Day Trading Economic News Analysis: S&P 500 May 5, 2010
Understanding the direction of the market as well as the economic activity will lead you to profitable trades. Keep up with our live news feed and the trend with Tradermongers.com!
S&P 500 Pivots
We have mentioned previously, uncertainty with further regulatory agencies could cool down Wall Street as the result of Goldman Sachs probe. The market is most likely to be weak after the April 15th tax deadline. All the major indexes fell below their natural support levels. Dow Industrials finished off below 11,000, Nasdaq is below 2500, and the S&P 500 is down to 1174 regardless of the positive earnings reported on Tuesday, May 4th.
The S&P 500 broke through three previous lows within the last three days as well as the natural support of 1200. The index paused near the 55 Fibonacci moving average on the 5 minute chart.
Euro traded below $1.30 for the first time since April 2009 due to long term concerns over the Eurozone sovereign debt. The US dollar soared as investors and traders rushed to safety out of the markets. This event is pushing the possibility of the Federal Reserve raising interest rates faster than its European counterparts.
European markets suffering due to various weak countries such as Greece, Portugal, and Spain have also played their part today within bringing a weak global economy. As we approach the seasonal trading strategy of ‘Sell in May and go away' we expect the market to have a correction or consolidate around the 1200 level before finding direction.
Looking at the market volatility index which has been trending lower since October of 2008 and recently reached a 52 week low of 15.23 – on Monday the index is approaching the 144 and 200 moving averages on the daily chart. The market may be looking to sell off due to the uncertainty of the Goldman Sachs probe leading the way for new financial regulations in the near future as well as the crisis with the European markets. On Tuesday market volatility is currently above the 144 and 200 moving averages on the daily chart and will most like begin to trend higher.
Summary of Pivot Levels:
1219: S&P 500 52 Week High
1208: Friday's Previous Low
1200: Natural support level
1199: 144 and 200 Moving Averages
1193: Last Thursday's Previous Low and
55 Fibonacci MA on Daily Chart
Wednesday economic calendar includes: mortgage applications, crude oil report, and ISM Non-manufacturing index.
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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! Visit our blog at Tradermonger.blogspot.com for charts
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!
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!
We mentioned yesterday that there will be resistance around Tuesday's previous high of 1192. The S&P 500 only reached a high of 1190 before being consumed with the consumer credit report declining $11.5 billion in February. The S&P 500 settled at 1182 level after it fell to a low of 1177 breaking last Thursday's previous high of 1181.
On Friday Goldman Sachs was charged by the SEC with civil fraud regarding dealings of the subprime related products. Expect European and Asia markets to be lower on Monday after the aftermath of selling on the US exchanges. The S&P 500 fell to 1192 ending the day near last Wednesday's previous low.
Monday's trading the S&P 500 ended at 1198 below the 144 and 200 Fibonacci moving averages on the 5 minute chart. Recently the volatility index spiked from a 52 week low of 15.23 to 17.34. There seems to be support between 16.50 and 15.50. Breaking these levels will push the S&P 500 index higher.
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