subject: Day Trading Economic News Analysis: S&P 500 June 10, 2010 [print this page] Day Trading Economic News Analysis: S&P 500 June 10, 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
Today we got a slew of numbers as well as Ben Bernanke and the Beige Book. Ben Bernanke before the House Budget Committee stressed that housing and labor will weigh on our economy than the ongoing Eurozone deficit crisis. The Beige Book stated that economic activity continued to improve.'
German Chancellor Angela Merkel said the time has come to withdraw the stimulus and learn the lessons from the crisis. This sent the markets lower after being positive on the day. We expected the markets will be in a tight trading range between 1075 and 1100 however the lower the indices trend the trading range decreases has well. We now expect to be within a trading range between 1025 and 1075.
On Wednesday the S&P 500 reached a high just above 1075 before falling back and ending the day at 1056. Tomorrow weekly jobless claims are expected as well as the BOE and ECB announcements on interest rates. Expect the dollar to move accordingly after those numbers are released. Unless any major new announcements the markets should be within a trading range between 1050 and 1075 tomorrow.
Tuesday we had a retracement to the 1050 area which we reached in early February. This second attempt could break this area due to the low volume trading during the summer months as well as the issues facing Europe sovereign debt and the BP oil crisis.We are trading below the 200 day moving average on the daily chart (1085) so expect any positive news to be a temporary rally as the volume dries up as me move along towards August 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 above 30.00 as of so traders and investors may maintain their short positions and retreat to safer assets.
However due to 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
1111: 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
1075: Natural Resistance Level
1064: 55, 144, 200 Day Fibonacci Moving Average Convergence on 5 Minute Chart
1050: Natural Support Level
Thursday Economic Calendar
BOE Announcement / 7.00 EST
ECB Announcement / 7.45 EST
International Trade / 8.30 EST
Weekly Jobless Claims / 8.30 EST
Tim Geithner Speaks / 10.00 EST
Natural Gas Report / 10.30 EST
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.
