Day Trading September 3, 2010 - TraderMongers.com Economic Analysis: ISM Non-Mfg Index
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
President Obama will be taking care of stimulating the economic activity in the USA while ending the military activity in Iraq. The end of the military activity may not go well for Aerospace and Defense sector stocks. Retails have a strong August due to back to school sales. Yesterday jobless claims edged lower however not enough to make a long-term impact. Economic activity is still the same as we are in the worst economic environment since the Great Depression. During that time the stock market did not hit a new high until after two decades had past.
Today Employment situation and Non-ISM manufacturing numbers are on the menu for today. Institutions and investors will be returning back to the markets after the Labor Day weekend on Tuesday. However for now traders are covering up their short positions from their August trades.
On the daily chart of the S&P 500, the market is still trading below between the 144 and 200 day moving averages after the first day of September. During the month of August the S&P 500 attempted to break through the 2010 January resistance levels starting from 1125 however fell short due to volume. Markets should continue to trade sideways for the next two months until elections are over in November. Volume will expect to pick up after the Labor Day weekend as institutional traders and investors return from their summer vacations.
The Market Volatility Index or VIX track prices that investors are willing to pay for options on the S&P 500, usually to protect themselves against declines in stocks. The VIX peaked in May during the Sell in May seasonal trend trading above the 30 mark as institutions and investors switched from equities to cash before the summer season.
Currently the VIX trading slightly below the 144 and 200 day moving averages indicating more risky approach towards investments and assets. The thin trading volume in August magnified moves on the VIX so markets could be less liquid markets than fear-driven. The previous low for the VIX is the 22 area which will be broken once the market finds direction after the mid-term elections in November.
The Chicago Board Options Exchange (CBOE) Market Volatility Index 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 when the index is trading above 30.
Summary of Major S&P Pivot Levels
1219: S&P 500 52 Week High
Technical Levels Natural Support and Resistance
1125: January 2010 Resistance Level
1100: Natural Resistance Level
1075: Natural Support Level
1050: Natural Support Level
Technical Levels 30 Minute Chart
1074: 144 Day Fibonacci Moving Average on 5 Minute Chart
1070: 200 Day Moving Average on 5 Minute Chart
Technical Levels Daily Chart
1096: 144 Day Fibonacci Moving Average on Daily Chart
1089: 200 Day Moving Average on Daily Chart
Daily Economic Calendar
Employment Situation / 8.30 EST
ISM Non-Mfg Index / 10.00 EST
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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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