DAILY TRADING ADVISORY 06-January-2008
Tax cuts, stimulus package expectations, Construction spending increasing .6% and automakers sales continued plummeting result in a consolidating session after last week big gains.
ECONOMIC DATA
10:00 AM Factory Orders
10:00 AM ISM Services
YESTERDAY’S MARKET
After breaking to new highs during last Friday session, markets opened slightly lower for Monday’s session. The E-mini SP opened the day at 924.00 and after trying to break higher, it pulled back to 920.00. As traders waited for the Construction Spending data release the SP moved lower testing our first support levels at 916.00-915.50. Once the numbers got release showing a better than expected number, the SP bounced back to 924.25, pulled back to the 921.00 level and after trading in a narrow range pushed higher reaching 931.50. As the rally lost its momentum, the SP pulled back to 924.00 from where it bounced back to 928.00 pulled back to 924.00 and tested once more the highs. As the session continued with lower traded volumes, the SP backed off to the 926.00 level where it posted a double bottom that resulted in a move to our 934.00-934.50 areas. Once more the rally lost its momentum the SP pulled back to the 926.00 level bounced to 928.00 and tested once more the early 924.00 support area from where a feeble bounce failed at the 928.00 inviting shorts in. The SP fell to 921.50, where it found support and bounced to 927.00 just to fail and push to new intraday lows at 917.50 before bouncing back to 922.50 and continue higher into the close, for the day, the E-mini SP added 2.00 points and settled at 927.50, the Nasdaq gained 12.00 points ending the session at 1265.00 and the Russell managed to gain 3.40 points ending the session at 503.60. The Dow lost 81 pints closing the day at 8952.
MARKET COMMENTARY AND OUTLOOK
Last week I wrote:” Last week rally seems to be overdone, 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.”
Yesterday’s action resulted in our expected consolidation after last week strong rally, our 934.00-934.50 resistance areas on the SP acted perfect as the markets sold off nicely once those levels got reached. Despite that the markets continue to show a bullish picture holding near the overall highs, double tops on a bear market, have the tendency to reverse the trend, moreover, the Dow has failed during the last months to hold above the 9000 level for two consecutive closes, will this time be different and that market will finally make it? I am not so sure, that index will have to trade above the 9050 level for the uptrend to continue and if that not happens, we could see another visit to the 860.00 area on the SP and the 8400 on the Dow.
So on the short term, yesterday’s double top around the 934.00-935.00 areas on the SP and the 9050 level on the Dow will have to get exceeded to confirm further strength, and before that happens we could see more sideways movement until a decisive breakout happens. If this is the case, rallies that fail near those levels could offer good selling opportunities, but beware of staying short if those areas get exceeded. Take into account that the markets look solid and besides the suggested shorting trade around the current highs, all the pullbacks, in particular once that test yesterday’s lows should be bought with tight stops.
TODAY’S SESSION
There is resistance just below Friday’s highs at 929.00-930.50 on the SP, 1268.50-1270.50 on the Nasdaq and 505.00-506.40 on the Russell. The current pattern favor breaking above those areas and reaching levels just above yesterday’s highs at 933.50-935.50 on the SP, 1274.00-1275.00 on the Nasdaq and 508.80-510.30 on the Russell. In this long term bear market, double tops indicate lower prices, so if the rally stalls there, and those levels don’t get exceeded by more than 1.50 SP points, look to get short, in particular if the Dow is trading below 9000 and the Russell continues to lag, however, if the conditions are bullish, look for the next areas at 938.00-939.50 on the SP, 1280.00-1281.00 on the Nasdaq and 512.50-513.70 on the Russell to get reached on the way to higher prices during the rest of the week.
There is good support at 925.75-924.25 on the SP, 1260.00-1258.00 on the NQ and 500.80-499.40 on the Russell; these areas are key support levels for the early going, in particular for the Nasdaq which has been leading this move, if the indexes break lower look for strong support at 922.00-921.50 on the SP, 1254.00-1253.50 on the Nasdaq and 595.20-495.10 on the Russell. Nothing bad happens all the time that those hold on a pullback, and if they get reached, it may be a good set up to get long there with tight stops, but if the markets area weak, look for a bigger pullback that test 917.50-916.50 on the SP, 1248.00-1247.00 on the Nasdaq and 492.30-491.20 on the Russell before bulls try to defend their positions. If those do not hold, then the SP should push lower reaching the short term KEY SUPPORT areas at 910.00-908.00. 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
Tax cuts, stimulus package expectations, Construction spending increasing .6% and automakers sales continued plummeting result in a consolidating session after last week big gains.
ECONOMIC DATA
10:00 AM Factory Orders
10:00 AM ISM Services
YESTERDAY’S MARKET
After breaking to new highs during last Friday session, markets opened slightly lower for Monday’s session. The E-mini SP opened the day at 924.00 and after trying to break higher, it pulled back to 920.00. As traders waited for the Construction Spending data release the SP moved lower testing our first support levels at 916.00-915.50. Once the numbers got release showing a better than expected number, the SP bounced back to 924.25, pulled back to the 921.00 level and after trading in a narrow range pushed higher reaching 931.50. As the rally lost its momentum, the SP pulled back to 924.00 from where it bounced back to 928.00 pulled back to 924.00 and tested once more the highs. As the session continued with lower traded volumes, the SP backed off to the 926.00 level where it posted a double bottom that resulted in a move to our 934.00-934.50 areas. Once more the rally lost its momentum the SP pulled back to the 926.00 level bounced to 928.00 and tested once more the early 924.00 support area from where a feeble bounce failed at the 928.00 inviting shorts in. The SP fell to 921.50, where it found support and bounced to 927.00 just to fail and push to new intraday lows at 917.50 before bouncing back to 922.50 and continue higher into the close, for the day, the E-mini SP added 2.00 points and settled at 927.50, the Nasdaq gained 12.00 points ending the session at 1265.00 and the Russell managed to gain 3.40 points ending the session at 503.60. The Dow lost 81 pints closing the day at 8952.
MARKET COMMENTARY AND OUTLOOK
Last week I wrote:” Last week rally seems to be overdone, 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.”
Yesterday’s action resulted in our expected consolidation after last week strong rally, our 934.00-934.50 resistance areas on the SP acted perfect as the markets sold off nicely once those levels got reached. Despite that the markets continue to show a bullish picture holding near the overall highs, double tops on a bear market, have the tendency to reverse the trend, moreover, the Dow has failed during the last months to hold above the 9000 level for two consecutive closes, will this time be different and that market will finally make it? I am not so sure, that index will have to trade above the 9050 level for the uptrend to continue and if that not happens, we could see another visit to the 860.00 area on the SP and the 8400 on the Dow.
So on the short term, yesterday’s double top around the 934.00-935.00 areas on the SP and the 9050 level on the Dow will have to get exceeded to confirm further strength, and before that happens we could see more sideways movement until a decisive breakout happens. If this is the case, rallies that fail near those levels could offer good selling opportunities, but beware of staying short if those areas get exceeded. Take into account that the markets look solid and besides the suggested shorting trade around the current highs, all the pullbacks, in particular once that test yesterday’s lows should be bought with tight stops.
TODAY’S SESSION
There is resistance just below Friday’s highs at 929.00-930.50 on the SP, 1268.50-1270.50 on the Nasdaq and 505.00-506.40 on the Russell. The current pattern favor breaking above those areas and reaching levels just above yesterday’s highs at 933.50-935.50 on the SP, 1274.00-1275.00 on the Nasdaq and 508.80-510.30 on the Russell. In this long term bear market, double tops indicate lower prices, so if the rally stalls there, and those levels don’t get exceeded by more than 1.50 SP points, look to get short, in particular if the Dow is trading below 9000 and the Russell continues to lag, however, if the conditions are bullish, look for the next areas at 938.00-939.50 on the SP, 1280.00-1281.00 on the Nasdaq and 512.50-513.70 on the Russell to get reached on the way to higher prices during the rest of the week.
There is good support at 925.75-924.25 on the SP, 1260.00-1258.00 on the NQ and 500.80-499.40 on the Russell; these areas are key support levels for the early going, in particular for the Nasdaq which has been leading this move, if the indexes break lower look for strong support at 922.00-921.50 on the SP, 1254.00-1253.50 on the Nasdaq and 595.20-495.10 on the Russell. Nothing bad happens all the time that those hold on a pullback, and if they get reached, it may be a good set up to get long there with tight stops, but if the markets area weak, look for a bigger pullback that test 917.50-916.50 on the SP, 1248.00-1247.00 on the Nasdaq and 492.30-491.20 on the Russell before bulls try to defend their positions. If those do not hold, then the SP should push lower reaching the short term KEY SUPPORT areas at 910.00-908.00. GOOD LUCK.
.
TODAY’S SUPPORT, PIVOT AND RESISTANCE LEVELS
S&P NASDAQ RUSSELL
Resistance 4 943.75-945.00 1290.00-1292.00 517.00-518.20
Resistance 3 938.00-939.50 1280.00-1281.00 512.50-513.70
Resistance 2 933.50-935.50 1274.00-1275.00 508.80-510.30
Resistance 1 929.00-930.50 1268.50-1270.50 505.00-506.40
PIVOT 926.00 1261.50 501.80
Support 1 925.75-924.25 1260.00-1258.00 500.80-499.40
Support 2 922.00-921.50 1254.00-1253.50 495.20-495.10
Support 3 917.50-916.50 1248.00-1247.00 492.30-491.20
Support 4 910.00-908.00 1232.00-1230.00 486.60-487.50
S&P NASDAQ RUSSELL
FIBONACCI FIBONACCI FIBONACCI
962.97 1324.75 533.09
958.78 1317.50 529.51
952.00 1305.75 523.70
945.22 1294.00 517.89
941.03 1286.75 514.31
934.25 1275.00 508.50
927.47 1263.25 502.69
925.38 1259.63 500.90
923.28 1256.00 499.11
916.50 1244.25 493.30
909.72 1232.50 487.49
905.53 1225.25 483.91
898.75 1213.50 478.10
891.97 1201.75 472.29
887.78 1194.50 468.71
DAILY PROJECTIONS S&P NASDAQ RUSSELL
AS DAILY HIGH 939.75 1285.50 513.70
AS DAILY LOW 922.00 1254.00 498.50
S&P NASDAQ RUSSELL
Resistance 4 943.75-945.00 1290.00-1292.00 517.00-518.20
Resistance 3 938.00-939.50 1280.00-1281.00 512.50-513.70
Resistance 2 933.50-935.50 1274.00-1275.00 508.80-510.30
Resistance 1 929.00-930.50 1268.50-1270.50 505.00-506.40
PIVOT 926.00 1261.50 501.80
Support 1 925.75-924.25 1260.00-1258.00 500.80-499.40
Support 2 922.00-921.50 1254.00-1253.50 495.20-495.10
Support 3 917.50-916.50 1248.00-1247.00 492.30-491.20
Support 4 910.00-908.00 1232.00-1230.00 486.60-487.50
S&P NASDAQ RUSSELL
FIBONACCI FIBONACCI FIBONACCI
962.97 1324.75 533.09
958.78 1317.50 529.51
952.00 1305.75 523.70
945.22 1294.00 517.89
941.03 1286.75 514.31
934.25 1275.00 508.50
927.47 1263.25 502.69
925.38 1259.63 500.90
923.28 1256.00 499.11
916.50 1244.25 493.30
909.72 1232.50 487.49
905.53 1225.25 483.91
898.75 1213.50 478.10
891.97 1201.75 472.29
887.78 1194.50 468.71
DAILY PROJECTIONS S&P NASDAQ RUSSELL
AS DAILY HIGH 939.75 1285.50 513.70
AS DAILY LOW 922.00 1254.00 498.50
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