DAILY TRADING ADVISORY 05-January-2008
Wall Street started the New Year optimistically Friday as investors ignore the weaker then expected ISM manufacturing report which dropped to a 28 year low.
WEEKLY PIVOTS FOR WEEK ENDING 09- January-2008
R3 969.00
R2 954.50
R1 940.00
PP 903.75
S1 902.50
S2 881.50
S3 846.50
ECONOMIC DATA
10:00 AM Construction Spending
2:00 PM Auto sales
2:00 PM Truck sales
WEEKLY RECAP
Another shortened week because of the New Year celebrations finally resulted in a rally for the U.S. equity markets. Monday’s session saw a quite opening despite the Israeli air strike on Hamas targets in Gaza and concerns about the post Christmas sales. News that a joint venture between Kuwait and Dow Chemical fell through kept the markets under pressure for most of the session; however after reaching short term support levels and once the news that GMAC was getting a $5 billion stake from the TARP funds markets rallied into the end of the session closing mixed for the day, the SP added 1.50 points closing the session at 870.50, the Nasdaq lost 13.00 points ending at 1175.50 and the Russell ended lower by 5.40 and settled at 468.50. The Dow lost 31 points ending the session at 8483. With ultra light trading volumes, normal for this time of the year, the SP fluctuated during the first part of Tuesday’s session, with GM and Ford trading higher as loans may be available for auto buying, markets managed to hold despite the continuing bad economic data, the S&P Case-Shiller index showed a record 18% drop in housing prices, U.S. Weekly Retail Sales fall most in almost 6 Years, the Chicago PMI came out better than expected but still showing a huge economic activity contraction and just for some dessert, the Consumer confidence reading hit a record low in December. At the end, with a late Christmas spirit, markets were able to rally closing higher for the day, the SP added 17.75 points closing the day at 888.25, the Nasdaq which, as I was expecting finally showed some strength after gaining 30.50 points and settling at 1206.00 and the Russell ended at 483.60, up 15.10 points. The Dow gained 184 points ending the session at 8668. Wednesday’s trading session continued to show the normal end of year bullishness, markets spend most of the session on positive territory, the weekly initial jobless applications came out at 492K, lower than the previous week, however, the continuing application, insured unemployment rate hit a 25 year high. Markets sold off before the end of the session but settlements were higher as a consequence of the end of month fair value adjustments. The Dow gained 108 points closing the year at 8776 and the E-mini SP futures contract settled at 900.00 regardless that the last trade was lower. Friday, the first trading day of 2009, showed a huge optimism as traders pushed prices sharply higher, the daily lows were post during the first minutes of the session and the markets rally until the markets closed. The ISM index report, which came out at 35.4, was the lowest in the last 28 years. Automakers shares rose after the government sent $4 billion loan to Chrysler. For the day, the SP advanced 25.50 points and settled at 925.50, the Nasdaq which leaded the upside move gained 40.50 points closing the session at 1253.00 and the Russell closed the day at 500.20 with a 2.30 point gain. The Dow closed above the 9000 key levels after a 258 point gain.
FRIDAY’S MARKETS
As the markets continued to show a normal end of year bullishness, Friday’s advances beat all the most optimistic expectations. After a shortened Globex session, the market opened slightly higher and pushed down to the daily lows. The E-mini SP started the session at 902.00 from were it backed off to 896.50 but managed to rebound after the first minutes of the session. After breaking above the 904.00 area, the index never looked back. Without any real pullback for most of the session, markets advanced. The SP reached 918.50 where the rally took some air as long traders regrouped, after a few minutes the rally continued reaching the 924.00 area. With not selling coming into the markets and despite the lagging Russell, the SP moved higher reaching 932.75 before pulling back a fit before the close. For the day, the SP gained 25.50 points ending the session at 925.50, the Nasdaq advanced 40.50 points closing the session at 1253.00 and the Russell closed the day at 500.20 with a 2.30 point gain. The Dow closed at 9034 after a 258 point gain.
MARKET COMMENTARY AND OUTLOOK
Last week I wrote:” Low trading volumes should be seen as normal during this time of the year, and, probably, investors and traders will continue to stay on the sidelines as this week New Year’s celebrations is another shortened one. There are two different scenarios; the first one is that this struggling upside move manages to make another attempt to continue to our upside 940.00-960.00 objectives on the SP and then falls to a new low, or, that after a few more days of consolidation, longs give up pulling their bids and bears regain the control pressing the markets much more lower. I still favor the first scenario, I think is too early for the markets to print another leg down, but obviously, a rally will be only a bear market rally. This time of the year, and the low volumes favor the long side. Yesterday’s rally comes from a successful test of the short term support areas on the SP and Dow, and from and expected reaction on the Nasdaq after a string of weak sessions. Where is the market going? It should be able to push higher for a test of the 9000 area on the Dow and probably the 920.00-940.00 areas on the SP. Yesterday’s close above 879.50 on the SP has placed that index in a strong position, and I assume we should see the 900.00 level during today’s trading session, of course, volumes will be ultra light, some of the trading products will close early, markets will be closed tomorrow and not too much traders will come to work on Friday. So the real action will start only by next Monday or Tuesday when trading volumes start to increase. So the markets continue to trade on this wide range, 850.00 to 920.00 on the SP and 8350 to 9000 on the Dow. That means that after the last test of the lower boundary of the range, we are on the way for a test of the higher limit, once those ranges get broken the next sizeable move will be seen.”
Last week end of year rally, that showed three consecutive trend days, is something that I have not seen in a long time, it is not normal for the markets to maintain a three day trend pattern without any decent pullback, however, the indexes managed to do it and practically reached our first upside objectives. Is the January effect on markets, that usually show a bullish pattern, or the Obama’s expected rally already taking place and the markets will continue to move higher? Who knows?
Last week rally seems to be overdone, the markets have being ignoring the terrible economic data, the last one the ISM index, and this week, more economic information will get delivered, the most important, next Friday’s unemployment numbers, that maybe won’t be as worst as expected as the holidays season holds the unemployment rate from growing and the lost of jobs could be moderate, however if I act as a position trader, along term trader, I wouldn’t be adding to my already long position, as at some moment this bear market rally should come to an end, and that, can happen during this week, probably with an upside spike. How far this rally can continue, my projections call for the 940.00-960.00 area on the SP, if it goes a bit higher, long term traders may start to get short as the 800.00 area on the SP will get another visit during the coming weeks or months.
On the short term, the market should be considered in a bullish trend all the time that the SP keeps trading above the 911.00-910.50 area with real selling pressure returning only below the 881.00 level. That means, that even if last week rally could be near to an end, day traders may stay on the long side of the markets buying the SP all the time that our second support levels (911.00-910.50) hold the uptrend intact, and if the rally continues in a strong pace during today’s trading session with volumes returning to normality on this first full week of activity of 2009, look for an explosion in optimism that should push the SP for a test of the 950.00’s during today’s trading session. If that not happen, and the markets rest a couple of days consolidating the last rally, look for opportunities on both sides with very strong support at the levels that I mentioned. In conclusion, a lower opening that respect the 911.00-909.50 support areas should be seen as a buying opportunity. A higher opening, or an early rally that holds below 934.00-934.50 on the SP may be sold with tight stops.
TODAY’S SESSION
There is resistance just below Friday’s highs at 928.50-930.00 on the SP, 1258.50-1261.50 on the Nasdaq and 501.60-503.00 on the Russell. If those levels get exceeded look for a top at 934.00-934.50 on the SP, 1268.00-1270.00 on the Nasdaq and 504.70-505.60 on the Russell. Those levels will have top get smashed with good upside momentum in order for last week rally to continue, if that happens look for the indexes to test 939.00-940.50 on the SP, 1277.50-1279.50 on the Nasdaq and 508.00-508.50 on the Russell.
There may be good support at 916.00-915.50 on the SP, 1247.00-1245.00 on the NQ and 498.80-497.50 on the Russell; if those can not hold the profit taking move, look for KEY support at 911.00-909.50 on the SP, 1241.00-1239.50 on the Nasdaq and 495.60-495.40 on the Russell. A normal pullback MUST hold there and if this uptrend will continue buyers may step in, however, if those areas fail, look for the 905.50-903.50 on the SP, 1233.00-1231.00 on the Nasdaq and 492.40-492.10 on the Russell to get tested 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
Wall Street started the New Year optimistically Friday as investors ignore the weaker then expected ISM manufacturing report which dropped to a 28 year low.
WEEKLY PIVOTS FOR WEEK ENDING 09- January-2008
R3 969.00
R2 954.50
R1 940.00
PP 903.75
S1 902.50
S2 881.50
S3 846.50
ECONOMIC DATA
10:00 AM Construction Spending
2:00 PM Auto sales
2:00 PM Truck sales
WEEKLY RECAP
Another shortened week because of the New Year celebrations finally resulted in a rally for the U.S. equity markets. Monday’s session saw a quite opening despite the Israeli air strike on Hamas targets in Gaza and concerns about the post Christmas sales. News that a joint venture between Kuwait and Dow Chemical fell through kept the markets under pressure for most of the session; however after reaching short term support levels and once the news that GMAC was getting a $5 billion stake from the TARP funds markets rallied into the end of the session closing mixed for the day, the SP added 1.50 points closing the session at 870.50, the Nasdaq lost 13.00 points ending at 1175.50 and the Russell ended lower by 5.40 and settled at 468.50. The Dow lost 31 points ending the session at 8483. With ultra light trading volumes, normal for this time of the year, the SP fluctuated during the first part of Tuesday’s session, with GM and Ford trading higher as loans may be available for auto buying, markets managed to hold despite the continuing bad economic data, the S&P Case-Shiller index showed a record 18% drop in housing prices, U.S. Weekly Retail Sales fall most in almost 6 Years, the Chicago PMI came out better than expected but still showing a huge economic activity contraction and just for some dessert, the Consumer confidence reading hit a record low in December. At the end, with a late Christmas spirit, markets were able to rally closing higher for the day, the SP added 17.75 points closing the day at 888.25, the Nasdaq which, as I was expecting finally showed some strength after gaining 30.50 points and settling at 1206.00 and the Russell ended at 483.60, up 15.10 points. The Dow gained 184 points ending the session at 8668. Wednesday’s trading session continued to show the normal end of year bullishness, markets spend most of the session on positive territory, the weekly initial jobless applications came out at 492K, lower than the previous week, however, the continuing application, insured unemployment rate hit a 25 year high. Markets sold off before the end of the session but settlements were higher as a consequence of the end of month fair value adjustments. The Dow gained 108 points closing the year at 8776 and the E-mini SP futures contract settled at 900.00 regardless that the last trade was lower. Friday, the first trading day of 2009, showed a huge optimism as traders pushed prices sharply higher, the daily lows were post during the first minutes of the session and the markets rally until the markets closed. The ISM index report, which came out at 35.4, was the lowest in the last 28 years. Automakers shares rose after the government sent $4 billion loan to Chrysler. For the day, the SP advanced 25.50 points and settled at 925.50, the Nasdaq which leaded the upside move gained 40.50 points closing the session at 1253.00 and the Russell closed the day at 500.20 with a 2.30 point gain. The Dow closed above the 9000 key levels after a 258 point gain.
FRIDAY’S MARKETS
As the markets continued to show a normal end of year bullishness, Friday’s advances beat all the most optimistic expectations. After a shortened Globex session, the market opened slightly higher and pushed down to the daily lows. The E-mini SP started the session at 902.00 from were it backed off to 896.50 but managed to rebound after the first minutes of the session. After breaking above the 904.00 area, the index never looked back. Without any real pullback for most of the session, markets advanced. The SP reached 918.50 where the rally took some air as long traders regrouped, after a few minutes the rally continued reaching the 924.00 area. With not selling coming into the markets and despite the lagging Russell, the SP moved higher reaching 932.75 before pulling back a fit before the close. For the day, the SP gained 25.50 points ending the session at 925.50, the Nasdaq advanced 40.50 points closing the session at 1253.00 and the Russell closed the day at 500.20 with a 2.30 point gain. The Dow closed at 9034 after a 258 point gain.
MARKET COMMENTARY AND OUTLOOK
Last week I wrote:” Low trading volumes should be seen as normal during this time of the year, and, probably, investors and traders will continue to stay on the sidelines as this week New Year’s celebrations is another shortened one. There are two different scenarios; the first one is that this struggling upside move manages to make another attempt to continue to our upside 940.00-960.00 objectives on the SP and then falls to a new low, or, that after a few more days of consolidation, longs give up pulling their bids and bears regain the control pressing the markets much more lower. I still favor the first scenario, I think is too early for the markets to print another leg down, but obviously, a rally will be only a bear market rally. This time of the year, and the low volumes favor the long side. Yesterday’s rally comes from a successful test of the short term support areas on the SP and Dow, and from and expected reaction on the Nasdaq after a string of weak sessions. Where is the market going? It should be able to push higher for a test of the 9000 area on the Dow and probably the 920.00-940.00 areas on the SP. Yesterday’s close above 879.50 on the SP has placed that index in a strong position, and I assume we should see the 900.00 level during today’s trading session, of course, volumes will be ultra light, some of the trading products will close early, markets will be closed tomorrow and not too much traders will come to work on Friday. So the real action will start only by next Monday or Tuesday when trading volumes start to increase. So the markets continue to trade on this wide range, 850.00 to 920.00 on the SP and 8350 to 9000 on the Dow. That means that after the last test of the lower boundary of the range, we are on the way for a test of the higher limit, once those ranges get broken the next sizeable move will be seen.”
Last week end of year rally, that showed three consecutive trend days, is something that I have not seen in a long time, it is not normal for the markets to maintain a three day trend pattern without any decent pullback, however, the indexes managed to do it and practically reached our first upside objectives. Is the January effect on markets, that usually show a bullish pattern, or the Obama’s expected rally already taking place and the markets will continue to move higher? Who knows?
Last week rally seems to be overdone, the markets have being ignoring the terrible economic data, the last one the ISM index, and this week, more economic information will get delivered, the most important, next Friday’s unemployment numbers, that maybe won’t be as worst as expected as the holidays season holds the unemployment rate from growing and the lost of jobs could be moderate, however if I act as a position trader, along term trader, I wouldn’t be adding to my already long position, as at some moment this bear market rally should come to an end, and that, can happen during this week, probably with an upside spike. How far this rally can continue, my projections call for the 940.00-960.00 area on the SP, if it goes a bit higher, long term traders may start to get short as the 800.00 area on the SP will get another visit during the coming weeks or months.
On the short term, the market should be considered in a bullish trend all the time that the SP keeps trading above the 911.00-910.50 area with real selling pressure returning only below the 881.00 level. That means, that even if last week rally could be near to an end, day traders may stay on the long side of the markets buying the SP all the time that our second support levels (911.00-910.50) hold the uptrend intact, and if the rally continues in a strong pace during today’s trading session with volumes returning to normality on this first full week of activity of 2009, look for an explosion in optimism that should push the SP for a test of the 950.00’s during today’s trading session. If that not happen, and the markets rest a couple of days consolidating the last rally, look for opportunities on both sides with very strong support at the levels that I mentioned. In conclusion, a lower opening that respect the 911.00-909.50 support areas should be seen as a buying opportunity. A higher opening, or an early rally that holds below 934.00-934.50 on the SP may be sold with tight stops.
TODAY’S SESSION
There is resistance just below Friday’s highs at 928.50-930.00 on the SP, 1258.50-1261.50 on the Nasdaq and 501.60-503.00 on the Russell. If those levels get exceeded look for a top at 934.00-934.50 on the SP, 1268.00-1270.00 on the Nasdaq and 504.70-505.60 on the Russell. Those levels will have top get smashed with good upside momentum in order for last week rally to continue, if that happens look for the indexes to test 939.00-940.50 on the SP, 1277.50-1279.50 on the Nasdaq and 508.00-508.50 on the Russell.
There may be good support at 916.00-915.50 on the SP, 1247.00-1245.00 on the NQ and 498.80-497.50 on the Russell; if those can not hold the profit taking move, look for KEY support at 911.00-909.50 on the SP, 1241.00-1239.50 on the Nasdaq and 495.60-495.40 on the Russell. A normal pullback MUST hold there and if this uptrend will continue buyers may step in, however, if those areas fail, look for the 905.50-903.50 on the SP, 1233.00-1231.00 on the Nasdaq and 492.40-492.10 on the Russell to get tested before the session is over. GOOD LUCK.
TODAY’S SUPPORT, PIVOT AND RESISTANCE LEVELS
S&P NASDAQ RUSSELL
Resistance 4 945.00-946.50 1288.00-1290.00 511.10-512.60
Resistance 3 939.00-940.50 1277.50-1279.50 508.00-508.50
Resistance 2 934.00-934.50 1268.00-1270.00 504.70-505.60
Resistance 1 928.50-930.00 1258.50-1261.50 501.60-503.00
PIVOT 918.25 1241.75 499.70
Support 1 916.00-915.50 1247.00-1245.00 498.80-497.50
Support 2 911.00-909.50 1241.00-1239.50 495.60-495.40
Support 3 905.50-903.50 1233.00-1231.00 492.40-492.10
Support 4 891.00-889.50 1217.00-1215.50 488.30-477.20
S&P NASDAQ RUSSELL
FIBONACCI FIBONACCI FIBONACCI
991.40 1372.21 531.17
982.85 1357.04 527.63
969.00 1332.50 521.90
955.15 1307.96 516.17
946.60 1292.79 512.63
932.75 1268.25 506.90
918.90 1243.71 501.17
914.63 1236.13 499.40
910.35 1228.54 497.63
896.50 1204.00 491.90
882.65 1179.46 486.17
874.10 1164.29 482.63
860.25 1139.75 476.90
846.40 1115.21 471.17
837.85 1100.04 467.63
DAILY PROJECTIONS S&P NASDAQ RUSSELL
AS DAILY HIGH 947.25 1292.75 511.10
AS DAILY LOW 911.00 1228.50 496.10
S&P NASDAQ RUSSELL
Resistance 4 945.00-946.50 1288.00-1290.00 511.10-512.60
Resistance 3 939.00-940.50 1277.50-1279.50 508.00-508.50
Resistance 2 934.00-934.50 1268.00-1270.00 504.70-505.60
Resistance 1 928.50-930.00 1258.50-1261.50 501.60-503.00
PIVOT 918.25 1241.75 499.70
Support 1 916.00-915.50 1247.00-1245.00 498.80-497.50
Support 2 911.00-909.50 1241.00-1239.50 495.60-495.40
Support 3 905.50-903.50 1233.00-1231.00 492.40-492.10
Support 4 891.00-889.50 1217.00-1215.50 488.30-477.20
S&P NASDAQ RUSSELL
FIBONACCI FIBONACCI FIBONACCI
991.40 1372.21 531.17
982.85 1357.04 527.63
969.00 1332.50 521.90
955.15 1307.96 516.17
946.60 1292.79 512.63
932.75 1268.25 506.90
918.90 1243.71 501.17
914.63 1236.13 499.40
910.35 1228.54 497.63
896.50 1204.00 491.90
882.65 1179.46 486.17
874.10 1164.29 482.63
860.25 1139.75 476.90
846.40 1115.21 471.17
837.85 1100.04 467.63
DAILY PROJECTIONS S&P NASDAQ RUSSELL
AS DAILY HIGH 947.25 1292.75 511.10
AS DAILY LOW 911.00 1228.50 496.10
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
