TradeStalker's
R.B.I. Trader's Update
10 / 18 / 2009
(Published Since 1996)
...............................................
Dateline: 2:34 pm eastern time, 10/18/2009
The market opened lower on Friday, then the ES bounced back
from 1081.75 to 1086.00 and the move was sold. A drop was
pretty fast and steady to the downside until reaching the
1077.75-1076.50 support zone. A bounce from 1078.25 stalled
and reversed from 1082.00, at the updated 1082.50-1083.00
resistance zone, then dropped back to a lower low at
1077.50. The market reversed back up, but was stopped at the
1082.00 level and a range-bound churn started. The ES
finally broke out higher and the rally to 1087.00 was
reversed. The pullback held at the 1082.50 level, which was
new support, and made 1 last run to 1088.25. That was at the
updated 1088.00-1088.50 updated resistance, and it was
rejected as the ES dropped 7.50 points before the close.
This market is reminding me of both 1987 and 1999 with the
exceptions being that the market is not at an all-time high.
If time permits I'll write a special report, but suffice it
to say that I'm not real comfortable with the long side at
this moment. The dollar was an important issue in 1987, and
the bullish sentiment along with relentless upside move is
reminiscent of late 1999. In any case, this is not a time to
start investing going by my work. It's quite the opposite
short term.
Once again it looks like a top could be in place, and if
there is a shift in sentiment then it could lead to a
sizable downdraft. The daily internal gauges are not keeping
up with the rally, and it set the stage for the Friday
decline. It would take a very good rally from current levels
to fix these divergences. Also, even though the upside
appears very limited, especially with the rejections and
quick drops on the Thursday and Friday rally attempts, the
sentiment is very complacent now. The 10 day put/call ratio
reached a yearly low (which is bearish from a contrary
viewpoint) on Thursday and Friday. In addition to that, with
the market getting a bit shaken up on Friday, the Vix fell
to another yearly low. That is now more than 10% under its
10 day average close, and the 5 day RSI is at 13.60. The
last time it was that low was in April just before a 4% drop
over a couple of days.
As for prices, there is a big cluster of resistance near
last week's high on the SP500 cash. First, their is symmetry
1096.83. From the low at 666.79 on the SP500 cash, the first
leg up equaled 289.45 points to the 956.23 high on 6-11. The
SP500 cash then fell 86.92 points to a low on 7-8 at 896.32,
and then started this leg higher. This leg will be a
Fibonacci 78.6 times the first leg up at 1096.83. In
addition, the gap on the SP500 cash from 10-3 to 10-6 is at
the 1097.56-1098.14 area. So far the high for this leg up is
1096.56, made last Thursday, is right at that zone. Also,
the SP and Nasdaq futures both closed under their Thursday
lows on Friday. That is one of the first steps in a topping
process.
On Monday look for a shorting opportunity if the market
opens higher, and especially if the Friday highs are tested.
If the market gets back near those highs, and then reverses,
it could start a sizeable downdraft. If those areas are
exceeded and held, then there could be one more run towards
the 1102.00-1103.00 area on the ES, where there should be
very strong resistance. If the market opens lower, then be
on alert for a reversal from a test of the 1077.75-1076.50
zone on the ES. However, if the market sells off to those
low areas from Friday, and cannot reverse, then a trip to
the 1072.75-1072.00 zone would be in the cards and possibly
head towards the 1068.25-1067.75 zone before a bounce
attempt.
December 2009 SP futures resistance
symbols: emini = esz9 / big contract =spz9
1088.00-1088.50
1092.75-1093.25
1097.50-1098.25
1102.00-1103.00
December 2009 SP futures support
symbols: emini = esz9 / big contract =spz9
1081.50-1080.75
1077.75-1076.50
1072.75-1072.00
1068.25-1067.75
December 2009 Nasdaq futures resistance
symbols: emini = nqz9 / big contract = ndz9
1745.75-1746.25
1753.50-1754.25
1760.00-1761.00
1767.50-1768.50
December 2009 Nasdaq futures support
symbols: emini = nqz9 / big contract = ndz9
1731.25-1730.50
1725.00-1724.00
1717.75-1716.50
1712.00-1710.75
December 2009 Dow futures resistance
symbols: emini = ymz9
9967-9971
10004-10007
10044-10049
10082-10087
December 2009 Dow futures support
symbols: emini = ymz9
9918-9914
9884-9878
9842-9838
9801-9798
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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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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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