Looking for Upside, Here’s Why

Wednesday left us up, down and all around. I thought I was on Mr. Toad’s Wild Ride at Disney today.
Volume was back to pre holiday levels, plus some! Very nice to see participation back and the volatility was not absent either today. Dow and Nasdaq managed a green close while the S&P 500 was slightly red. After the huge upside early move then the fall, to come back mid range was impressive for the bulls. The push down came off the FOMC minutes. Some worries of the same old stuff….soft landing, inflation etc… Will keep the market on edge with each data release. Now the market is leaning toward

Along with the FOMC minutes reflecting a somewhat weaker picture we have additional data this week. Today the ADP job’s data reflected weakness, but the market showed no concern over that (it was the biggest drop since August 2005). That could be due to the report has been WRONG multiple times, or just the busy market after the four day weekend pushed it on the back burner until later day and the FOMC minutes and the ADP report did the sell off damage. Jobs data is out on Friday so the market maybe nervous Thursday ahead of that pre market information.

Crude fell hard today closing down $2.73 at $58.35. No supply pressures are contributing to this drop and volatility. This was the biggest drop since April of 2005 in a single day. Gold tumbled today down $8.20 at $629.80 on the day. Metals had a rough day today falling apart mid morning.

HMO’s (healthcare) tested the swing high and still holding at this high. Making for eight days in this very tight range at resistance. The sector should be watched for a break of the highs for a break out 1859.27 and a break of support of the range at 1817 and onto 1780.23 would be a tradeable pullback. Stocks like HNT, CI, UNH, WLP, HMA are in the sector.

Thursday I will look for some upside off this powerful bounce we saw in the last hour. It did come right into resistance so that coupled with the Initial claims in the pre market should set the mornings tone. For now I am bias to the upside, that could change if the data shakes the tree tomorrow. Late day we’ll be weary of jobs data positioning and play it tight. That data according to ADP’s data could shake the market some, so don’t get in a lot of positions until we see that data Friday morning for anything other than a trade.

Economic data for the Week of January 1st — 5th Thursday 08:30 Initial Claims, 10:00 Factory Orders, 10:00 ISM Services,10:30 Crude and Nat Gas inventories, Friday 08:30 Nonfarm Payrolls, 08:30 Unemployment Rate, 08:30 Hourly Earnings, 08:30 Average Workweek.

Some earnings for the Week of January 1st — 5th Thursday pre market STZ, MON, MSM, TXI and after the bell ARRO, ESIO, HORC. Friday pre market AZZ, GPN and SGR. Still a very light week of earnings.

ES (S&P 500 e-mini) Thursday’s pivot is 1427.25, the weekly is 1429.25. The support at 1416.50 held us today even in that freefall. This is going to be a very key area for the ES and through that is likely to open the flood gates for a deeper pullback. We haven’t been under this level since December 4th, so it has been tested and held 4 times now. Upside did not quite test 1444 area today, just the swing high at 1440. This is the key on the upside and now our range is wide, but still a range and one we’ve been in for three weeks. Intra day Support: 1423.75, 1419.75, 1416.25, 1414.50. Resistance: 1425.50, 1430.50, 1435, 1436.25, 1438.75, 1440, 1442.25, 1444.25. 60 minute chart is below.

ER (Russell 2000) Thursday’s pivot is 793.90, the weekly is 784.30. ER is much like the ES and held a key level when it came off the 78.6% fib at 786.40. Intraday support: 792.5, 789.4, 786.4, 784.10 and 781.10. Resistance: 795, 797.6, 801.2 and 805.90. 60 minute chart below

Good trading to everyone today!

Teresa Appleton has traded equities and options for
nine years and futures for seven. She is founder and CEO of TradeLogic, LLC. For
more information about Teresa and the training she offers stock, options and
futures traders,

click here.