, but don’t overstay in your trade if you don’t have a hard stop loss order just below the first hour lows. Expect a strong reaction to the automakers sales numbers to be released at 12:00 AM (ET), obviously, the numbers will be terrible. If the indexes are trading in positive territory for the announcement and hold the initial pressure, there is a chance that some light could be seen at the end of the tunnel.
.
TODAY’S SESSION
There is initial resistance at 823.50-825.00 on the SP, 1103.00-1105.00 on the Nasdaq and423.10-424.60 on the Russell. An early test of those levels should be met by sellers, so get ready to short up there with tight stops. If the indexes do not get rejected from those areas, expect a test of last week lows at 832.00-834.00 on the SP, 1112.00-1113.50 on the Nasdaq and 429.20-430.80 on the Russell. Only above them the indexes will be able to go for yesterday’s consolidation levels at 839.50-842.00 on the SP, 1121.50-1123.75 on the Nasdaq and 434.50-435.20 on the Russell.
Initial support is at yesterday’s lows, 813.00-812.00 on the SP, 1085.00-1083.00 on the Nasdaq and 412.10-411.90 on the Russell, if those levels hold, printing a double bottom, then a 13 point rally could be seen, but if those fail, expect the selling pressure to gain momentum bringing the markets down to 808.00-806.00 on the SP, 1076.00-1074.00 on the Nasdaq and 407.00-405.70 on the Russell. Holding there could see the sell off losing its steam, however the next levels at 800.50-799.00 on the SP, 1067.00-1`066.00 on the Nasdaq and 401.70-400.30 on the Russell will act as a magnet, so don’t run be a buyer until the indexes trade back in positive territory. 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
Morgan Stanley and Goldman Sachs having their fourth quarter estimates cut by Credit Swiss, lower oil prices, and record highs for U.S bonds as investors look for protection and Construction Spending and ISM Index showing additional contraction for the U. S. economy result in a strong sell off for the U.S equity indexes. Consumer Spending remain a concern. Now official: U.S. economy in recession.
ECONOMIC DATA
12:00 AM Auto Sales
12:00 AM Truck Sales
YESTERDAY’S MARKET
After a nightly sell off, the futures indexes opened near their Globex lows. The E-mini SP started the session at 869.50 just to get immediately sold strongly not stopping until it reached 852.25. As traders waited for the release of the economic data, the SP bounced back to 856.50 where sellers stepped back in pressing the index to a new intraday low at 851.50. As the reaction to the worst than expected numbers started, the SP tried to form a bottom after making a new marginal low at 851.00 which resulted in another failed rally attempt to the 856.00 level. As the session and the selling pressure continued, the SP made new lows at 848.00, bounced to 852.50 and pushed down to 844.50 where the index held on a double bottom. As the markets tried hard to mount a rally, the 851.00 area on the SP was reached and get sold once more pushing the index to test its lows. Finally as the short covering rallies failed to gain the necessary momentum to push the markets higher, the SP made new lows at 841.50. As the same pattern of small bounces continued, the SP made new lows at 839.00 and then at 838.25. Two hours before the close, the markets tried to push higher, the SP reached 849.50 where sellers stepped back in with force pushing the index down in a free fall all the way to 813.00. For the day, the SP lost 79.50 points finishing the session at 815.75, the Nasdaq lost 91.50 and settled at 1094.50 and the Russell ended lower by 54.50 points at 418.20. The Dow sold off strongly losing 680 points finishing the day at 8149.
MARKET COMMENTARY AND OUTLOOK
Yesterday I wrote:” The daily charts continue to look good and only if Friday’s rally that closed on the daily highs exhausted the last run, we could see a negative session that I suspect will be only a one day countertrend or a few hours of profit taking before the SP tries to trade above the critical 900.00 area on its way to the obvious 918.00-920.00 resistance levels which will offer the real test for this upside move, those should be considered pivotal, once the market breaks above them, trade higher, sell offs for a test and holds, then the way to much higher prices will be open. Remember that the bear campaign is not over yet, and despite the fact that I am expecting a strong December, in the same way my studies point for another steep fall during January. The break below the 50% retracement from the high on the Dow, was extremely important and indicates a short term low, the upside swing from that low has already lasted six consecutive sessions, here is where the uptrend has some risk, that’s the main reason why I am expecting some selling, but as I wrote, nothing serious at this point. Take into account that I am not forecasting a move above the 940.00-960.00 areas, and I think the way to get there will be very volatile, not a trend move, so don’t try to chase prices as ups and downs will be seen.
For today’s trading session, if we have an early sell off that last most of the session, get ready to get long during the last two hours as I suspect that a few trapped shorts will give support to today’s low volume expected session, and, if the market tries to rally on the early going, look to be a seller near the resistance levels, obviously with tight stops.”
Yesterday’s failure to hold and trade above the 900 area on the SP and the critical 9000 level on the Dow has placed the markets back under difficult circumstances as they broke below important support areas, and, if the SP and Dow won’t be able to hold the 800.00 and 8000 levels respectively, we could see much more weakness ahead. We came into yesterday’s session looking for and early sell off that recovers during the last two hours of the session, what we got? A 10 point rally on the SP and a total collapse once last week lows failed to hold. After yesterday’s huge decline, we could see some consolidation during today’s trading session, however, there is a lot of work to be done in order to place the indexes in a neutral position. It seems that the 832.00 area on the SP and 8400 on the Dow will have to get exceeded and hold for the close for the markets to move higher, until- unless that happens, the bears are in complete control. This decline has formed lower highs on the daily charts and leaves the markets on a weak position and ready for another sharp decline. Yesterday’s declines with low volumes are not the best indication that the strong downtrend has resumed, but the extension of the decline really disappoint all of us that were expecting a few sessions where the indexes could consolidate the last week gains and then go for new highs.
The only positive things that I can see on the daily charts is an early sell off that holds the 800 area on the SP and then slowly, starts to move higher, or a successful test of yesterday’s late lows and the a run to have a higher close.
I wrote yesterday that traders will be cautious in front of next Friday unemployment data, but the true, I was expecting the SP to hold a pullback to the 863.00 level, and in the worst case, to respect the 832.00 support level, so only if that index breaks above it I will start to look at the markets as a buy for the rest of the month, meanwhile they are chances of a another steep decline.
For today’s trading session, an early sell off that holds at the 800.00 and 8000 areas on the SP and Dow respectively, or a break below them that get reversed, could offer a good long entry, but don’t overstay in your trade if you don’t have a hard stop loss order just below the first hour lows. Expect a strong reaction to the automakers sales numbers to be released at 12:00 AM (ET), obviously, the numbers will be terrible. If the indexes are trading in positive territory for the announcement and hold the initial pressure, there is a chance that some light could be seen at the end of the tunnel.
.
TODAY’S SESSION
There is initial resistance at 823.50-825.00 on the SP, 1103.00-1105.00 on the Nasdaq and423.10-424.60 on the Russell. An early test of those levels should be met by sellers, so get ready to short up there with tight stops. If the indexes do not get rejected from those areas, expect a test of last week lows at 832.00-834.00 on the SP, 1112.00-1113.50 on the Nasdaq and 429.20-430.80 on the Russell. Only above them the indexes will be able to go for yesterday’s consolidation levels at 839.50-842.00 on the SP, 1121.50-1123.75 on the Nasdaq and 434.50-435.20 on the Russell.
Initial support is at yesterday’s lows, 813.00-812.00 on the SP, 1085.00-1083.00 on the Nasdaq and 412.10-411.90 on the Russell, if those levels hold, printing a double bottom, then a 13 point rally could be seen, but if those fail, expect the selling pressure to gain momentum bringing the markets down to 808.00-806.00 on the SP, 1076.00-1074.00 on the Nasdaq and 407.00-405.70 on the Russell. Holding there could see the sell off losing its steam, however the next levels at 800.50-799.00 on the SP, 1067.00-1`066.00 on the Nasdaq and 401.70-400.30 on the Russell will act as a magnet, so don’t run be a buyer until the indexes trade back in positive territory. GOOD LUCK.
TODAY’S SUPPORT, PIVOT AND RESISTANCE LEVELS
S&P NASDAQ RUSSELL
Resistance 4 856.00-857.75 1148.00-1150.00 445.30-446.20
Resistance 3 839.50-842.00 1121.50-1123.75 434.50-435.20
Resistance 2 832.00-834.00 1112.00-1113.50 429.20-430.80
Resistance 1 823.50-825.00 1103.00-1105.00 423.10-424.60
PIVOT 842.00 1124.00 434.50
Support 1 813.00-812.00 1085.00-1083.00 412.10-411.90
Support 2 808.00-806.50 1076.00-1074.00 407.00-405.70
Support 3 800.50-799.00 1067.00-1066.00 401.70-400.30
Support 4 792.50-791.00 1058.00-1056.00 395.70-394.80
S&P NASDAQ RUSSELL
FIBONACCI FIBONACCI FIBONACCI
1032.91 1346.16 571.05
1013.09 1323.09 556.75
981.00 1285.75 533.60
948.91 1248.41 510.45
929.09 1225.34 496.15
897.00 1188.00 473.00
864.91 1150.66 449.85
855.00 1139.13 442.70
845.09 1127.59 435.55
813.00 1090.25 412.40
780.91 1052.91 389.25
761.09 1029.84 374.95
729.00 992.50 351.80
696.91 955.16 328.65
677.09 932.09 314.35
DAILY PROJECTIONS S&P NASDAQ RUSSELL
AS DAILY HIGH 856.00 1141.00 445.60
AS DAILY LOW 772.00 1043.00 385.00
S&P NASDAQ RUSSELL
Resistance 4 856.00-857.75 1148.00-1150.00 445.30-446.20
Resistance 3 839.50-842.00 1121.50-1123.75 434.50-435.20
Resistance 2 832.00-834.00 1112.00-1113.50 429.20-430.80
Resistance 1 823.50-825.00 1103.00-1105.00 423.10-424.60
PIVOT 842.00 1124.00 434.50
Support 1 813.00-812.00 1085.00-1083.00 412.10-411.90
Support 2 808.00-806.50 1076.00-1074.00 407.00-405.70
Support 3 800.50-799.00 1067.00-1066.00 401.70-400.30
Support 4 792.50-791.00 1058.00-1056.00 395.70-394.80
S&P NASDAQ RUSSELL
FIBONACCI FIBONACCI FIBONACCI
1032.91 1346.16 571.05
1013.09 1323.09 556.75
981.00 1285.75 533.60
948.91 1248.41 510.45
929.09 1225.34 496.15
897.00 1188.00 473.00
864.91 1150.66 449.85
855.00 1139.13 442.70
845.09 1127.59 435.55
813.00 1090.25 412.40
780.91 1052.91 389.25
761.09 1029.84 374.95
729.00 992.50 351.80
696.91 955.16 328.65
677.09 932.09 314.35
DAILY PROJECTIONS S&P NASDAQ RUSSELL
AS DAILY HIGH 856.00 1141.00 445.60
AS DAILY LOW 772.00 1043.00 385.00
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
