subject: Day Trading Economic News Analysis: S&P 500 June 7, 2010 [print this page] Day Trading Economic News Analysis: S&P 500 June 7, 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
On Thursday the S&P 500 ended the day above 1100 and traded above all the major Fibonacci moving averages (8, 21, 55, and 144) on the 5 minute chart. After disappointing jobs report on Friday, the markets went into full reverse and ended at the low of the day. Traders and investors sought safety in the dollar as fears of Hungary's debt situation mounted and the euro fell to the lowest level in four years.
The S&P 500 broke through two natural support areas (1100 and 1075) on Friday. The volume indeed for a rally is decreasing as we progress into the slow summer months. Do not expect the index to break above 1075 area on Monday due to the low volume. Currently we are trading below the 144 and 200 Fibonacci moving averages on the daily chart.
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 Friday, June 4th 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
1113: 144 Day Fibonacci Moving Average on Daily Chart
1100: Natural Resistance Level
1086: 200 Day Fibonacci Moving Average on Daily Chart
1082: 200 Day Fibonacci Moving Average on 5 Minute Chart
1081: 144 Day Fibonacci Moving Average on 5 Minute Chart
1090: Important Pivot Level
1175: Natural Support Level
Monday Economic Calendar
Consumer Credit / 15.00 EST
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