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Stocks end sharply lower after a rollercoaster session. US retail sales fell 2.8% in October. Michigan sentiment, preliminary, as expected.


R3 1026.50
R2 943.00
R1 901.50
PP 880.25
S1 848.00
S2 821.50
S3 798.00


8:30 AM NY Empire State Index
9:15 AM Capacity Utilization
9:15 AM Industrial Production


Markets continue to trade with huge volatility reflected in intraday wide ranges and huge swings. Thursday’s new lows and the huge reversal from what can be view as a false break did not showed the expected follow through during Friday’s session but the rally from the obvious support, despite that the indexes retracted during Fridays, could be the initial movement of a strong bear market rally that could reach the 1040.00-1060.00 levels during the next two weeks. The key for this scenario to happen will be the capacity of the SP to hold during the next two days the 832.00 area.
Friday’s close at the daily lows could be seen as a temporary exhausting move that could hold in front of this option expiration week, however, Thursday’s rally may be a failed one day countertrend move and if the markets won’t trade higher during the next two sessions, or the SP breaks back below the 832.00 area then we could see the November option expiration taking place at new lows around the 770.00 or lower on a panic capitulation before the markets starts to move higher for the rest of the year.
This expected rally, probably a “sucker rally”, at the end will be resolved to the downside where a new low at the level I just mentioned will have to result in a mid term low or the state of the global economy will be near collapse, which must coincide with 7700-7500 on the Dow, that is the 2003 low for that market. Traders and investors must be aware of the strong support at the 820.00-800.00 areas on the SP and the dangerous situation if that level does not hold or the index closes two consecutive sessions below that level. If that will be the case, then the line in the sand, the 900.00 area won’t be only a short term resistance area, but it will be considered as the major hurdle for bulls to turn the markets to the upside. I personally will prefer to see some kind of consolidation between the 860.00 to 920.00 area during the week and then the upside move after the expiration.

So we have two great areas to be watched, the 900.00 and 9000 levels for the SP and Dow as short term resistance for any strong move that carries the indexes to the 1000.00 area or higher on the SP and 9800 on the Dow, and the critical 832.00 and 8200 levels as support, until those levels get broken, the markets could show some consolidation. For the rally scenario, during the next two days, the indexes will have to trade above today’s respective pivot points and hold on a pullback, those levels should offer strong resistance, and, if a reversal does not starts from an early rally that reaches those areas, then shorts could start to cover pushing the indexes near Friday’s daily highs in a strong move.

For today’s trading session, on a weak opening that holds above the 848.00-846.00 area on the SP, or an initial sell off that reaches my 832.00 area during the first 90 minutes of the session but lost momentum there, be ready for a huge reversal, that could reach the 910.00 level once it get back up above the 889.75, but if that 889.75 area holds intact, then the way will be open for new lows during the week. On the other side of the coin, if the indexes rally before the opening to start the session near fair value, and gain upside momentum during the first 45 minutes of trading, look for an upside move all the time that the early lows hold.


There is resistance at 868.00-869.50 on the SP, 1163.00-1165.00 on the Nasdaq and 449.10-450.20 on the Russell. If those levels get exceeded, another strong short covering rally could be underway and the markets should start to move higher reaching 880.00-881.50 on the SP, 1171.00-1172.50 on the Nasdaq and 453.60-455.00 on the Russell. An early failure there could be disastrous for the markets, however, if those areas do not hold the early short covering move, then the markets could reach the KEY levels at 890.50-892.00 on the SP, 1183.00-1185.00 on the Nasdaq and 459.80-461.20 on the Russell. If those get surpassed, be wary on any short position.

There is initial support at 856.00-854.50 on the SP, 1147.00-1145.00 on the Nasdaq and 443.20-441.80 on the Russell. If the opening is below those areas, don’t try to pick a bottom as the bears will have full control and Friday’s trapped longs could press prices lower at least to the next levels at 848.00-846.00 on the SP, 1138.00-1136.00 on the Nasdaq and 435.80-434.30 on the Russell. Failing to hold there could indicate a downtrend session, that pushes prices down to their next support levels at 841.00-839.50 on the SP, 1118.00-1116.00 on the Nasdaq and 430.00-428.70 on the Russell. If those area tested and the indexes hold, be ready for a strong short covering rally, but if buyers do not stand in line to buy there, then the 829.00-828.00 are will act as a magnet, if that is the case, it will be better to stay on the sidelines if you did not get short at higher levels or wait until the 850.00 area is exceeded to the upside to jump with a long position. GOOD LUCK.

Resistance 4 899.50-901.25 1202.00-1204.00 471.80-473.50
Resistance 3 890.50-892.00 1183.00-1185.00 459.80-461.20
Resistance 2 880.00-881.50 1171.00-1172.50 453.60-455.00
Resistance 1 868.00-869.50 1163.00-1165.00 449.10-450.20
PIVOT 880.00 1183.50 460.70
Support 1 856.00-854.50 1147.00-1145.00 443.20-441.80
Support 2 848.00-846.00 1138.00-1136.00 435.80-434.30
Support 3 841.00-839.50 1118.00-1116.00 430.00-428.70
Support 4 829.00-828.00 1102.00-1098.50 423.90-422.90

1011.84 1376.88 556.69
998.16 1356.87 546.81
976.00 1324.50 530.80
953.84 1292.13 514.79
940.16 1272.12 504.91
918.00 1239.75 488.90
895.84 1207.38 472.89
889.00 1197.38 467.95
882.16 1187.37 463.01
860.00 1155.00 447.00
837.84 1122.63 430.99
824.16 1102.62 421.11
802.00 1070.25 405.10
779.84 1037.88 389.09
766.16 1017.87 379.21

AS DAILY HIGH 889.75 1197.50 468.30
AS DAILY LOW 832.00 1112.00 425.00​

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