Market SnapShot for Friday, June 11
Yesterday was the first day of trading of the September S&P futures contract. In Globex trading there was a sell off and the market opened on a gap down and basically traded down all day. It tested support at the top of last week's trading range around 1320, traded right through it and did not find support until 1306, which is close to the lower boundary of support from last week. There was a decent short covering rally during the last 45 minutes of trading. Traders are waiting for the Producer Price Index figures to be released this morning to get a better look at what the inflation picture might be. There is a meeting of the Federal Open Market Committee at the end of this month, and general consensus is that the market is bracing for a rate hike at that time.
On Wednesday's Market SnapShot we commented that given 1320 September S&P futures (1308.50 basis June S&P futures) served as resistance for almost a week last week when the market was locked in a trading range, it would be a good level to find support, at least temporarily. It lasted for one day.
On the daily chart, the September S&P has already recovered slightly more than half of the losses of the recent sell off. Short term resistance remains at the 1348 area where the 50-day moving average is located overhead.
On the daily chart, the September S&P has already recovered slightly more than half of the losses of the recent sell off. Short term resistance remains at the 1348 area where the 50-day moving average is located overhead.
Here is a quick update on the Dow Jones Industrial and Transport indices. The Dow Industrials has key support at 10,409. A decisive break of this level would reverse the uptrend since the October 1998 low. To traditional Dow Theorists, this action never truly confirmed the Industrial index's new high this year, producing a somewhat bearish non-confirmation.
The Dow Transports broke its key support today, moving to another new 20-day low. If this cannot reverse over the next few days, the trend will be confirmed as down. Note that the Transports have been weak in relation to the Industrials for some time. In fact, the 1999 high of this index was only 200 points higher than last year's high, while the high for the Industrials was 2,000 points higher than its 1998 high.
As for the S&P 500 cash index we have drawn a pair of parallel lines on the daily chart of the SPX. One line is at the all time high of 1375.98 and the other is at the recent low of 1277.31. Resistance overhead is at 1327, 1350.50, 1367 and 1375. Support is at 1277, 1260 and 1220.
Four stock charts that are of interest today. Yahoo has formed a bear flag over the past couple of weeks and if it breaks support at $140, the target will be a test of the recent low at $120.
Broadcom is in a test of top position and if it fails to gain momentum on this breakout right here, many traders will be selling it on the assumption that it has failed at the high.
It is interesting to note that E*Trade and CMGI both have classic large broken triangles that have almost reached their measured targets and are near support. It will be interesting to see if they can hold there and rebound.
We note that YHOO, CMGI and EGRP are all trading under their respective 20 and 50 day moving averages and we would expect any bounce to find resistance in those areas overhead.
During the trading day, we analyze and provide market commentary on the S&P 500 stock index and Treasury bond futures because they are two of the most closely watched financial futures contracts traded around the globe. They lead the market during the U.S. market hours and overnight trading sets the tone for the open in New York. What happens in the trading pits in Chicago has tremendous impact on the underlying cash indices, interests rates, and market sentiment in general.
Individual investors can take advantage of index-based investments by visiting the NASDAQ Amex market site to research SPYDRS, Dow DIAmonds, and NASDAQ 100 QQQ at options.nasdaq-amex.com
Have a good weekend and we'll see you again on Monday.
Charts have been posted to intelligentspeculator.com |
