US markets down close to 1% ahead of the opening bell. Japanese markets down significantly following Friday's earthquake with the TOPIX down 7.5% and the NIKKEI down 6.2%. Japan's GDP is going to suffer as a result of the economic consequences of the quake and tsunami. Initial damage estimates are up to $120 billion. Bank of Japan has printed another 17 Trillion Yen ($184 billion dollars) to inject into the markets.
Japan's Fukushima Daiichi nuclear plant suffered a second explosion overnight raising concerns of a potential nuclear meltdown. Interesting to note that solar and wind power stocks have seen a boost while Uranium stocks have slipped on the now negative perception of nuclear power.
Oil prices on the other hand, have dipped back below $100/barrel on weaker demand expectations following the quake in Japan.
The key resistance just above 1300 (ES) held on Friday and there were some nice gains to be had if you got short at the close of trading last week. I did take that trade, as discussed in the comments on Friday's post.
Markets still weak and I view the best opportunities as shorting the up-ticks/shorting the rallies as US markets have further to correct in my opinion. I continue to like the resistance at Friday's highs and expect new market lows this week. First target is 1270 or a dip into the 1260s. We'll see how the market trades at that point to determine if continued weakness will follow.
In any case, when it looks like the correction has ended, I will be looking to get swing long on the S&P.
Levels to watch today on the ES:
Resistance above at: 1298-1299, 1304-1305, 1308-1309
Support below at: 1289-1290, 1280-1281, 1270-1271
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I will consider a long entry around 1280-1281
ReplyDeleteWill not take a long entry unless support confirms at or just below 1280. Intra-day bear flag could propel markets lower...
ReplyDeleteConsider Short at 1286-1287
ReplyDeleteI think the better short now will be around the VWAP 1288-1289
ReplyDeleteDon't see a reason to short here now as we test the high 1280s again. Will consider shorting the close...
ReplyDeleteA short here is good if you are willing to take some heat... There is just no edge at the moment to give higher odds of a sell-down or a break-out into the close...
ReplyDelete