TradeStalker's
R.B.I. Trader's Update
2 / 22 / 2009
(Published Since 1996)
...............................................
Dateline: 3:58 pm eastern time, 2/22/2009
First off, it is in all of our best interest to make sure
that the "Trader Tax" does NOT get passed. I urge everyone
to go here:
http://www.rallycongress.com/no2tradertax/1536/
And let your voice be heard. This could destroy our
business!! On to the market...
The market started the week with a gap down open on Tuesday
morning, which broke the 24 day old trading range. With that
damage done, the bounces failed all week. On Friday the ES
opened down 17 points and after a bounce, the downside
resumed. The ES reached 752.50, right in the 753.00-751.50
support zone and reversed back up. It turned into a better
rally once the 761 level was broken. That sparked a run up
to 778.75 on the ES where the move fizzled. The pullback was
13+ points to 763.25 on the ES and then the market churned
into the close.
First, the plusses coming into the week. Last week I
mentioned that it looked like we are in "wave 5" -- which
has certainly proved to be the case. The "good" news is that
the Dow broke the November 2008 low on Friday, which could
mean the big trend down may be near an end. Meanwhile, the
SP500 and Nasdaq 100 are still above the November 2008 lows.
Sometimes the previous bottom isn't exceeded (as the Dow has
done) and turns out to be a bullish divergence. The drop
from the 12/08/09 top at 919.25 on the ES down to the
1/20/09 low at 797.50 was 121.75 points. From the 2/09/09
high at 873.00, subtract 121.75 points and it gives equality
at 751.25. The Friday low was at 752.50, so some symmetry
may be at work here too. Yes, given the recent action the
SP500 looks like it can easily fall to 741.02, its November
low. However, the fact that the rally came from a support
area on the SP500 cash and futures is a plus for the bulls,
short term. They must defend that now.
In addition to this, the internal gauges are at extreme
oversold territory. Everything listed in the Thursday night
update is still in oversold territory. The McClellan
oscillator is at -299, which is the 5th most extreme reading
in many years. It was at -318 on November 20, the day
before the November 2008 lows. Also, for 4 straight days
there are less than 1000 advancing issues on the NYSE. This
last occurred going into October 10th, 2008. The following
Monday, the SP500 then rallied 104 points on Monday October
13th. Finally, at the November low there was 1894 stocks
making new 52 week lows. On Friday just 555 stocks made
new 52 week lows.
I'm not calling for a repeat of that big rally, as things
were different. The ES was coming off of back to back 103
point trading ranges. However, it is time to be a bit more
careful as we could see more "out of nowhere" rallies of 20+
points like on Friday.
Now the negatives... the market has good downside momentum,
which needs to be turned around. The sentiment, while
getting a bit less enthusiastic, is still not near extreme
pessimism seen at good lows. And most important, the market
just cannot hold onto gains. It did better on Friday, so
maybe it's a start. Still, the upside shouldn't be an easy
road as there is a lot of resistance overhead.
On Monday, the initial support needs to hold or quickly
reverse if broken, if the market is going to hold together
and make another run to the upside. If that occurs, just
beware that the bounces will offer shorting opportunities
when the upside sprint fizzles and begins to roll over. The
path of least resistance should be to the upside as long as
that support holds, but both sides should be in play given
the recent damage. If the 752.50-751.25 zone doesn't
hold, then a break to or through 741-739 is likely.
March 2009 SP futures resistance
symbols: emini = esh9 / big contract =sph9
771.00-771.50
778.75-779.50
783.50-784.25
789.50-790.25 *key, even more so 763.25 holds*
794.75-795.25
800.50-801.25 *strong*
805.50-806.00 *major*
March 2009 SP futures support
symbols: emini = esh9 / big contract =sph9
764.00-763.25
757.50-757.00
752.50-751.25 *key*
748.00 *minor*, possible air pocket
741.00-739.00 *major*
March 2009 Nasdaq futures resistance
symbols: emini = nqh9 / big contract = ndh9
1174.00-1174.50
1183.50-1184.50
1187.50-1188.00
1193.50-1194.00 *key*
1203.50-1204.00
1210.50-1211.50 *strong*
1217.50-1218.50 *major*
March 2009 Nasdaq futures support
symbols: emini = nqh9 / big contract = ndh9
1164.50-1164.00
1158.75-1158.00
1153.00-1152.25 *key*
1138.50-1137.50 *major*
March 2009 Dow futures resistance
symbols: emini = ymh9
7372-7376
7457-7463
7502-7506
7538-7542 *key*
7595-7599
7638-7643 *strong*
7694-7699 *major*
March 2009 Dow futures support
symbols: emini = ymh9
7318-7314
7274-7270
7232-7228 *key*
7117-7112 *major*
---------------------------
REMINDER:
Real Time subscribers can view these updates on
the web at this site:
http://www.tradestalker.com/members
---------------------------
Good Trading,
Mike Reed
Copyright (c) 2009 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
This publication's primary focus is trading the index
futures. However, you can also use my nightly updates to
trade the following ETF's (SPY), (QQQQ), (SDS), (QID),
(DIA), and (DOG)
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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