Daily Trading Advisory

arturo1

Well-known member
351 1
DAILY TRADING ADVISORY 23-March-2009


GE and Chrysler may need more than $21.6 billion, markets sold off for the weekend

WEEKLY PIVOTS FOR WEEK ENDING 27- March-2009
R3 826.00
R2 810.50
R1 795.00
PP 770.50
S1 753.00
S2 739.50
S3 715.00

ECONOMIC DATA
10:00 AM Existing Home Sales

WEEKLY RECAP
An exciting week for the global markets as the stock indexes continues to push higher. Monday’s trading session started in the green, Barclay’s indications that the year has started with a strong note gave way to a positive opening and to an early rally that saw its earnings erased during the trading session. The SP reached our first upside objective the 771.00 level, but the economic reports didn’t help to close with gains. Industrial Production continued to show weakness after it came out 1.4% lower than the previous month, also, the NY Empire Manufacturing index was lousy, for the day, lost half point and settled at 754.00, the Nasdaq lost 15.75 points closing the session at 1152.25 and the Russell lost 5.60 points and finished the session at 386.00. The Dow lost 7 points closing at 7216. Tuesday’s session, the first day of the two day FOMC meeting, was a bullish session. While the PPI report which measures producer cost came out with a 0.1% increase, lower than expected, the Housing Starts data surprised to the upside, also, commentaries about more assets purchases by the government in order to avoid further damage to the economy helped the stock indexes to end the session with strong gains, the SP added 21.25 points and closed at 775.25, the Nasdaq ended higher by 38.00 points closing the session at 1190.25 and the Russell which leaded the move gained 17.30 points ending the day at 403.30. The Dow ended higher by 178 points at 7395. Wednesday came the breakout, with the markets waiting for the FOMC policy statement after an early report showed that consumer prices increased by 0.4% during February as a consequence of higher gasoline and car prices and that the world bank cut China’s growth expectations for the current year, the markets exploded to the upside once the Fed reported that it will be buying $300 billion in long term treasury bills in order to reduce long term rates, also it will buy more backed mortgage securities to try to stabilize that market, investors were pleased with the news, the financials ended with very strong gains and the indexes closed the session sharply higher. At some moment of the session, the SP traded above 800.00 and the Dow exceeded the 7500 short term resistance areas. Long term bonds made a move not seen since 1981 and gold rallied as the dollar traded much lower against the other world currencies For the day, the SP ended the day up by 16.00 points at 791.25, the Nasdaq settled at 1212.75, up 22.50 points and the Russell added 13.50 points closing at 416.80. The Dow closed higher, at 7486 after gaining 90 points. With the recent rally showing already overextended conditions, and the economic reports and corporate outlooks continuing to indicate weakness, markets retraced during Thursday’s session. The Initial jobless claim report was a bit lower than the previous week, at 646K but the continuing claims report kept growing, the Leading Indicators were worst than expected, down 0.4% and in the corporate news, FedEx earnings collapsed by more than 85%. For the day, the SP lost 11.00 points and settled at 780.50; the Nasdaq gave back 9.00 points closing the day at 1203.75 and the Russell ended lower by 5.30 points at 411.40. The Dow lost 85 points and finished the day at 7400. Friday was the March futures and option expiration, while trading lower during the Globex session, markets started with small gains but the selling pressure was present during all the day and the session ended with some more profit taking. At the end of the day, the SP lost 16.00 points and settled at 764.00, the Nasdaq ended lower by 15.50 points at 1188.00 and the Russell lost 14.40 points closing the session at 397.40. The Dow lost 122 points ending the week at 7277.



FRIDAY’S MARKET
After testing the key support area at 771.00 on the SP during the Globex session, the E-mini SP started the day at 784.00. After bouncing one point, the index backed off to 779.50. Another bounce failed once more at 785.00 posting a double top. Despite the strength on the Nasdaq, the SP pulled back to 776.50. While trading in a sideways pattern, the index tested back the lows, bounced a bit but failed to push higher pushing down to a new intraday low at 775.50. With very low trading volumes, despite the option expiration, the SP continued to trade in a narrow range, a rebound to the 780.00 gave way to another round of selling that broke the sideways pattern and pushed the SP to 771.25, just above the Gobex low, our downside initial objective. The SP posted a double bottom but two failed attempts to rebound gave way to new lows at 768.25 and then at 766.50. With every bounce, the index pushed to new lows reaching the 761.75 area just half point above our downside objective. After trying to come back and failing to break above the 766.00 level. After another pullback that posted a new marginal low at 761.50 and during the last hour of the session, the markets bounced, the SP reached 771.50 just to see new selling pressure into the end of the session. For the day, the SP lost 16.00 points and settled at 764.00, the Nasdaq ended lower by 15.50 points at 1188.00 and the Russell lost 14.40 points closing the session at 397.40. The Dow lost 122 points ending the week at 7277.

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MARKET COMMENTARY AND OUTLOOK
Friday I wrote: “Wednesday’s rally and yesterday’s early bounce that failed, have posted a near term high that may hold for a few days, the markets have to consolidate the last move, and as yesterday, I suspect that the pullback will continue. The markets are overextended and if not today, during the next week they will have to test lower prices, first the 760.00 on the SP. The Dow, its another story, I wrote about the obvious resistance area around the 7500 level, and even if the last Fed’s measures are trying to draw the floor for this index, a pullback to 7000 won’t make any danger Today, the expiration has historically been a bullish day, but the extension of the last move could make difficult for the indexes to continue to push higher without any pullback or a two to three consolidating sessions, so unless the SP breaks above our third resistance level, selling the rallies may be the way to go.”
After the last run to the 801.50 area, our last week second resistance level and just below our expected 804.00 second objective, which was reached after the SP broke the 771.00 level, and coinciding with the 7500 area on the Dow that offered the strong resistance that we were looking for, the markets pulled back during the last two days of the week.
Markets continue to react to the financial and government news, this coming week, besides the programmed economic reports to get released, we have rumors that a plan to relocate bank toxic assets could be announced as soon as Monday, also, Chairman Bernanke and Secretary Geithner will testify before the House Financial Services Committee on Tuesday on the government's rescue of AIG, while Secretary Geithner goes before the committee again on Thursday this time on financial market regulation. All this will make the week full of action.
Last week high at 801.50 coincide with the 50% Fibonacci retracement level between the yearly highs and lows, so it is critical for any further advance on this bear market rally to exceed that level, if that happens, the next Fibonacci areas are at 833.00 and 878.00 on the upside, but if the markets continue to retrace after the last huge move, the SP may be able to found support around 730.00 (the recent rally that started at the 665.75 and reached 801.50, if it shows a 50% retracement that should push the SP lower to 734.00).
I have explained in different occasions the time duration of a countertrend move, this one, a second degree move that has the potential to last 13 trading sessions and that it is approaching the time when the move will be in risk, once defined will give us the clues for the next 30 days. If the markets can consolidate during the first three trading sessions of this week, even with an extension of the recent pullback, holding above the 734.00 on a closing base, then this bear market rally has the potential to reach much higher prices, maybe near the 860.00.
But slowly, and one day after the other one, for this Monday, the markets may be able to bounce a bit, Friday’s close near the lows may have exhausted the short term pullback, and despite the double top, at least another attack to the recent highs may be seen. For this scenario to be true, the SP will have to hold last Friday’s lows at 761.50.

TODAY’S SESSION
There is initial resistance at 768.50-770.50 on the SP, 1192.00-1194.50 on the Nasdaq and 399.30-401.20 on the Russell, an early bounce that fail to trade above those levels, below the pivotal 771.00 area on the SP may give way to additional weakness, but if the markets are in a positive mood, then the indexes may be able to reach 775.00-777.00 on the SP, 1199.50-1201.00 on the Nasdaq and 405.00-406.80 on the Russell. If those get exceeded last Friday’s initial highs around 780.50-782.00 on the SP, 1211.00-1212.50 on the Nasdaq and 409.30-410.50 on the Russell may get tested before the session is over.
There is support at 761.00-759.50 on the SP, 1184.00-1180.00 on the Nasdaq and 395.50-393.80 on the Russell. If those do not hold, we could see the recent profit taking move gain additional momentum and reach 755.50-754.00 on the SP, 1172.00-1170.00 on the Nasdaq and 390.00-389.10 on the Russell. Failing to hold there will probably push the indexes down to 751.00-750.00 on the SP, 1164.00-1162.00 on the Nasdaq and 386.10-385.50 on the Russell. GOOD LUCK.




TODAY’S SUPPORT, PIVOT AND RESISTANCE LEVELS
S&P NASDAQ RUSSELL
Resistance 4 790.00-791.50 1228.00-1230.00 419.40.420.10
Resistance 3 780.50-782.00 1211.00-1212.50 409.30-410.50
Resistance 2 775.00-777.00 1199.50-1201.00 405.00-406.80
Resistance 1 768.50-770.50 1192.00-1194.50 399.30-401.20
PIVOT 770.00 1195.00 403.00
Support 1 761.00-759.50 1184.00-1180.00 395.50-393.80
Support 2 755.50-754.00 1172.00-1170.00 390.00-389.10
Support 3 751.00-750.00 1164.00-1162.00 386.10-385.50
Support 4 746.00-744.00 1152.50-1151.00 382.50-381.00






S&P NASDAQ RUSSELL
FIBONACCI FIBONACCI FIBONACCI
887.50 1401.69 503.2
848.33 1331.92 469.8
824.33 1289.17 449.3
809.50 1262.75 436.6
800.33 1246.42 428.8
785.50 1220.00 416.1
776.33 1203.67 408.3
773.50 1198.63 405.9
770.67 1193.58 403.4
761.50 1177.25 395.6
746.67 1150.83 382.9
737.50 1134.50 375.1
722.67 1108.08 362.4
698.67 1065.33 341.9
659.50 995.56 308.5












DAILY PROJECTIONS S&P NASDAQ RUSSELL
AS DAILY HIGH 774.75 1204.00 406.80
AS DAILY LOW 750.75 1161.25 386.30​






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