DAILY TRADING ADVISORY 12-January-2008
Job losses stack up as recession deepens. Unemployment rate jumps to 7.2%, its highest level in 15 years, Nonfarm payrolls minus 524K as job markets continue to deteriorate. Job losses during the last year total 2.6 million, the highest since 1945. Markets sold off but managed to pare some losses by the end of the session.
WEEKLY PIVOTS FOR WEEK ENDING 16- January-2008
R3 963.00
R2 918.00
R1 896.75
PP 903.00
S1 880.00
S2 869.50
S3 843.25
ECONOMIC DATA
None
WEEKLY RECAP
Markets failed to hold their early week gains as recession deepens. Monday’s trading session stated with a positive tone as the end of year’s rally continued; the construction spending report came out better than expecting showing a .6% increase from the previous month. Later on the session, the auto and truck sales report was not a surprise, auto sales continue to collapse. Speculation about a tax cut and stimulus package were some of the bullish factors. Markets ignored the bad news ending mixed for the day as they consolidated the previous week rally, 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. Tuesday’s session was highly bullish; the SP opened with an upside gap and traded at new highs for the rally before giving back much of it gains into the close. The ISM Services index rose to 40.7, and despite that any reading below 50.0 indicates economic weakness, the number was better than expected. The Factory Orders report was down another 4.6% as the manufacturing sector continued to shrink. Pending home sales was down by another 4%showing that the housing sector has not bottoming yet. Later on the day, the FOMC minutes from the last FED meeting indicated concerns about the length and severity of the current downturn. For the day, the SP added 3.00 points closing the session at 930.50, the Nasdaq gained 6.00 points and settled at 1271.00, and the Russell closed at 510.50, up 6.90 points for the session. The Dow finished the day at 9015 with a 62 point advance. The story was quiet different for Wednesday’s trading session, markets gaped down for the opening, crude oil prices collapsed as the weekly inventories were higher than expected, and the bad corporate news, triggered by Intel that reported revenues 23% down for the fourth quarter and Alcoa which is cutting 13% of its working force resulted in a strong sell off for the equity markets, in addition, the ADP employment data, that measures the job loss or creation in the privet sector showed a huge 700K decline sparking fears about the monthly job reports. Also, a projected 1.2 Trillion deficit for this year, without including stimulus packages and government bailouts added pressure to the markets. For the day, the SP ended lower by 25.75 points and settled at 905.25, the Nasdaq lost31.50 points ending the session at 1239.50 and the Russell ended lower 12.60 points at 496.90. The Dow lost 245 points closing at 8769. Thursday session was another consolidation day, volumes were light and the markets fluctuate managing to close well above their nightly lows, the weekly initial claims data, which came out better than expected, helped the markets to recover from early weakness which resulted from the Wal-Mart news that earning will miss forecast. However the continuing jobless claims reached 4.6 million, highest since 1982. Also, President elected Obama gave a speech about his projected stimulus plan warning that worst times could come if his plan is rejected. At the end of the day, the SP added 1.50 points closing at 906.75, the Nasdaq ended higher by 10.00 points and settled at 1249.50 and the Russell gained 2.80 points finishing the session at 499.70. The Dow lost 27 points and settled at 8742. Friday’s session, before the opening, markets got the jobs market data, the unemployment rate jumped to 7.2% indicating that more lay offs are possible in the coming months , however the monthly job losses came out at minus 524K, near consensus. This gave way to a pre-market rally where the SP reached 914.75, however, a higher opening resulted in a strong push to the downside as traders realize that the accumulated job losses in the last year, reached already 2.6 million, the highest since 1945.
FRIDAY’S MARKETS
After trading between 900.00 and 910.00 during the Globex session, the E-mini SP rallied before the opening as a result of the Unemployment rate that jumped to 7.2% but a better than expected job losses which came out lower than the consensus. The E-mini SP started the session at 908.50 from where it tested the 910.00 area just to get sold strongly reaching 887.75 during the first half hour of the session. The SP tried hard to bounce and reached 895.00 but the lack of momentum resulted in a push to a new low at 886.75. After trading in a narrow range, markets finally made another rally attempt, the SP bounced to 895.25 from where it repeated the same pattern, testing the 891.00-889.00 areas and bouncing near the intraday resistance levels. After holding in that narrow range for more than four hours the markets finally moved up on short covering activity, the E-mini SP reached 898.00 but failed to push higher. The index pulled back all the way to 889.00 and bounced to 895.50 just to fail and get sold to a new intraday low at 884.25 before bouncing a few points into the close. For the day, the SP lost 21.50 points and settled at 885.25, the Nasdaq ended lower by 28.50 points at 1221.00 and the Russell lost 26.80 points ending the session at 476.90. The Dow lost 143 points closing at 8599.
MARKET COMMENTARY AND OUTLOOK
Last week I wrote:” As expected, markets consolidated the previous session movement and despite the sell off attempts, the indexes managed to hold nicely as they waited for today’s unemployment data. Yesterday’s narrow trading ranges will probably explode to one or the other side, and probably a trend session will be seen. The unemployment numbers will get released before the opening, if they are as bad as expected, but not worst, an initial or pre market sell off could hold if players continue to ignore all this bad economic data and corporate news. So yesterday’s lows are important, if the indexes can hold above them look for more range-type movement between the current lows and the 930.00 area on the SP and 9000 on the Dow, but if the lows finally get broken, markets probably will sell off today and next Monday reaching the 860.00-850.00 band that I mentioned in yesterday’s commentary. I am really surprise that the index again held up in the face of bad news, so it will be bullish if yesterday’s early sell off gives way to a rally during today’s trading session.”
Markets posted their daily high during the Globex session and held most of the day but get sold strongly into the close. The three day negative sessions will have to prove that the down move after last week false break to new highs has already been exhausted. The fact that the indexes closed at their daily lows open the door for this possibility to be true, but the index will have to close higher during today’s trading session or another test of the 850.00 area will be the next move. If that happens and the markets hold we will have another intermediate rally that in front of the prevalent weakness I doubt that it will be able to post new highs before the downtrend gets resumed.
On the daily charts, the Dow is already testing the lower boundary of the triangle formation, the same will happen in the SP at the 870.00-867.00 levels, so today and the next couple of days are important to redefine market direction, it will be short term bullish, if the markets are able to rally for more that three days; does the transition of power on the United States and next week Martin Luther King holiday will result in a rally? It is very difficult to forecast right now. But surely, another negative session will point for a test of the levels at just mentioned or a test of the 850.00 level.
It will be highly positive if the SP can rally more than 15.0-0 points from its daily low and close above the 891.00-892.00 area. This week, is full of important economic reports, with retail sales and inflation numbers to be closely watched by traders, but today the way is open for the markets to act without any news, many days like this, when the markets are trading down, bears have the control, and so the importance of a rally will be greater.
For today’s trading session, markets have a lot of work to be done just to get back in a neutral position, our pivot levels, are well above Friday’s weak settlements, and all the time that the indexes do not trade above those pivot areas, they should be considered in a weak position, however if the Globex lows whatever they area, hold for the first hour of the session, buying the pullbacks could be the way to go.
TODAY’S SESSION
There is resistance at 888.00-889.50 on the SP, 1225.50-1227.50 on the Nasdaq and 479.10-480.90 on the Russell. Trading above them will indicate a test of the strong resistance areas at 891.00-892.00 on the SP, 1232.00-1234.00 on the Nasdaq and 483.70-484.60 on the Russell. Be ready for a reversal if the indexes fail to break higher, if they do it, only 894.00-896.50 on the SP, 1238.50-1239.50 on the Nasdaq and 490.30-491.00 on the Russell will be in the way for another test of the 900.00’s plus on the SP.
There may be strong support at 882.50-880.00 on the SP, 1217.00-1215.50 on the NQ and 474.10-473.30 on the Russell. If Friday’s late sell off will get reversed, markets should not spend too much time below those levels, but if weakness is present look for a test of 876.00-874.50 on the SP, 1208.00-1206.50 on the Nasdaq and 471.50-469.80 on the Russell. Holding above them during the first hour of the session, or coming back from lower levels, could result is a 15.00 to 17.00 point rally on the SP. However, if those can not hold, the short term KEY SUPPORT areas at 868.00-867.00 on the SP, 1201.00-1199.00 on the Nasdaq and 466.50-464.80 on the Russell may get tested. Those are the line in the sand between the bulls and a possible test of the 850.00 area on the SP or lower. 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
Job losses stack up as recession deepens. Unemployment rate jumps to 7.2%, its highest level in 15 years, Nonfarm payrolls minus 524K as job markets continue to deteriorate. Job losses during the last year total 2.6 million, the highest since 1945. Markets sold off but managed to pare some losses by the end of the session.
WEEKLY PIVOTS FOR WEEK ENDING 16- January-2008
R3 963.00
R2 918.00
R1 896.75
PP 903.00
S1 880.00
S2 869.50
S3 843.25
ECONOMIC DATA
None
WEEKLY RECAP
Markets failed to hold their early week gains as recession deepens. Monday’s trading session stated with a positive tone as the end of year’s rally continued; the construction spending report came out better than expecting showing a .6% increase from the previous month. Later on the session, the auto and truck sales report was not a surprise, auto sales continue to collapse. Speculation about a tax cut and stimulus package were some of the bullish factors. Markets ignored the bad news ending mixed for the day as they consolidated the previous week rally, 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. Tuesday’s session was highly bullish; the SP opened with an upside gap and traded at new highs for the rally before giving back much of it gains into the close. The ISM Services index rose to 40.7, and despite that any reading below 50.0 indicates economic weakness, the number was better than expected. The Factory Orders report was down another 4.6% as the manufacturing sector continued to shrink. Pending home sales was down by another 4%showing that the housing sector has not bottoming yet. Later on the day, the FOMC minutes from the last FED meeting indicated concerns about the length and severity of the current downturn. For the day, the SP added 3.00 points closing the session at 930.50, the Nasdaq gained 6.00 points and settled at 1271.00, and the Russell closed at 510.50, up 6.90 points for the session. The Dow finished the day at 9015 with a 62 point advance. The story was quiet different for Wednesday’s trading session, markets gaped down for the opening, crude oil prices collapsed as the weekly inventories were higher than expected, and the bad corporate news, triggered by Intel that reported revenues 23% down for the fourth quarter and Alcoa which is cutting 13% of its working force resulted in a strong sell off for the equity markets, in addition, the ADP employment data, that measures the job loss or creation in the privet sector showed a huge 700K decline sparking fears about the monthly job reports. Also, a projected 1.2 Trillion deficit for this year, without including stimulus packages and government bailouts added pressure to the markets. For the day, the SP ended lower by 25.75 points and settled at 905.25, the Nasdaq lost31.50 points ending the session at 1239.50 and the Russell ended lower 12.60 points at 496.90. The Dow lost 245 points closing at 8769. Thursday session was another consolidation day, volumes were light and the markets fluctuate managing to close well above their nightly lows, the weekly initial claims data, which came out better than expected, helped the markets to recover from early weakness which resulted from the Wal-Mart news that earning will miss forecast. However the continuing jobless claims reached 4.6 million, highest since 1982. Also, President elected Obama gave a speech about his projected stimulus plan warning that worst times could come if his plan is rejected. At the end of the day, the SP added 1.50 points closing at 906.75, the Nasdaq ended higher by 10.00 points and settled at 1249.50 and the Russell gained 2.80 points finishing the session at 499.70. The Dow lost 27 points and settled at 8742. Friday’s session, before the opening, markets got the jobs market data, the unemployment rate jumped to 7.2% indicating that more lay offs are possible in the coming months , however the monthly job losses came out at minus 524K, near consensus. This gave way to a pre-market rally where the SP reached 914.75, however, a higher opening resulted in a strong push to the downside as traders realize that the accumulated job losses in the last year, reached already 2.6 million, the highest since 1945.
FRIDAY’S MARKETS
After trading between 900.00 and 910.00 during the Globex session, the E-mini SP rallied before the opening as a result of the Unemployment rate that jumped to 7.2% but a better than expected job losses which came out lower than the consensus. The E-mini SP started the session at 908.50 from where it tested the 910.00 area just to get sold strongly reaching 887.75 during the first half hour of the session. The SP tried hard to bounce and reached 895.00 but the lack of momentum resulted in a push to a new low at 886.75. After trading in a narrow range, markets finally made another rally attempt, the SP bounced to 895.25 from where it repeated the same pattern, testing the 891.00-889.00 areas and bouncing near the intraday resistance levels. After holding in that narrow range for more than four hours the markets finally moved up on short covering activity, the E-mini SP reached 898.00 but failed to push higher. The index pulled back all the way to 889.00 and bounced to 895.50 just to fail and get sold to a new intraday low at 884.25 before bouncing a few points into the close. For the day, the SP lost 21.50 points and settled at 885.25, the Nasdaq ended lower by 28.50 points at 1221.00 and the Russell lost 26.80 points ending the session at 476.90. The Dow lost 143 points closing at 8599.
MARKET COMMENTARY AND OUTLOOK
Last week I wrote:” As expected, markets consolidated the previous session movement and despite the sell off attempts, the indexes managed to hold nicely as they waited for today’s unemployment data. Yesterday’s narrow trading ranges will probably explode to one or the other side, and probably a trend session will be seen. The unemployment numbers will get released before the opening, if they are as bad as expected, but not worst, an initial or pre market sell off could hold if players continue to ignore all this bad economic data and corporate news. So yesterday’s lows are important, if the indexes can hold above them look for more range-type movement between the current lows and the 930.00 area on the SP and 9000 on the Dow, but if the lows finally get broken, markets probably will sell off today and next Monday reaching the 860.00-850.00 band that I mentioned in yesterday’s commentary. I am really surprise that the index again held up in the face of bad news, so it will be bullish if yesterday’s early sell off gives way to a rally during today’s trading session.”
Markets posted their daily high during the Globex session and held most of the day but get sold strongly into the close. The three day negative sessions will have to prove that the down move after last week false break to new highs has already been exhausted. The fact that the indexes closed at their daily lows open the door for this possibility to be true, but the index will have to close higher during today’s trading session or another test of the 850.00 area will be the next move. If that happens and the markets hold we will have another intermediate rally that in front of the prevalent weakness I doubt that it will be able to post new highs before the downtrend gets resumed.
On the daily charts, the Dow is already testing the lower boundary of the triangle formation, the same will happen in the SP at the 870.00-867.00 levels, so today and the next couple of days are important to redefine market direction, it will be short term bullish, if the markets are able to rally for more that three days; does the transition of power on the United States and next week Martin Luther King holiday will result in a rally? It is very difficult to forecast right now. But surely, another negative session will point for a test of the levels at just mentioned or a test of the 850.00 level.
It will be highly positive if the SP can rally more than 15.0-0 points from its daily low and close above the 891.00-892.00 area. This week, is full of important economic reports, with retail sales and inflation numbers to be closely watched by traders, but today the way is open for the markets to act without any news, many days like this, when the markets are trading down, bears have the control, and so the importance of a rally will be greater.
For today’s trading session, markets have a lot of work to be done just to get back in a neutral position, our pivot levels, are well above Friday’s weak settlements, and all the time that the indexes do not trade above those pivot areas, they should be considered in a weak position, however if the Globex lows whatever they area, hold for the first hour of the session, buying the pullbacks could be the way to go.
TODAY’S SESSION
There is resistance at 888.00-889.50 on the SP, 1225.50-1227.50 on the Nasdaq and 479.10-480.90 on the Russell. Trading above them will indicate a test of the strong resistance areas at 891.00-892.00 on the SP, 1232.00-1234.00 on the Nasdaq and 483.70-484.60 on the Russell. Be ready for a reversal if the indexes fail to break higher, if they do it, only 894.00-896.50 on the SP, 1238.50-1239.50 on the Nasdaq and 490.30-491.00 on the Russell will be in the way for another test of the 900.00’s plus on the SP.
There may be strong support at 882.50-880.00 on the SP, 1217.00-1215.50 on the NQ and 474.10-473.30 on the Russell. If Friday’s late sell off will get reversed, markets should not spend too much time below those levels, but if weakness is present look for a test of 876.00-874.50 on the SP, 1208.00-1206.50 on the Nasdaq and 471.50-469.80 on the Russell. Holding above them during the first hour of the session, or coming back from lower levels, could result is a 15.00 to 17.00 point rally on the SP. However, if those can not hold, the short term KEY SUPPORT areas at 868.00-867.00 on the SP, 1201.00-1199.00 on the Nasdaq and 466.50-464.80 on the Russell may get tested. Those are the line in the sand between the bulls and a possible test of the 850.00 area on the SP or lower. GOOD LUCK.
.
TODAY’S SUPPORT, PIVOT AND RESISTANCE LEVELS
S&P NASDAQ RUSSELL
Resistance 4 903.00-905.00 1245.00-1247.50 494.80-496.50
Resistance 3 894.00-896.50 1238.50-1239.50 490.30-491.00
Resistance 2 891.00-892.00 1232.00-1234.00 483.70-484.60
Resistance 1 888.00-889.50 1225.50-1227.50 479.10-480.90
PIVOT 894.25 1231.25 485.30
Support 1 882.50-880.00 1217.00-1215.50 474.10-473.30
Support 2 876.00-874.50 1208.00-1206.50 471.50-469.80
Support 3 868.00-867.00 1201.00-1199.00 466.50-464.80
Support 4 864.00-863.00 1193.00-1191.00 462.50-461.40
S&P NASDAQ RUSSELL
FIBONACCI FIBONACCI FIBONACCI
966.53 1321.37 548.16
958.97 1311.88 541.64
946.75 1296.50 531.10
934.53 1281.12 520.56
926.97 1271.63 514.04
914.75 1256.25 503.50
902.53 1240.87 492.96
898.75 1236.13 489.70
894.97 1231.38 486.44
882.75 1216.00 475.90
870.53 1200.62 465.36
862.97 1191.13 458.84
850.75 1175.75 448.30
838.53 1160.37 437.76
830.97 1150.88 431.24
DAILY PROJECTIONS S&P NASDAQ RUSSELL
AS DAILY HIGH 900.25 1238.50 490.10
AS DAILY LOW 868.00 1198.50 462.50
S&P NASDAQ RUSSELL
Resistance 4 903.00-905.00 1245.00-1247.50 494.80-496.50
Resistance 3 894.00-896.50 1238.50-1239.50 490.30-491.00
Resistance 2 891.00-892.00 1232.00-1234.00 483.70-484.60
Resistance 1 888.00-889.50 1225.50-1227.50 479.10-480.90
PIVOT 894.25 1231.25 485.30
Support 1 882.50-880.00 1217.00-1215.50 474.10-473.30
Support 2 876.00-874.50 1208.00-1206.50 471.50-469.80
Support 3 868.00-867.00 1201.00-1199.00 466.50-464.80
Support 4 864.00-863.00 1193.00-1191.00 462.50-461.40
S&P NASDAQ RUSSELL
FIBONACCI FIBONACCI FIBONACCI
966.53 1321.37 548.16
958.97 1311.88 541.64
946.75 1296.50 531.10
934.53 1281.12 520.56
926.97 1271.63 514.04
914.75 1256.25 503.50
902.53 1240.87 492.96
898.75 1236.13 489.70
894.97 1231.38 486.44
882.75 1216.00 475.90
870.53 1200.62 465.36
862.97 1191.13 458.84
850.75 1175.75 448.30
838.53 1160.37 437.76
830.97 1150.88 431.24
DAILY PROJECTIONS S&P NASDAQ RUSSELL
AS DAILY HIGH 900.25 1238.50 490.10
AS DAILY LOW 868.00 1198.50 462.50
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