subject: Day Trading Economic News Analysis: S&P 500 June 24, 2010 [print this page] Day Trading Economic News Analysis: S&P 500 June 24, 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 Federal Reserve kept short-term interest rates at record lows however downgraded its outlook on the US economy. One of the issues that need to be addressed is shadow-inflation.' This type of inflation is sneaking into the US economy and slowly hindering economic recovery. The S&P 500 is currently continuing to trade below multiple Fibonacci moving averages on 5 minute chart. After today's FOMC Announcement the market lower on the S&P 500 index however slightly higher on the Dow Industrials.
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. Today's FOMC announcement stayed within a range between 25 and 30 so most likely 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
1098: 144 Day Fibonacci Moving Average on 5 Minute Chart
1101: 200 Day Fibonacci Moving Average on 5 Minute Chart
Technical Levels Daily Minute Chart
1110: 144 Day Fibonacci Moving Average on Daily Chart
1088: 200 Day Fibonacci Moving Average on Daily Chart
Tuesday Economic Calendar
Durable Goods Orders / 8.30 AM
Jobless Claims / 8.30 AM
Natural Gas Report / 10.30 AM
Disclaimer
The content in this website is provided for educational and informational purposes only. We offer no investment advice and nothing in this material should be construed as such. There is risk of loss when you invest; past performance is never a guarantee of future performance. Trading is the sole responsibility of the individual. No reader should act on the basis of any matter contained herein without getting appropriate professional advice. Every investor or trader should consider all offerings of products and services on their own merits and for suitability to the individual's personal needs and circumstances.
