Wednesday, December 2, 2009

Key Levels and Scenarios (S&P 500) for Thursday 12/03/2009

E-Mini S&P500
I was busy last night and wasn't able to post the key levels and scenarios, but my bias has been bullish and we tagged the 1115 level that I mentioned in my last post from Monday night. At this point, I still don't see any sign of weakness in the S&P. For the past three days, prices have either remained in the upper half of the previous session's range, or extended to the upside. As I type this (12:30 AM CST), ES is trading at 1114.25 (1111.50 is near-term support over-night now), building value above Wednesday's VPOC. My current bias is bullish above 1108. Shorts are counter-trend at the moment.

Jobless Claims and Productivity and Costs data out at 7:30 AM (CST), ISM Non-Mfg Index at 9:00 AM (CST) tomorrow morning. To top it off, both Ben Ber"tank"e and Barack Obama, speak sometime tomorrow which could move the markets. Be careful...and do NOT fight the momentum! If you are going to enter counter-trend trades, initiate them at Key Levels so you can bail at close to break-even if you happen to be on the wrong side of the market.

Bullish Scenario (above 1108)
1108-1109 is initial support, and I'm anticipating a bounce on first touch. Below that, we have a VPOC Cluster in the 1105-1107 area, and then strong support in the 1100.25-1102.25 area. On the upside, some chop/rotation in the 1115 area wouldn't be a surprise. Beyond 1115, I would scale out of Longs in the 1117.75 area, and move stop-loss on remainder to 1115 at that point. We also have that 1122 level above that's just begging to be tagged!

Bearish Scenario (below 1105)
Support levels are defined, and I'm staying out of shorts between 1108 and 1115. I would consider shorts on an extension to the 1119.75-1122 area. If we break below 1105, the 1108 level could then act as short-term resistance. Shorting the bounce at that point in anticipation of a move down to test the 1101-1102 area would be a decent play. There is a cushion of support from 1108 all the way down to 1100.25, with 1100.25-1101.50 being pretty strong. Anticipate a bounce on first touch, which means it's a good place to scale out of shorts and then re-load if price remains below 1108. The bounce could be pretty damn strong though, so be careful initiating shorts on a bounce at 1100.25. By that, I mean, don't re-load at 1103; wait for the momentum to stall on the bounce as price could easily retrace back to 1108.

ES - Daily Bar Chart with Volume Profile and Key Levels


  1. Do you consider this as beginning of the month seasonal strength or more than that?

    At what level do you like the return trip to fill downside gap(s)?

    Bubba, did you have stuffed shrimp or gumbo with Fari? LOL

    Nice work.


  2. Hi E, I think it's a combination of seasonal and momentum. On the downside, I was anticipating a move to 1064 on a big sell off, and we got 1067 off the Dubai debacle. In the short-term, my line in the sand is 1089 (bullish above, bearish below). Longer term, 1060 is the level I'm watching. If we break 1060, I would anticipate a test of 1045 followed by 1026.

    I believe tomorrow will set the tone for the coming weeks. A close above mid-point of tomorrow's range could set us up for some bullish action into next week.

    And LOL, no shrimp :D Fari and I went to an excellent Persian restaurant in Chicago. We'll hit up Bubba Gump when you're in town :)


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