GDP To Be Announced at 8:30am EST

Market trading down 1/2 a percent in the early going ahead of the GDP report. Consensus estimates expect 2% growth in GDP. Lets watch to see if the report beats or misses estimates. Consider fading whatever direction the market moves following the report.

Levels to watch for S&P 500 Futures (ES)
Support below at 1165-1167 and 1160-1162
Resistance above at 1179-1181, 1186-1188 and 1191-1193

After Initial Strength, Market Sells

The ES gapped up this morning, but began to sell off within 15 minutes of trading. The selling was sharp and we are now seeing a mini-bounce come in after the ES found some support above 1175. Market is looking weak and I'll be looking for shorts if the ES retraces back up to 1180-1181. ES could likely trade down and retest yesterday's lows at 1168. My initial trades however, will only be scalps as maintaining direction in this market is difficult. Any confirmed move above 1183 will negate my negative bias.

Market Slightly Negative After Durable Goods Orders Released

Durable Goods Orders exceeded expectations by 1.5%, but excluding transportation (which saw a big growth in airplane orders), orders fell by .8%. This could be considered negative overall and right now the market is set to open lower as we threaten to break down below the 1173-1175 support on the ES.

There is more support below at: 1169-1170 and at 1163-1165. I will be looking to buy the market if we trade down to either of these support levels.

Resistance above at 1179-1181. If we don't break down further this morning and the ES confirms back above 1179, we should trade as high as 1190.

As usual, I will post in the comments here if I enter any trades at the levels mentioned...

The Beginning of the Correction?

I wasn't able to blog the past two trading days, but I wanted to quickly note some significance in recent price action. The S&P 500 Futures reached a key level yesterday morning after trading above 1190 and filling a gap open since 5/3/2010. This is the level I have been waiting for since thinking about entering a swing short position. If you were able to enter a swing short anywhere above 1190, you are in good position. If you did not get short, I wouldn't worry too much about it, we will likely trade back up again before initiating the real correction. However, as you can see, the ES has already traded down more than 15 points, so getting short early after filling the gap would have given you some quick profits and/or an aggressive entry to begin a scale-in swing short in the event the market does not trade back up. Don't chase the downward action, if you missed the short entry yesterday, you will likely get another chance to get in.

This morning the 1172-1175 level (ES) needs to hold as support for the bias for the rest of the day not to be negative. Resistance above at 1181. ES needs to confirm back above 1181-1183 before any positive sentiment can come back into the market.

Still Looking for Another 1.5 Points

Markets have made up almost all the ground they lost yesterday and are now consolidating a bit. It may look tempting to short the market here, but I recommend waiting. The ES still has 1.5 points to go before official gap fill at 1181. You may be able to get a few points if you managed to get a short entry above 1179. But don't defend that position as I fully expect a retest of Monday's highs and official gap fill above 1181. You can consider a short entry there, but be careful as we will likely make new highs, possibly to 1184. I continue to like shorting opportunities in the 1190s on the ES, but there will be short scalp opportunities on the way up as well. If we get a down-tick now to 1175-1176, I will be looking to be a buyer back up to the highs.

Watch for Short Covering into the Close

Since we made new lows this afternoon on heavy selling, we then went on to make two new one-tick lows. This usually happens in an effort to shake out the weak longs. If we don't go on to make new lows below 1157, watch out for a short covering rally into the close. When I say watch out for it, I mean look to take advantage of it by getting a good entry long.

Lows for the Day In?

We touched down to a low of 1162.75. ES has already achieved an average daily range, there is a potential intra-day bottoming pattern forming and at the same time the ES has bounced off a key resistance level. This suggests a high probability that a bottom is in for the day. I like buying the down-tick now with expectations of a move back up to 1170 on the ES. If we make new lows, do not defend the position.

Market Sells Overnight and Into the Morning

The selling kicked off yesterday with disappointing earnings from Apple. Apple beat expectations, but sales of the iPad disappointed. Support should be coming into the market now in the low 1160s. I will be looking to buy somewhere around 1162-1163 on the ES. If we confirm a move below 1160, I expect that selling will continue down to the low 1150s

This Morning

I expect choppy trading to continue. 1180 continues to be resistance on the ES. I do expect higher highs this week and will probably enter a scale-in swing-short position if we trade into the 1190s.

Levels Today (ES):
Resistance: 1179-1181, 1183.50-1185.50, 1189-1191
Support: 1169-1171, 1165, 1160

Test Highs into the Close?

We've been trading in a 5 point range for the past 4 hours. We are now testing the top of that range as we approach the range high resistance at 1172-1174 on the ES. A break above 1173 may result in continued momentum upwards, but we need to confirm above 1174 first. If we do, watch for a test back up at the 1180 highs. I will look for a short entry at the highs if that happens.

If you don't think we will break above the current range, 1172-1173, you can look to short off that level (or off a slight up-tick to 1174). Keep in mind that we are testing the high level of the range for the 4th time today. This can often result in a breakout above the range. Odds are less likely that the resistance will hold the more times it is tested.

Market Sells

We have traded down after the open this morning and have already traded an average daily range on the ES. With a potential bottoming tail forming, the lows of the day could be in. Be cautious however, as there is not yet confirmation that the selling is over.

Market Strong this Morning

Market trading back up towards the Wednesday highs with the ES touching 1180 in pre-market action. Retail Sales came in slightly higher than expected which was more good news on top of solid earnings results. CPI inflation was unchanged for the second month in a row at .1% which was below estimates of .2%. Certainly no signs of inflation yet as US debt looms. Bernanke spoke earlier this morning as well suggesting that the Fed has no plans, yet, to do more quantitative easing, meaning they have no immediate plans to print more money to inject into the economy, but he did not rule out the possibility of doing so if need be in the future. That news could put a damper on the current upward momentum.

Resistance (ES) above at 1179-1181, 1189-1091, 1197-1199.
I will consider entering into a scale-in swing short position if we trade into the 1190s

Like yesterday, support (ES) Below at 1169-1171, 1164-1166, 1158-1160

Neutral bias today as I expect choppy markets. New highs possible, but I would look to short-scalp any new highs.

Google Earnings Rally Market After the Close

I expect Google to keep going up. I'm not suggesting anyone buy GOOG now, as it just rallied 5% in 5 minutes, but, would have been nice had you bought it at the end of August for $450. Better if you bought it for $250 in November 2008. Google is doing impressive stuff. Google will reach $700 again...

The Numbers and the News this Morning

A mixed bag of news this morning initiates a little selling in pre-market trading. Initial jobless claims come in higher than expected marking the first decline after six straight weeks of improvement. Continuing claims dropped significantly though that number may be slightly misleading as it likely reflects claims running out more so than people finding work.

Producer Price Index saw mixed numbers, but came in slightly better than expectations overall.

U.S. Trade gap widened by $3 Billion, much more than expected.

Overall the news this morning puts a slight negative bias on the market. On the ES, 1180-1181 continues to be resistance. Support at 1169-1171, 1164-1166, 1158-1160 and then down at the low 1150s.

Today could turn out to be a choppy day which will likely see trade down into the 1160s.

Market Continues to Churn Upwards

I had been expecting to get a little selling in the morning, at least maybe half a gap fill, but it didn't happen. We have pierced my 1180 resistance level to 1181 and we have already achieved a daily range consistent with the current average. It is possible that the high is in, but in reality, there are no signs yet that we won't just continue to churn up into the close. If an opportunity to short this market presents itself, I will post it here. If you already shorted in the 1179 to 1181 range, its a good trade, but be careful in this bullish environment, don't defend it...

If the markets don't turn down from here, 1184 on the ES is the next likely level to find resistance into the close...

Gapping Up

Bullish sentiment continues as the market is bid up more in the overnight session.

If the ES can continue to trade above 1171, watch for potential range extension up to 1178-1180. It is unlikely that we will see trades price the ES higher than that today, but looking ahead to tomorrow, the next level to watch is 1189-1190.

On the other hand, if the ES breaks down below 1171, watch for potential gap fill to 1165. Next level below that is 1160.

Market very bullish. I haven't forgotten about considerations to begin a scale-in swing short position, but there are not yet any signs to begin that play.

FOMC Minutes

The release of the Fed's FOMC minutes today at 2:00 pm EST includes the quarterly economic forecast. We should see some nice movement and volatility. Remember, the first move is often the wrong move. I will be looking to buy the market if we get a nice down-tick immediately following the minutes. I expect the market to close the day on the upside. But, lets see what the Fed has to say first...

Range Play This Morning

We are currently chopping around in the 1160-1165 range on the ES. You can consider buying the lows and selling the highs (i.e. highs being 1164-1165 and lows being 1160-1161). Be careful though if we trade below 1160 as we could see further selling down from there. If that happens, more support should come in below at 1157-1158. I like shorts at the top of this range. You shouldn't face much danger in the event you take some heat on this move. However, if the ES trades above 1167, you should think about getting out of the trade.

Eventually we must break out of the range in one direction or another. I think we will break lower before we break higher, but if we do break lower, I do expect opportunities to get long as we find support underneath. I won't look for more than 1 or 2 points on these types of trades.

Is Market Beginning to Look Good For a Short Play?

I have been talking about the market moving up into territory that is ripe for considering a short play. I continue to believe this, however I am not going to just blindly get short here without considering market conditions. I will wait for a signal before I attempt to simply pick a price.

The S&P 500 is approaching the highs that followed the flash crash from may 6th. In overnight trading, the ES actually came within 3 ticks of the post crash highs of 1165.75. Dow Futures or the YM has already traded above its post-crash high of 10,792 and is currently trading 1.5% higher. Dow has been trading above since 10/5. The Nasdaq is also trading above its post-crash high and has been doing so since 9/20.

On that note there is no reason to simply assume the S&P is not going to continue above that level as well. After the weaker than expected jobs numbers from last Friday, a common belief is that the Fed will implement stronger quantitative easing going forward. This is typically positive for the stock market. So shorts beware and be very careful entering any sort of swing short position.

Market Poised for Another (Intra-Day) Push Higher

Market has indeed traded up since the open. We are now consolidating above the pre-market highs after an 8+ point move up on the ES. A bullish sign. It is likely that we will see another push higher today. The question is, do you buy into the market now, or wait for another down-tick?

I didn't wait, I am now long at 1159.50. Getting in now ensures that if the market doesn't down-tick here, then I won't miss the move. If it does down-tick here. I can look to add to my position a little lower. For example, there is some more support below at 1157. If you add to your position there and the 1157 doesn't hold, you can the bail on the entire position and accept your loss. However, to avoid additional risk, you shouldn't add to your position at all and just be patient for the market to turn in your favor. Obviously if we don't continue up, you must accept your loss. If we get consecutive 10 minute candle closes below 1157, you should probably look to exit the position. If you do exit the position and we find support at 1155-1156 and the market turns back up, you can look to enter back into your long position. Also, if you don't want to carry such a large stop on your 1159.50 entry, you can look to bail on the trade at 1158.50. If support does hold below that, you can always get back into the trade...

Market Has Some Fun After Jobs Report

The ES sold off rapidly following the jobs report which left much to be desired. S&P Futures pierced yesterday's low in less than 30 seconds before making a swift reversal back up. My bullish bias ahead of the report was on the money, but actually trading it was a difficult endeavor. One indication that the immediate sell-off might be short lived was the fact that the dollar was not really gaining in concert with the sell-off in the overall market.

And the dollar shouldn't have been gaining. Bad employment numbers are also bad for the US dollar. With growing debt in the US and an economy that depends on consumption to drive it, there is no sign that the economy can really improve with employment staying high. There can be no increase in consumption without an increase in jobs for the American consumer. The 13 trillion US National Debt cannot be overcome without a growing economy. This is bad news for the US dollar because it suggests the US cannot pay off its debt. What's bad for the US dollar is generally good for equities and the US stock market.

Following the news, both the market and the dollar sold off. That correlation could have been a sign to the astute observer to buy the market. If you thought fast (i.e. the sell-off of 7 points on the ES and the reversal happened in less than a minute) you could have bought the market after we pierced yesterday's low. The ES eventually traded back up past 1158, a 13 point gain.

Given the news, if you believe the US dollar should see some further selling, you could feel safe buying into the market this morning. Buying the down-tick is not a bad bet. That being said, I am still looking to scale in short if we trade up into the mid 1060s again...

Market Awaits News on Employment Situation

Unemployment is expected to rise for a second consecutive month. However, if the ADP jobs report or jobless claims report are any indication, today's news reported at 8:30 EST may prove to show numbers slightly better than expectations. We saw spikes in the indices after both reports on Wednesday and Thursday, so we are going to see market movement this morning as well.

After trading up to 1159.50 in the overnight session, the ES has since moved back down to 1150.50 and is hovering just above the 1148-1150 support. I will be looking to buy the market ahead of the employment numbers in anticipation of spikes like we saw on Wednesday and Thursday. Could be a potential 10 points up for grabs. Any move below 1048 or yesterday's low of 1047.25 will be a sign to get out of any longs.

I will also be looking to begin a scale in short position if we trade up to the mid 1060s today.

Employment numbers out in 10 minutes, lets see if we have a fun pre-market session here...

Pre-Market Surge on Jobless Claims and Sell-Off into the Open

The ES came within one tick of the target price range of 1164-1166 I mentioned in yesterday's post after better than expected New Jobless Claims Numbers were announced. The markets quickly sold off after the opening bell. Does this mean that we have topped? Probably not. Buyers stepped in preventing a move below 1152. This is a higher low than the 1151 from yesterday afternoon. Higher highs and higher lows cannot be viewed as bearish, so we may be in store for another test of the 1160s. We do seem to be getting poised for a pull-back soon though. We need to break below 1148-1150 first. I will be looking to begin a scale in Short if we trade back up to the 1160s.

Bullish Close as Sellers Fail to Drive Market Lower

The ES never did trade down to 1150. Bearish pattern into the end of the day failed to follow through. Often times failed patterns result in a move in the opposite direction. If this is the case, look for the the ES to trade back up to 1160 and possibly higher. Lets see if the ES can trade back above 1157. I will look to buy a move back down to 1151-1152. Ultimately this was a consolidation day as the markets traded in a very narrow range following yesterday's bullish up move. We have a bit of a bull flag formation right now. Perhaps we will make new highs to 1164-1166 before trading back down...

Looking Like Choppy Consolidation

We have not been able to establish momentum in either direction today. However, the market is beginning to look weaker than it is strong. We had a failed continuation above 1157 on the ES and now we have minor resistance there. I like short scalp plays at the moment. Book profits while you have them. Lets see if we can get a follow through move to the downside later today. If you can book some scalp profits now, you can use that to buy you a free stop later to try and grab an extended move into the close.

Higher Highs and Lower Lows

Intra-day here in the first hour of trading, we have a minor uptrend forming. I am considering a long entry on the next down-tick. 1157 will be my probable entry. Will post here in the comments if I take a trade...

Bullish Market Approaching Resistance

Buying continued into the overnight session as the ES traded up to 1160. ADP Employment numbers came in worse than expected and the market sold off at 8:15 am EST. ES dropped 6.75 points but found support at 1154. Markets now seeing buying come back in after the open. I will consider shorts again at 1160 and 1165 on the ES. I will also consider a long entry here at 1157 (assuming we get a consecutive 10 min candle close above 1157) with anticipation of a retest of the overnight highs and potentially upwards to 1066.

S&P Trades up Toward Top of Range

We gapped up this morning and surged higher towards the top of the trading range after better than expected non-manufacturing data was released at 10:00am. We have been chopping around between 1145 and 1148, but it doesn't look like the market is ready to break down yet. 1150 is likely and 1153 would probably be the maximum price point for the day on the ES. I am looking for opportunities to short the market (probably between 1150 and 1153) and look for eventual gap fill down to the low 1130s. Current action is very bullish, so I am only considering the short above 1150. Need to see solid signs of resistance and indication of a reversal. I'll post in the comments here if I take a trade.

I'm Back and so is Earnings Season

I'm back after a two week stint away from the markets and today (Monday) was a good day getting re-acclimated to the action. I didn't miss much in my absence as the lack of volume and volatility in the markets have provided a trading environment that has been nothing short of mundane.

Overall, bullish sentiment continues. The fact that we saw a confirmed move above 1125 on the ES supports this view. We have been consolidating in essentially a 20 point range for the past week and a couple days. The key is to determine which direction we will break out of this: above 1153 or below 1127 (ES). We tested the bottom of this range in afternoon trading today and support held.

I am expecting a move down to 1110 on the ES. The worst case scenario, in my estimates, is a retrace down to the low 1080s. If the ES trades that low, I will be a very confident buyer there as I will expect bullish action to resume.

As far as the market pulling back, its all about timing your entry to catch it. There is no sign yet that the pull-back has begun. Look for a move below 1125 as a sign that the pull-back is officially in effect. When that happens;

look for support at 1112-1115, 1102-1105, 1090-1093, 1081-1084

In the mean time, you can look to play the current range between 1127 and 1150 by selling the high and buying the low. The ES just found support at 1127, so look for a potential move to retest the top of the range in the coming days.

Earnings season kicked off Monday afternoon, so look for anything short of great earnings as an opportunity to pull this market a bit lower...