Holiday Trade
Good morning, today the market will focus on the Columbus Day holiday and the Jewish High Holy Day of Yom Kippur. The cash treasury market and futures markets are closed for trading. Ahead of this, the SPZ is trading -100 at 1425.80 on little volume.
For today’s session, we have a key area between 1433-1438. If we can get above this zone, expect a retracement to the 1448 level. If we were able to trade above 1448, especially on a settlement basis, it would take the short-term pressure off the market. On the downside, we have support between 1423-1421. If this fails to hold, look for a trade to 1410. If we break 1410, things could get wild, and we would look for a move towards the 1401.50-1399 support zone.
As for the NDZ, we are currently trading up 1.50 at 3359. On the upside, above 3375, look for 3425 with some resistance along the way between 3403-3410. If we can hold above this level, look for a move to 3465 with resistance coming in between 3450-3470. Any settlement above this level bodes well for the market.
On the downside, we have key support between 3340 and 3320. Below 3320, look for 3250. Along the way 3290-3275 should be support. If we trade below 3250, things could get very aggressive to the downside, leading us towards the 3180 level.
In general, one has to expect lighter volume due to the holiday. The Non-Farm Payroll report turned out to be a non-event this morning for the market.The headline number and the rate of unemployment were a little higher than anticipated. But the hourly earnings came in right in line, and the market had a very muted reaction overall. Only 2000 S&P contracts have traded on Globex since the report.
S&Ps were up 400 points at 1460. On the upside today, we see 1461, then a band from 1463 to 1464, which has been a pivotal area that we’ve been trading around for several sessions. If we get above this area and stay above it, we’ll be looking for the market to move back to 1475 and then 1483. Above 1464, we see 1465.50, 1468, 1470.50, 1472, 1475, 1478, 1480 and 1483.
On the downside, we see 1458, 1454.50, 1453.50, a key area at 1451.50 and 1450. Friday, there were major buyers at 1450-1451.50. Every time we got down to that area, the buyers came in very strongly. Below that, we see 1448.50, 1445.50 and a critical at 1443.50.
The S&P and the Dow have sustained a positive note, in spite of the decline in the NASDAQ, which is getting into an oversold condition. And if it turns around, we may get a scenario in which all three major indices are moving in the same direction.
At Wednesday’s settlement, the NASDAQ Composite index was at its greatest distance below the 200-day moving average since October 1998. In the last 11 years, this marks the fourth greatest extension from that moving average. Each one has been followed by a snap-back rally.
Probability wise, the market is a trading buy down here. That does not mean it will pop up right away and rally 10%. What it does mean is that if you buy them in here, you have a very good risk/reward ratio to the upside.
The NASDAQ was trading at 3500, up 17.50. We have support between 3490 and 3480, then 3452 to 3440. If we trade below that, it could get a little dicey, and look for a move down to 3380, which would be below Friday’s low. At 3380, we think the market will find support. If it fails, look for a trade through 3300.
On the upside, this whole 3510-3540 area is critical resistance. If we can get above it, the market should make a move for 3615. Along the way, 3580 to 3592 will be resistance. If we get above 3615, the rally should accelerate, and we could trade as high as the band between 3680 and 3710.
The Dow, meanwhile, continues its “slopping around.” Hewlett-Packard
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PowerRating) was Friday’s big debacle, and the index lost 60 points. We’re having a lot of difficulty getting through 10,850 in the cash. In general, not much of a trade in the Dow.