subject: Day Trading Economic News Analysis: S&P 500 June 14, 2010 [print this page] Day Trading Economic News Analysis: S&P 500 June 14, 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
The last two days we had a short covering rally before the weekend. Many believe that the gold rally is over due to deflation hitting the European countries and China's impending economic slowdown. However gold pushed higher between the months of April and May due to the one million weddings in India. Now that the demand for gold is over, we must look at what will drive gold in the immediate future. Main issue would be safety from the equities and real estate properties. Other vehicles for safety include the dollar and Treasurys.
Next week will be a huge week for the markets as Housing, CPI data, and Quadruple Witching Day approaches. On Wednesday FedEx will report quarterly results and they will also forecast their global trade. Many traders and investors will decide on where to invest their cash. The euro will most likely continue lower due to high unemployment in Greece reaching over 12% while Spain struggles with 20%.
The S&P 500 is currently trading above all moving averages on the 5 minute chart as bears cover their shorts before the weekend. We are currently trading above the important 1090 pivot level. Any trade below this pivot could indicate bears returning to hammer the markets down.
The markets look like staying between the 1050 and 1100 for the low volume summer months. We are currently between the 144 and 200 day moving averages on the daily chart. With a large number of economic numbers due next week as well as Quadruple Witching Day on Friday, where various expiration on financial instruments expire, do not expect a confirmed rally especially throughout these low-volume trading summer months. We still believe that any positive news is considered a temporary rally as move into August which is considered the slowest trading month.
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.
As long as we stay above this level expect pessimism as we approach the slow summer months. Currently the VIX is above the 144 and 200 day moving averages on the daily chart. The volatility index is just below the 30 level and there is support around 25 due to the convergence of the 144 and 200 day moving averages on the daily chart.
The low volume in the recent rally and liquidation of mutual fund investors due to frightening instances such as the flash crash,' European debt crisis and BP Oil Spill expect volatility will return and traders will prey and make money on both ends. Traders will buy when investors are fearful and sell when they are euphoric and confident.
Summary of Pivot and Technical Levels
1219: S&P 500 52 Week High
1110: 144 Day Fibonacci Moving Average on Daily Chart
1100: Natural Resistance Level
1090: Important Pivot Level
1085: 200 Day Fibonacci Moving Average on Daily Chart
1081: 144 Day Fibonacci Moving Average on 5 Minute Chart
1077: 200 Day Fibonacci Moving Average on 5 Minute Chart
1075: Natural Support Level
1050: Natural Support Level
Monday Economic Calendar
No Economic Numbers Scheduled Watch European and Asian Markets
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