Arturo Stern
09-15-2008, 11:47 AM
DAILY TRADING ADVISORY 15-September-2008
Stocks fluctuate on Retail sales slide, Producer prices down in August and Consumer sentiment jumps. Lehman’s sale must be closed before Sunday “without” any government funds.
WEEKLY PIVOTS FOR WEEK ENDING 19-September-2008
R3 1323.00
R2 1290.50
R1 1271.00
PP 1251.50
S1 1235.50
S2 1219.50
S3 1180.00
ECONOMIC DATA
8:30 AM NY Empire Index
9:15 AM Capacity Utilization
9:15 AM Industrial Production
WEEKLY RECAP
It was a wild week for the U.S. stock indexes Markets opened last Monday’s trading session with a huge upside gap as a result of the Fannie Mae and Freddie Mac take over by the government. However the daily highs were reached during the Globex session and the indexes traded in a volatile manner with huge swings, the E-mini SP which posted its nightly high at 1282.00, traded as low as 1246.75 during the regular trading hours session. For the day, the indexes closed mixed, the E-mini SP advanced 26.00 points and closed at 1267.00, the Nasdaq lost 9.25 closing the session at 1760.75 and the E-mini Russell settled at 734.30, up 15.80 for the day. The Dow ended the session with huge gains after surging 290 points finishing at 11510. Tuesday, the high volatility continued in a downtrend session where the previous day gains were totally erased. Pending Home sales reported another contraction, this time 3.2% and Business Inventories were up 1.4% indicating lower sales. Extreme financial weakness, this time Lehman brothers and lower prices for energy and materials related stocks pushed the indexes lower. The SP had one of its worst session as it tumbled 3.4%, for the day, the E-mini SP ended lower by 40.50 points at 1226.50, the Nasdaq lost 32.00 points ending the session at 1728.75 and the Russell gave back 25.00 points and settled at 709.30. The Dow sold off strongly losing 280 points ending the session at 11230. Wednesday’s trading session was a quite one; Lehman’s earnings report came out one week before schedule looking to calm investors after the previous day the stock lost almost half of its value; however the relief was short lived as skeptical share holders were not satisfied with its recapitalization plan. The session showed a consolidation of the previous day huge sell off and the stock indexes managed to keep the head above the water. The E-mini SP ended higher by 6.75 points and closed at 1233.25, the Nasdaq added 8.75 points finishing the session at 1737.50 and the Russell closed t 716.80 with a 7.50 points gain. The Dow ended modestly higher at 11268 with a 38 points gain. Volatility came back strong for Thursday’s session where huge early losses were reversed forcing short traders to cover. A mildly increase in weekly initial job claims and another cut by half of Lehman’s share price, drove the indexes for a sharp lower opening, the session was filled of wild swings and a late rumor about Lehman looking for a buyer before it has to go bankrupt boosted the indexes during the last hour of trading, in 45 minutes, the Dow gained more than 200 points rallying 400 points from its daily lows, and the SP surge more than 20 points in the last hour. For the session, solid gains were seen on all the indexes, the SP settled at 1252, up 17.50 points for the day, the Nasdaq which was bullish during all the session added 37.50 points and settled at 1781.25 and the Russell added 2.80 points closing the session at 718.90. The Dow came back very strong adding 164 points finishing the day at 11433. Friday session started with some profit taking after the economic reports showed a lower than expected CPI number and the Retail sales posted a non expected loss, Michigan Sentiment report that measures consumer confidence bounced more than expected. The early losses were reversed as rumors about Lehman plagued all the session. AIG was the big loser as its shares plunged 30% and could be a candidate for future “bailout” if the government continues to rescue Wall Street. The session ended with gains for the SP as short covering was seem in front of a possible sell of Lehman Brothers. The E-mini SP added 6.75v points closing at the daily highs, the Nasdaq closed almost unchanged and the Russell gained 4.80points. The Dow lost 11 points but closed above 11400 at 11421.
FRIDAY’S MARKETS
Markets fluctuate ending almost unchanged. The E-mini SP opened the session at 1240.00 and fell to test yesterday’s late lows. After testing the 1234.50 and unable to break lower, the index rallied strong and reaching 1246.75 from where it pulled back to 1240.75 just to be bough and push higher reaching the Globex highs at 1256.50 where the rally lost its steam. The SP pulled back to 1248.00 and traded on a side ways pattern between that low and the 1253.00 area. As the range narrowed, the indexes finally break lower, the SP moved down to 1240.75 from where it rallied back up to 1251.00 from where some profit taking was seen pushing the index back down to 1244.00. Markets held the selling attempt and bounced back. The SP reached once more the 1256.00 area, pulled back to 1246.25 and bounced back into the end of the session making new highs just at the close. The E-mini SP ended strong at 1258.75 with a 6.75 points gain, the Nasdaq ended with a I.75 point loss at 1780 and the Russell added 4.80 points and settled at 723.70. The Dow ended lower by 11 points at 11421.
MARKET COMMENTARY AND OUTLOOK
Last Friday I wrote:” Markets conditions continue to be extremely volatile as the indexes have difficult to find a direction , yesterday’s bounce from below the 1220.00 area has posted a short term low, and if the rally continues, the 1264.00 area may be reached during today’s session. The fact that the SP did not spend too much time below the 1220.00 area must be considered mildly bullish in this long term consolidation that continues to build a triangle formation on the daily charts. Regarding to the Dow, the higher low seen during yesterday’s early hours and the vigorous rally, call for another test of the 11600 area before that index gets back in troubles. Yesterday’s important test of the lows could result, this time in a continuation of the rally and move the SP in a fast rally to much higher prices, however if today is a negative session, the July low will be broken during the next week. Yesterday “outside” day where higher highs and lower lows were posted could also result in a consolidation of the wide range session and only next week gets definitive market direction, however if yesterday’s rally is all that the markets can done, then the bearish trend will be intact.
The indexes ended the session on a strong uptrend and many sellers should be trapped at lower levels, so if today’s important economic reports show better than expected economic conditions, the short squeezing that started yesterday during the last hour of trading should continue, but if the data disappoints, expect more sideways action between yesterday’s highs and the 1230.00 level.”
Friday’s action tested the previous lows and managed to bounce in a weak manner just to end almost unchanged if we consider the last 4 points gain as pure short covering in front of an uncertain weekend and financial events, Merrill Lynch, Lehman and AIG, the good, the bad and the ugly, and of course the Fed, unable to give markets the confidence to return to a normal pattern of trend, makes a direction forecast as probable as throwing a coin to the air; however, last week lows around 1212.00 on the SP and Sunday’s night test of that level could result in early support until the markets assimilate the impact of the weekend events. The last rally that resulted in a bounce of more than 40 points on the SP, now that has been totally reversed during Sunday’s Globex session, if result in additional weakness will have an objective for that index to test the 1180.00-1160.00 area. Those numbers had appear in many of my past newsletter as a good objective if the trend is down, and they will be probable reached, unless the SP is capable to maintain the 1230.00 area on the close. So any bounce to that level should be considered a selling opportunity, stops? Wider than normal, only trading back above the 1242.00 area which was pivotal during the last two days of the past week could indicate that the “obvious” 1212.00 area on the SP has hold the selling pressure. A rally, it can happen, but markets uncertainty is obvious, and is doubtful that those conditions could change in the near term, although the indexes could continue to trade on a wide range sideways pattern.
This week is full of economic events, today’s digestion of the weekend financial events, tomorrows FOMC policy statement, inflation data and a few banks earnings reports, sure will give us a lot of emotion, like in a rollercoaster.
For today’s trading session, there are not low risk trades, as stops should be wide and swings probably will be wild and fast, so if you catch a move, take your profits and don’t overstay in your position, and, as I mention on the previous paragraph, selling bounces, first to the 1230.00 area, and then to 1242.00, should be the best set ups for today.
I won’t update my support and resistance numbers done with my normal calculations, but if the 1212.00 area gets broken down on the SP there is additional support at 1209.75, 1201.25 and 1192.75.
Take into account that a good day trader also has to recognize days where being a spectator are the best play.
TODAY’S SESSION
There is resistance at 1230.00-1232.00, 1241.00-1242.00 and 1250.00-1253.00 on the SP.
There is support at last week lows, at 1212.00, then a false break that only touches 1209.75 could result in a good rally, however if that level can not hold the selling pressure, then a test of 1201.75 to 1200.00 is possible, if bulls can not defend that area, the index could fall fast to levels near the 1190.00. GOOD LUCK.
TODAY’S SUPPORT, PIVOT AND RESISTANCE LEVELS
S&P NASDAQ RUSSELL
Resistance 4 1275.50-1277.00 1808.50-1810.50 738.00-739.70
Resistance 3 1271.50-1272.75 1799.00-1801.00 732.30-734.00
Resistance 2 1267.00-1268.00 1792.25-1794.00 728.40-729.60
Resistance 1 1263.00-1265.00 1784.00-1786.00 725.10-726.60
PIVOT 1250.75 1772.00 719.90
Support 1 1255.50-1254.00 1772.00-1770.50 720.80-719.40
Support 2 1251.00-1249.50 1764.00-1762.50 715.10-714.00
Support 3 1246.00-1244.00 1758.00-1756.50 711.40-709.80
Support 4 1241.50-1240.00 1748.25-1748.50 704.00-702.80
S&P NASDAQ RUSSELL
FIBONACCI FIBONACCI FIBONACCI
1299.30 1844.25 751.04
1293.45 1835.75 747.36
1284.00 1822.00 741.40
1274.55 1808.25 735.44
1268.70 1799.75 731.76
1259.25 1786.00 725.80
1249.80 1772.25 719.84
1246.88 1768.00 718.00
1243.95 1763.75 716.16
1234.50 1750.00 710.20
1225.05 1736.25 704.24
1219.20 1727.75 700.56
1209.75 1714.00 694.60
1200.30 1700.25 688.64
1194.45 1691.75 684.96
DAILY PROJECTIONS S&P NASDAQ RUSSELL
AS DAILY HIGH 1271.25 1783.00 732.60
AS DAILY LOW 1246.50 1746.50 717.00
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.
Stocks fluctuate on Retail sales slide, Producer prices down in August and Consumer sentiment jumps. Lehman’s sale must be closed before Sunday “without” any government funds.
WEEKLY PIVOTS FOR WEEK ENDING 19-September-2008
R3 1323.00
R2 1290.50
R1 1271.00
PP 1251.50
S1 1235.50
S2 1219.50
S3 1180.00
ECONOMIC DATA
8:30 AM NY Empire Index
9:15 AM Capacity Utilization
9:15 AM Industrial Production
WEEKLY RECAP
It was a wild week for the U.S. stock indexes Markets opened last Monday’s trading session with a huge upside gap as a result of the Fannie Mae and Freddie Mac take over by the government. However the daily highs were reached during the Globex session and the indexes traded in a volatile manner with huge swings, the E-mini SP which posted its nightly high at 1282.00, traded as low as 1246.75 during the regular trading hours session. For the day, the indexes closed mixed, the E-mini SP advanced 26.00 points and closed at 1267.00, the Nasdaq lost 9.25 closing the session at 1760.75 and the E-mini Russell settled at 734.30, up 15.80 for the day. The Dow ended the session with huge gains after surging 290 points finishing at 11510. Tuesday, the high volatility continued in a downtrend session where the previous day gains were totally erased. Pending Home sales reported another contraction, this time 3.2% and Business Inventories were up 1.4% indicating lower sales. Extreme financial weakness, this time Lehman brothers and lower prices for energy and materials related stocks pushed the indexes lower. The SP had one of its worst session as it tumbled 3.4%, for the day, the E-mini SP ended lower by 40.50 points at 1226.50, the Nasdaq lost 32.00 points ending the session at 1728.75 and the Russell gave back 25.00 points and settled at 709.30. The Dow sold off strongly losing 280 points ending the session at 11230. Wednesday’s trading session was a quite one; Lehman’s earnings report came out one week before schedule looking to calm investors after the previous day the stock lost almost half of its value; however the relief was short lived as skeptical share holders were not satisfied with its recapitalization plan. The session showed a consolidation of the previous day huge sell off and the stock indexes managed to keep the head above the water. The E-mini SP ended higher by 6.75 points and closed at 1233.25, the Nasdaq added 8.75 points finishing the session at 1737.50 and the Russell closed t 716.80 with a 7.50 points gain. The Dow ended modestly higher at 11268 with a 38 points gain. Volatility came back strong for Thursday’s session where huge early losses were reversed forcing short traders to cover. A mildly increase in weekly initial job claims and another cut by half of Lehman’s share price, drove the indexes for a sharp lower opening, the session was filled of wild swings and a late rumor about Lehman looking for a buyer before it has to go bankrupt boosted the indexes during the last hour of trading, in 45 minutes, the Dow gained more than 200 points rallying 400 points from its daily lows, and the SP surge more than 20 points in the last hour. For the session, solid gains were seen on all the indexes, the SP settled at 1252, up 17.50 points for the day, the Nasdaq which was bullish during all the session added 37.50 points and settled at 1781.25 and the Russell added 2.80 points closing the session at 718.90. The Dow came back very strong adding 164 points finishing the day at 11433. Friday session started with some profit taking after the economic reports showed a lower than expected CPI number and the Retail sales posted a non expected loss, Michigan Sentiment report that measures consumer confidence bounced more than expected. The early losses were reversed as rumors about Lehman plagued all the session. AIG was the big loser as its shares plunged 30% and could be a candidate for future “bailout” if the government continues to rescue Wall Street. The session ended with gains for the SP as short covering was seem in front of a possible sell of Lehman Brothers. The E-mini SP added 6.75v points closing at the daily highs, the Nasdaq closed almost unchanged and the Russell gained 4.80points. The Dow lost 11 points but closed above 11400 at 11421.
FRIDAY’S MARKETS
Markets fluctuate ending almost unchanged. The E-mini SP opened the session at 1240.00 and fell to test yesterday’s late lows. After testing the 1234.50 and unable to break lower, the index rallied strong and reaching 1246.75 from where it pulled back to 1240.75 just to be bough and push higher reaching the Globex highs at 1256.50 where the rally lost its steam. The SP pulled back to 1248.00 and traded on a side ways pattern between that low and the 1253.00 area. As the range narrowed, the indexes finally break lower, the SP moved down to 1240.75 from where it rallied back up to 1251.00 from where some profit taking was seen pushing the index back down to 1244.00. Markets held the selling attempt and bounced back. The SP reached once more the 1256.00 area, pulled back to 1246.25 and bounced back into the end of the session making new highs just at the close. The E-mini SP ended strong at 1258.75 with a 6.75 points gain, the Nasdaq ended with a I.75 point loss at 1780 and the Russell added 4.80 points and settled at 723.70. The Dow ended lower by 11 points at 11421.
MARKET COMMENTARY AND OUTLOOK
Last Friday I wrote:” Markets conditions continue to be extremely volatile as the indexes have difficult to find a direction , yesterday’s bounce from below the 1220.00 area has posted a short term low, and if the rally continues, the 1264.00 area may be reached during today’s session. The fact that the SP did not spend too much time below the 1220.00 area must be considered mildly bullish in this long term consolidation that continues to build a triangle formation on the daily charts. Regarding to the Dow, the higher low seen during yesterday’s early hours and the vigorous rally, call for another test of the 11600 area before that index gets back in troubles. Yesterday’s important test of the lows could result, this time in a continuation of the rally and move the SP in a fast rally to much higher prices, however if today is a negative session, the July low will be broken during the next week. Yesterday “outside” day where higher highs and lower lows were posted could also result in a consolidation of the wide range session and only next week gets definitive market direction, however if yesterday’s rally is all that the markets can done, then the bearish trend will be intact.
The indexes ended the session on a strong uptrend and many sellers should be trapped at lower levels, so if today’s important economic reports show better than expected economic conditions, the short squeezing that started yesterday during the last hour of trading should continue, but if the data disappoints, expect more sideways action between yesterday’s highs and the 1230.00 level.”
Friday’s action tested the previous lows and managed to bounce in a weak manner just to end almost unchanged if we consider the last 4 points gain as pure short covering in front of an uncertain weekend and financial events, Merrill Lynch, Lehman and AIG, the good, the bad and the ugly, and of course the Fed, unable to give markets the confidence to return to a normal pattern of trend, makes a direction forecast as probable as throwing a coin to the air; however, last week lows around 1212.00 on the SP and Sunday’s night test of that level could result in early support until the markets assimilate the impact of the weekend events. The last rally that resulted in a bounce of more than 40 points on the SP, now that has been totally reversed during Sunday’s Globex session, if result in additional weakness will have an objective for that index to test the 1180.00-1160.00 area. Those numbers had appear in many of my past newsletter as a good objective if the trend is down, and they will be probable reached, unless the SP is capable to maintain the 1230.00 area on the close. So any bounce to that level should be considered a selling opportunity, stops? Wider than normal, only trading back above the 1242.00 area which was pivotal during the last two days of the past week could indicate that the “obvious” 1212.00 area on the SP has hold the selling pressure. A rally, it can happen, but markets uncertainty is obvious, and is doubtful that those conditions could change in the near term, although the indexes could continue to trade on a wide range sideways pattern.
This week is full of economic events, today’s digestion of the weekend financial events, tomorrows FOMC policy statement, inflation data and a few banks earnings reports, sure will give us a lot of emotion, like in a rollercoaster.
For today’s trading session, there are not low risk trades, as stops should be wide and swings probably will be wild and fast, so if you catch a move, take your profits and don’t overstay in your position, and, as I mention on the previous paragraph, selling bounces, first to the 1230.00 area, and then to 1242.00, should be the best set ups for today.
I won’t update my support and resistance numbers done with my normal calculations, but if the 1212.00 area gets broken down on the SP there is additional support at 1209.75, 1201.25 and 1192.75.
Take into account that a good day trader also has to recognize days where being a spectator are the best play.
TODAY’S SESSION
There is resistance at 1230.00-1232.00, 1241.00-1242.00 and 1250.00-1253.00 on the SP.
There is support at last week lows, at 1212.00, then a false break that only touches 1209.75 could result in a good rally, however if that level can not hold the selling pressure, then a test of 1201.75 to 1200.00 is possible, if bulls can not defend that area, the index could fall fast to levels near the 1190.00. GOOD LUCK.
TODAY’S SUPPORT, PIVOT AND RESISTANCE LEVELS
S&P NASDAQ RUSSELL
Resistance 4 1275.50-1277.00 1808.50-1810.50 738.00-739.70
Resistance 3 1271.50-1272.75 1799.00-1801.00 732.30-734.00
Resistance 2 1267.00-1268.00 1792.25-1794.00 728.40-729.60
Resistance 1 1263.00-1265.00 1784.00-1786.00 725.10-726.60
PIVOT 1250.75 1772.00 719.90
Support 1 1255.50-1254.00 1772.00-1770.50 720.80-719.40
Support 2 1251.00-1249.50 1764.00-1762.50 715.10-714.00
Support 3 1246.00-1244.00 1758.00-1756.50 711.40-709.80
Support 4 1241.50-1240.00 1748.25-1748.50 704.00-702.80
S&P NASDAQ RUSSELL
FIBONACCI FIBONACCI FIBONACCI
1299.30 1844.25 751.04
1293.45 1835.75 747.36
1284.00 1822.00 741.40
1274.55 1808.25 735.44
1268.70 1799.75 731.76
1259.25 1786.00 725.80
1249.80 1772.25 719.84
1246.88 1768.00 718.00
1243.95 1763.75 716.16
1234.50 1750.00 710.20
1225.05 1736.25 704.24
1219.20 1727.75 700.56
1209.75 1714.00 694.60
1200.30 1700.25 688.64
1194.45 1691.75 684.96
DAILY PROJECTIONS S&P NASDAQ RUSSELL
AS DAILY HIGH 1271.25 1783.00 732.60
AS DAILY LOW 1246.50 1746.50 717.00
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.