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Strategies & Market Trends : Systems, Strategies and Resources for Trading Futures -- Ignore unavailable to you. Want to Upgrade?

To: Teresa Lo who wrote (24947)	6/13/1999 2:10:00 PM
From: Teresa Lo	Respond to of 44573

Market SnapShot for Monday, June 14, 1999 The Producer Price Index figures were released last Friday. They were in line with expectations; however, with the strong downward momentum in bonds in place and no surprising good news, sellers just kept selling. The general consensus is that a rate hike is coming at the end of this month after the scheduled meeting of the Federal Open Market Committee. With a strong downtrend in place, we expect any rally in bonds to be met with selling overhead at the 20-day exponential moving average. The September S&P futures contract opened to test the gap overhead in the 132450 to 132900 area. It made a morning high of 1327, could go up no more and basically traded down all day before a bounce going into the close. It broke support at the top of last week's trading range around 1320, and traded through Thursday's low. The lower boundary of support is in the 1295 area with key support at 129050. We fully expect this level to be tested next week. Next week will be a long one, with a slew of economic statistics coming out midweek. Friday will be triple witching, with the expiration of futures, options and options on futures. We keep statistics of NYSE new highs and lows on a daily basis. We use this as a longer-term indicator of the internal health of the market. For several months, there have been a diminishing number of new highs, even as the market indices made new highs. This is a serious divergence. Over the past week, as the bounce lost strength, the number of new lows have increased dramatically. This is telling us that the market is very weak internally and that it is very vulnerable to the downside at this time. After the all time high made on May 13, the market pulled back, bottomed on June 2, and began a bounce. On the daily chart, the September S&P recovered slightly more than half of the losses but found resistance in the 1350 area where the 50-day moving average is located overhead. At this time, we are expecting a test of the June 2 low shortly. We have drawn a pair of parallel lines on the daily chart of the S&P 500 cash index, 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. The June 2 low of 1277 is key support. Should the low not hold we would be looking at the weekly chart for support. On the weekly SPX chart, a one-third pull back of the intermediate uptrend from the October 1998 low targets approximately 1200. The 200-day and the 50-week moving averages are also at approximately 1200. The previous all time high is also in the 1200 areas. The NASDAQ 100 Index, the NDX, is in the process of forming what could be a large head and shoulders top. The neckline is at 1980 area, but until it is breached to the downside, we will not lose sleep over it at this time. Here is a quick update on the Dow Jones Industrial and Transport indices. The Dow Industrials is set to test key support at 10,409. A decisive break of this level would reverse the uptrend since the October 1998 low and we will be looking to the 200-day moving average for support. The Dow Transports broke its key support last week, making new 20-day lows. 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. To traditional Dow Theorists, this action never truly confirmed the Industrial index's new high this year, producing a somewhat bearish non-confirmation. 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 Charts have been posted to intelligentspeculator.com