TradeStalker's
R.B.I. Trader's Update
9 / 21 / 2008
(Published Since 1996)
...............................................
Dateline: 5:24 pm eastern time, 9/21/2008
In a week of wild swings, the market spiraled to new lows
for the year by Thursday afternoon. After turning back up
off of those lows, the biggest 2 day rally in 21 years
followed. The SP futures were locked limit up before the
open on Friday morning and when the collar was lifted the
market spiked up and reversed on the open. The SP futures
fell over 50 points to a 1237.75 low in the morning. A
bounce into early afternoon fizzled after the SP futures
reached 1267.75, and then the bad pattern that formed played
out as selling took the SP futures down to test the morning
low. After reaching 1138.00 with about 45 minutes left in
the trading day, the market bounced back into the close. The
futures sold off after stocks closed as the SP settled about
10 points under fair value.
At Friday's close the Dow posted the biggest 2 day rally (in
points) since just after the 1987 crash. I remember that
well. If this goes as things did in 1987, then the market
will get hit another time and the consensus will become that
a test of the lows is necessary. However, the market will
not make a lower low before a sustainable rally reappears.
The internal gauges went from a deep oversold status going
into last Thursday's action. Now, after 2 days, many
indicators are at a very overbought state. It looks like
another drop from up here could set up a good buying
opportunity. If the SP futures fall towards the 1219.00-
1217.50 area, they will need to turn back up to set up a
decent trade on the long side. If the market does drop that
far, and cannot reverse, then another trip to the 1200 area,
and possibly back towards the 1187-1185 zone, could be in
the cards before a better base is built to get a rally going
that will stick.
On Monday look to get short if there is early strength and
it stalls near the initial resistance areas. However, if
those are exceeded and not quickly reversed, then we will
likely see a test of the Friday afternoon highs occur before
another drop occurs. If the market does reject the initial
resistance, then beware that the first decent pullback will
likely set up a buying opportunity as soon as prices stall
out and a reversal occurs.
The initial resistance is at the 1255.00-1255.50 area on the
SP futures and the 1751.25-1752.00 area on the Nasdaq
futures. If those do not cause a problem, then the next
hurdles are at the 1267.50-1268.00 area on the SP futures
and the 1765.75-1766.50 area on the Nasdaq futures. The
SP500 cash made a little double top near that area on
Friday, and the Nasdaq futures didn't confirm at those
areas. If they are reached, and they are no problem for
buyers, then a run towards the 1280.00 and 1790.00 areas
could be in the cards before the market gets toppy and pulls
back.
The initial support is at the 1238.00-1237.50 area on the SP
futures and the 1728.00-1727.00 area on the Nasdaq futures.
If those are not quickly reversed, then the bounces will be
shorting opportunities. The next support would be at the
1230.50-1229.50 area on the SP futures and the 1714.00-
1712.75 area on the Nasdaq futures. If the market cannot
reverse from those areas, then a drop towards the 1219.00-
1217.50 area on the SP futures and the 1701.00-1699.00 area
on the Nasdaq futures would be key support. If the market
gets back there and cannot reverse, then the door is opened
for a drop back towards the 1212.50-1211.50 area, and maybe
down towards the 1202-1200 zone.
December 2008 SP futures resistance
symbols: emini = esz8 / big contract =spz8
1255.00-1255.50
1267.50-1268.00
1280.00
December 2008 SP futures support
symbols: emini = esz8 / big contract =spz8
1238.00-1237.50
1230.50-1229.50
1219.00-1217.50
1212.50-1211.50
1202-1200
December 2008 Nasdaq futures resistance
symbols: emini = nqz8 / big contract = ndz8
1751.25-1752.00
1765.75-1766.50
1790.00
December 2008 Nasdaq futures support
symbols: emini = nqz8 / big contract = ndz8
1728.00-1727.00
1714.00-1712.75
1701.00-1699.00
December 2008 Dow futures resistance
symbols: emini = ymz8
11396-11400
11474-11479
12512
December 2008 Dow futures support
symbols: emini = ymz8
11276-11271
11222-12219
11112-11107
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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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