subject: Day Trading Economic News Analysis: S&P 500 June 8, 2010 [print this page] Day Trading Economic News Analysis: S&P 500 June 8, 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 S&P 500 continues its downward spiral trading below all the major Fibonacci moving averages (8, 21, 55, and 144) on the 5 minute chart as well as breaking Monday's previous low below stopping at the natural support level of 1050. Expect the markets to be in a narrow trading range within these low volume trading months.
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
Tuesday's trading will provide resistance between 1067 and 1071 due to the 144 and 200 day moving averages converging within those levels. The natural resistance level is hovering just above those moving averages at 1075 so expect a resistance cushion between those areas on Tuesday.
Yesterday 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 (1086) 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
1112: 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
1071: 200 Day Fibonacci Moving Average on 5 Minute Chart
1067: 144 Day Fibonacci Moving Average on 5 Minute Chart
1050: Natural Support Level
1025: Natural Support Level
Tuesday Economic Calendar
None Watch news from Europe and the BP Oil Spill
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