Day Trading Economic News Analysis: S&P 500 June 23, 2010
Day Trading Economic News Analysis: S&P 500 June 23
, 2010
Understanding the direction of the market as well as the economic activity will lead to profitable trades. Keep up with our live news feed with TraderMongers.com!
S&P 500 Pivots
The market continued its slide from yesterday after enthusiasm over China revaluing the Yuan over the weekend faded. Today the energy sector led the way of possible fear after a federal judge in New Orleans blocks Gulf offshore drilling moratorium by siding with the energy industry against the White House. US Existing Home Sales were down 2.2%. This news may have affected the market however everyone could be waiting for tomorrow's FOMC Announcement.
The technical levels we are currently trading below multiple Fibonacci moving averages on 5 minute chart. Tomorrow's FOMC Announcement may push the market higher as 11 out of the last 12 FOMC Announcements have ended with a positive S&P 500 close.
On the daily chart of the S&P 500, we are between the 144 and 200 day moving averages of 1110 and 1087. Do not expect any major movements unless we break out of this trading range.
- If we break above 1110 then expect the January 2010 resistance levels starting at 1125 to hold back the market during these low volume summer months.
- If we break below 1087 then be wary of picking bottoms in the market as we may be expect to go even lower due to the slow down in manufacturing, increasing jobless claims, the European debt crisis, and the fears of another flash crash.'
The Chicago Board Options Exchange (CBOE) Market Volatility Index (VIX) measures options activity within the market and is widely used tracking the S&P 500. A common trading strategy for traders and investors includes a VIX level of 30 or above means an immediate switch from equities to cash. Traders and investors are retreating from the markets and finding safety and protection within the Treasuries, gold, and the dollar.
The Market Volatility Index is currently between 30 and 25, which usually means that traders and investors are switching from cash to riskier assets such as equities and other financial instruments. We have stated before that we will be within a trading range before the FOMC Announcement.
If the volatility breaks through the 25 level then the markets show an influx of equity purchases. The 25 level is a major level of support for CBOE Market Volatility Index as it is the convergence of the 144 and 200 day moving averages.
This index must break down below 25 or bounce above 30 for the markets to show a consistent momentum and direction. Depending on tomorrow's FOMC announcement either we will break out of the trading range or we will stay within this range throughout the summer months due to low volatility.
Summary of Major Pivot Levels
1219: S&P 500 52 Week High
Technical Levels Natural Support and Resistance
1125: January 2010 Resistance Level
1100: Natural Support Level
1075: Natural Support Level
Technical Levels 5 Minute Chart
1111: 144 Day Fibonacci Moving Average on 5 Minute Chart
1112: 200 Day Fibonacci Moving Average on 5 Minute Chart
Technical Levels Daily Minute Chart
1110: 144 Day Fibonacci Moving Average on Daily Chart
1087: 200 Day Fibonacci Moving Average on Daily Chart
Tuesday Economic Calendar
Mortgage Applications / 7.00 AM
New Home Sales / 10.00 AM
Petroleum Report / 10.30 AM
FOMC Announcement / 2.15 PM
Disclaimer
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