TradeStalker's
Support and Resistance Update
7 / 4 / 2011
(Published Since 1996)
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Dateline: 5:36 pm eastern time, 7/4/2011
Last week was a good week for the Bulls. The market closed
higher every day last week, even in the face of some extreme
over bought internal indicators. On Friday, the ES held
above the 1312 key support level on its first pullback, and
then shot higher on the ISM data release. The move didn't
stall until reaching 1328 on the ES, and then per normal for
the uptrend last week there was just a small 3 point
pullback by the ES before the move continued. The 1336.50
level was reached shortly before the close.
The market has rallied now to the area where the break down
began on June 1. Up between 1339 and 1342 on the ES there
should be very good resistance, if for nothing else than to
get the last trapped traders from a month ago back to even
where they should be looking to get out. There are other
reasons that the market should have some difficulty moving
forward without some sort of pullback first.
First off, the market has gone straight up for five days,
and although it has ignored extreme overbought readings for
two days, this is not a good time to be diving in on the
long side. Odds favor a decent pullback soon. The biggest
intraday pullback last week was 8 points on the ES. There
were a number of 3.50-4.50 point pullback's intraday last
week, as the five day move higher was well contained and
barely took a breath before moving on up.
The short-term indicators didn't relieve any of the
overbought status on Friday. In fact, the closing Trin was
at a miniscule .41 Friday and further stretched the short-
term over bought condition. Odds had favored a pullback on
Thursday and we didn't get one. Instead the market rallied
for two more days so far. This is not a common occurrence
when the indicators set up as they did last week. It's more
reason to expect things to return to normal early next week.
As for price indicators, the S&P 500 cash closed more than
three standard deviations above the 20 day moving average on
Friday. Finally, the put call ratio which had reached a very
big extreme a little over a week ago has gone in a straight
line drop... kind of opposite of prices over the past week
and a half. The weight of the evidence favors a pullback
early this week.
On Tuesday morning the 1332.50-1331.50 initial support will
need to hold on a pullback, otherwise it will be a sign of
topping out and bounces should then fail. If the ES breaks
that zone, then the 1328.50 area would be next. That should
be key since the biggest dip last week was 8 points on the
ES and that would be an eight point pullback from Friday's
high.
September 2011 SP futures resistance
symbols: emini = esu1 / big contract =spu1
1336.75-1238.00
1342.00-1342.50
1345.75-1346.25
1350.50-1352.00
September 2011 SP futures support
symbols: emini = esu1 / big contract =spu1
1332.50-1331.50
1328.50-1327.75
1325.00-1324.50
1320.25-1319.75
September 2011 Nasdaq futures resistance
symbols: emini = nqu1 / big contract = ndu1
2360.75-2362.25
2371.50-2372.00
2378.50-2379.60
2388.00-2389.50
September 2011 Nasdaq futures support
symbols: emini = nqu1 / big contract = ndu1
2353.00-2352.00
2345.00-2344.00
2337.75-2336.50
2328.25-2327.50
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---------------------------
Good Trading,
Mike Reed
Copyright (c) 2011 by TradeStalker.com, Ft Wayne, IN.
TradeStalker Updates may not be redistributed without
permission.
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PO Box 9783, Ft Wayne, IN, 46899
Disclaimer
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Past performance does not guarantee future performance.
The foregoing has been prepared solely for informational
purposes and is not a solicitation, or an offer to buy
or sell any security. Opinions are based on historical
research and data believed reliable, but there is no
guarantee that future results will be profitable.
We are not advocating trading futures. The prices and
contracts in the TradeStalker Updates specify a manner
in which you could trade. We occasionally mention the
SP500 and Nasdaq futures markets because it is
extremely liquid and tends to lead the other markets.
This is not an endorsement or recommendation of the SP500
and Nasdaq futures markets. The risk of loss in futures
is substantial. You can lose more than your original
investment. We are not Registered Investment Advisors or
Commodity Trading Advisors.
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