24 Aug
Pre-open eMini S&P 500 Morning Report for August 24 2010
Posted in Pre-open Analysis by Bob English at 9:07:46 7 CommentsThe Precise Take – Equity futures tumble overnight after failing to hold critical support
Big Picture Analysis: After a quick run-up on yesterday’s open to kiss the 50% retracement of last week’s range, the ES headed down and closed below critical support at 1069. Overnight, the 1055.50 first target was reached and then some (low of 1051.50). The leaders are similarly ugly, with the EuroYen at lows not seen since September 2001, and 10 Year T-Note futures to new highs (never having closed below the 125’15 trigger). Given the whipsaw nature of the markets over the summer, it would be reasonable to soon expect a sharp reversal to the upside to shakeout late shorts. Our best guess is on a test of the 1045-48 support band from late June/early July price action; however, longs are risky today with this much downside momentum. If 1045 goes, next major support is 1018-25. Only above yesterday’s settlement of…
Bob English
on August 24 2010 at 10:09:09
There was a big buying burst at 10:01 after 44 was hit. Given that 43.75 was the daily S3′s, this could be a signal of a multi-day low. Would def. not be long below 44.
spainconsultant
on August 24 2010 at 10:12:57
Ibex surrender the 10.000 with the house figures (USA figures, here are probably worse but nobody cares and nobody knows for real as the banks are taking them in thousands and statistics are ……let´s say weak)………….
Figures are nasty, but probably worst would be the sensation that the reality was being worse than other figures/people was saying………. that would makes sense for the FED moves…….. and getting conspiratorial the july for me inexplicable rally in middle of the bad news could be a way to get people in, sell them the little papers and run to the bonds…….. Today Germany treasuries (called bund) touched new historical lows, yen and not seen in years highs
Lots of data for the next days…… September and October coming soon. Stocks fluctuate and as you say Bob we´d been assisting to violent whipsaws……..but if the fall gets ugly ¿when would the FED go nuclear? Can this be before the November elections? I ask as I don´t know America that good to evaluate if the FED must fullfill a kind of neutral policy (not serious moves) near to elections………..
Jeff
on August 24 2010 at 11:06:35
Is this strength related to weak shorts covering?
Bob English
on August 24 2010 at 11:36:27
Jeff…in part it is weak shorts covering, but the reaction off daily S3 says there is also some institutional support at the ~1045 level. First, market makers are a big part of the reason why floor trader s/r levels work on the daily through yearly time frames. They will usually cap price movement for the day at R3/S3. If price exceeds those levels, there is something much bigger going on. Since we got a big price reaction off S3 (when hit within one tick), it is indicative that there were sufficient institutional orders at this price level to justify the market makers taking a proprietary long position. Where will they cover? We don’t know in advance, but distribution at a higher floor level will be a signal that they are covering. Right now, the ES is at the D-S2/W-S1 confluence area between 54-56. While a ten point move (such as off the earlier low) is what the large prop day traders look for, the MM’s usually swing for large moves–several days to a few weeks in normal times. However, over the summer, they’ve been much shorter in duration than usual. I suspect they’ll try to get to the confluence of M-PP and W-PP, from 74-76.75, but that’s just a hunch.
spainconsultant
on August 24 2010 at 11:59:56
That 74 to 76.75 would be a target area for today?
Very didactic comment your last one
Thanks!
Bob English
on August 24 2010 at 12:27:45
No SC, could be into tomorrow. However, the “easy” money has been made and the currencies are forecasting more downside in the weeks ahead. Personally, I let price action guide me more than a commitment to price targets. The pre-determined “levels” are there to cue us in where we should be the most observant.
mahmed
on August 24 2010 at 14:14:39
http://www.bloomberg.com/news/2010-08-24/goldman-sachs-s-hatzius-says-fed-will-move-toward-more-stimulus-tom-keene.html