TradeStalker's
R.B.I. Trader's Update
9 / 15 / 2008
(Published Since 1996)
...............................................
Dateline: 7:03 pm eastern time, 9/15/2008
The market gapped down 45 points on the SP futures on Monday
and from the 1212.50-1211.50 support area, the market
rallied back. The SP futures reached 1239.00 which was at
the 1238-1239 resistance zone and the market turned back
down. After breaking the 1220 level, the SP futures
continued lower until bouncing off of 1215.25 and they
popped back to 1226.50 and then reversed. The selling off of
that high drove the SP futures down to 1201.25 with 30
minutes left in stock trading. The market reversed and short
covering mostly took the market back up. The SP futures
reached 1215.75 and backed off 6.50 points to 1209.25, and
then buying came back in. The SP futures tested the 1215.75
bounce high and then reversed and fell under the July low on
the way to a 1195.75 low before the close.
Some rare extremes occurred on Monday. The NYSE breadth was
horrible. There was just 174 advancing issues at the close.
Looking at my spreadsheet data back to 1994, that is the
lowest single day reading for advancing stocks in 15 years.
Other bad days with less than 400 advancing issues were:
SEPT 15, 2008 174
SEPT 9, 2008 394
MAR 6, 2008 356
MAY 7, 2004 266
MAY 10, 2004 351
APR 27, 1998 335
APR 11, 1997 394
JULY 5, 1996 315
APR 8, 1996 323
MAR 8, 1996 177
The problem, as far as looking for a market bottom goes, is
that the closing Trin wasn't even above 2.00, let alone
being over 3.00, which tends to occur when there is a panic
selloff. The only real plus from Monday's collapse was the
big jump made by the VIX. It jumped 23.5% to 31.70 on Monday
and closed over 31 for the first time since March 14, 2008,
which was just a day before a low was made.
As if the market wasn't volatile already, we get the Fed
decision on interest rate policy on Tuesday around 2:15 pm.
The futures closed well above fair value again on Monday, so
a bounce is priced into the open on Tuesday. The market
could snap back, but the downside has good momentum as
bounces are not sticking. So shorting the bounces will
likely offer the better opportunities until the market can
get turned back around. At the moment, it looks like a break
over the initial resistance will need to stick and hold on a
pullback, to turn the intraday trends back up. If the market
rallies back to the initial resistance areas early on
Tuesday and the move stalls out, then it sets up a shorting
opportunity for the early going. After the Fed release,
there tends to be 15-25 minutes of gyrations in both
directions, and then a trend develops. If that action works
out, the trend should be one to ride into the last 30
minutes or so of trading.
The initial resistance is at the 1215.25-1216.00 area on the
SP futures and the 1737.00-1738.00 area on the Nasdaq
futures. Those areas must be exceeded and not quickly
reversed, to put some cushion under the market. The market
is vulnerable unless those are cleared and held. If the
market doesn't reverse from those areas, then it would open
the door for a rally towards the 1225.50-1226.00 area on the
SP futures and the 1745.75-1747.25 area on the Nasdaq
futures. If those areas are reached and the market doesn't
back off, then the key hurdles would be at the 1232.50-
1233.00 area on the SP futures and the 1758.75-1760.75 area
on the Nasdaq futures. The market will need to get back over
those areas and not get reversed again to begin to think
that a low, short term anyway, could be in place.
The initial support is at the 1195.00-1194.50 area on the SP
futures and the 1718.00-1717.00 area on the Nasdaq futures.
If those areas are not quickly reversed, then a drop towards
the 1188.00-1187.50 area on the SP futures and the 1711.50-
1710.50 area on the Nasdaq futures will likely be seen
before any turn around attempt occurs. If that doesn't
happen and the market keeps falling, then we should see some
support at the 1182.50-1182.00 area on the SP futures and
the 1702.00-1699.75 area on the Nasdaq futures. If the bulls
cannot get the market turned around from there, then we will
likely test major support down at the 1173-1172 area on the
SP futures. If the market gets down there and cannot quickly
reverse, then the market can get a hit with some panic
selling and head towards the 1164-1162 area on the SP
futures. If that zone is broken, and the market doesn't
quickly reverse, then we could see a repeat of Monday's big
selloff occur.
December 2008 SP futures resistance
symbols: emini = esz8 / big contract =spz8
1215.25-1216.00
1225.50-1226.00
1232.50-1233.00
December 2008 SP futures support
symbols: emini = esz8 / big contract =spz8
1195.00-1194.50
1188.00-1187.50
1182.50-1182.00
1173.00-1172.00
1164.00-1162.00
December 2008 Nasdaq futures resistance
symbols: emini = nqz8 / big contract = ndz8
1737.00-1738.00
1745.75-1747.25
1758.75-1760.75
December 2008 Nasdaq futures support
symbols: emini = nqz8 / big contract = ndz8
1718.00-1717.00
1711.50-1710.50
1702.00-1699.75
December 2008 Dow futures resistance
symbols: emini = ymz8
11090-11100
1142-11148
11200-11206
December 2008 Dow futures support
symbols: emini = ymz8
10927-10922
10876-10870
10822-10816
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---------------------------
Good Trading,
Mike Reed
Copyright (c) 2008 by TradeStalker.com, Ft Wayne, IN.
TradeStalker Updates may not be redistributed without
permission.
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Disclaimer
The financial markets are risky. Investing is risky.
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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