Watch for the Current Trading Range to Break

Tuesday brought a split market on higher volume for us. S&P 500 and the Dow both closed slightly red leaving a distribution day. The Nas 100 and Nas Composite both green on higher volume for an accumulation day.

Crude fell today closing down 45 cents at $55.64. At one point mid day it was down $2.21 a level we haven’t seen since June 2005 (53.88). Gold rallied to close up $5.60 on the day at $615.00 after getting a slow start. As I detailed Sunday night GLD is the ETF and now needs to clear $61.00 early tomorrow to continue our upside move.

Wednesday the pullback we started could continue early on. The market for all the volatility intra day is not getting far. Monday and Tuesday held the same basic ranges and stopped right at resistance. So we need another run through this support or resistance and get us moving. Earnings kicked off with good news from Alcoa and that sets a nice tone. Can the market move up with lower energy prices and good earnings from here without a deeper correction with the lurking of the fed not cutting rates for at least the first half of 2007 is now the question. I do know we cannot continue to hold this range so we have to keep watching the same levels and be cautious of a move to come. Probably sooner rather than later.

Economic Data released for the Week of January 8th — 12th
08:30 Trade Balance, 10:00 Wholesale Trade Inventories, 10:30 Crude Inventories, 12:30 Chi Fed Bank Pres. Moskow to speak, Thursday 08:00 NY Fed Bank Pres Geithner to speak, 08:30 Initial Claims, 10:30 Natural Gas inventories, 14:00 Treasury Budget, Friday 08:30 Export Prices ex-oil, 08:30 Import Prices ex-oil, 08:30 Retail Sales, 08:30 Retail Sales ex-auto, 10:00 Business Inventories.

Some Earnings for the Week of January 8th — 12th Wednesday after the bell — DNA, SAPE. Thursday pre market — INFY, MTB, SRR and after the bell CAMP. Friday nothing of interest. Still a fairly light week, but it will start to pick up now.

ES (S&P 500 e-mini) Wednesday’s pivot is 1419.75, the weekly is 1423.50. The 1416.50 did once again break temporary and let us test the 1414, which held and quickly bounced us right back over 1416.50. So once again this level holds the test of the market. The bounce Monday and now Tuesday leaves the ES right into 38.2% retracement resistance (1423.50) which will be key for higher ground. The weekly pivot is at this same spot giving us two pivotal pieces of data at this closing level. A break of 38.2% signifies a reversal in the short term direction on this intra day look. A move back up through the resistance should be watched with a break of this 1423.50. Failure here would result in another look at 1416.50 and even lower. Intra day support: 1420.25, 1418.75, 1416.50, 1413, 1408 1403 (will be key), 1400, 1391.75 support levels. Resistance to look for -1423.50, 1426.50, 1427.75 (fills the gap), 1429.75, 1432, 1434.25. 60 minute chart is below.

ER (Russell 2000) Wednesday’s pivot is 780.50, the weekly is 787.20. The ER tested the lows from November 28th and held that support today (775.50). Still holding under 38.2% (786.10) is lagging the ES some and that should be watched. Intra day support: 782, 780.50, 779.20, 778, 776.10, 775.50, 773.80, 771.30. Resistance: 784.50, 786.10, 788.40, 790.70, 792.5, 794.00, 795.50 (fills open gap) and 798.30. 60 minute chart below

Everyone have a great trading day.

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.